Hello. Welcome to Martin Marietta's Third Quarter 2024 Earnings Conference Call. All participants are now in a listen-only mode. A question-and-answer session will follow the company’s prepared remarks. As a reminder, today's call is being recorded and will be available for replay on the company's website. I will now turn the call over to your host, Ms. Jacklyn Rooker, Martin Marietta's Director of Investor Relations. Jacklyn, you may begin.

Good morning, and thank you for joining Martin Marietta's third quarter 2024 earnings call. With me today are Ward Nye, Chair and Chief Executive Officer; and Jim Nickolas, Executive Vice President and Chief Financial Officer. Today's discussion may include forward-looking statements as defined by United States securities laws in connection with future events, future operating results, or financial performance. Like other businesses, Martin Marietta is subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation, except as legally required, to publicly update or revise any forward-looking statements, whether resulting from new information, future developments, or otherwise. Please refer to the legal disclaimers contained in today's earnings release and other public filings, which are available on both our own and the Securities and Exchange Commission's website. We have made available, during this webcast and on the Investors section of our website, supplemental information that summarizes our financial results and trends. As a reminder, all financial and operating results discussed today are for continuing operations. In addition, non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix to the supplemental information as well as our filings with the SEC and are also available on our website. Today's earnings call will begin with Ward Nye, who will discuss our third quarter operating performance, our preliminary view for 2025 and supporting market trends. Jim Nickolas will then review our financial results and capital allocation, after which Ward will provide closing comments. A question-and-answer session will follow. Please limit your Q&A participation to one question. I will now turn the call over to Ward.

Thank you, Jacklyn, and thank you all for joining this teleconference. During the third quarter, we experienced a series of well-chronicled extreme weather events, including significant July precipitation together with Tropical Storm Debby in North Carolina, Hurricane Beryl in Texas, and Hurricane Helene across much of our Southeast footprint. First and foremost, we're grateful that our employees and their families are safe. Our thoughts and prayers remain focused on those who have suffered so disproportionately during these natural disasters. We're particularly mindful of our neighbors in Western North Carolina as they begin the long process of rebuilding. Aside from the human cost of these events, we and a host of other businesses were affected by the storms. In our specific case, project delays and inefficiencies negatively impacted our financial results. As a consequence, we revised our full year 2024 adjusted EBITDA guidance to $2.07 billion at the midpoint. To help better demonstrate the severity of these weather events during the last two quarters to our upstream product shipments, we provided two case studies on Page 8 of our supplemental information. The first case study is particularly revealing relative to cement. As you will recall, the second quarter's significant precipitation was notably severe in Dallas-Fort Worth, our company's single largest market area, resulting in an 18% decline in our low-teen cement shipments. Encouragingly, as the weather improved, so did Midlothian's third quarter shipments. Shifting now to aggregates, our implied fourth quarter shipment guide reflects a 5% increase in shipments, a notable improvement relative to the third quarter's 4% decline. Our fourth quarter view is primarily based on October's trends and reasonable expectations for the remainder of the year. These statistics demonstrate the important irony of disruptive and destructive weather. Planned shipments are not generally canceled; they're delayed. Depending on seasonality and severity, the resumption of planned shipments usually occurs in the following months and/or quarters. Despite these weather-related events, I'm pleased to highlight some of our team's accomplishments. First, we achieved the best year-to-date safety incident rates in our company's history, inclusive of our newly acquired businesses. Operationally, our teams achieved record quarterly aggregates gross profit per ton of $8.16, record third quarter cash flows from operations, and record third quarter revenues and gross profit in our Magnesia Specialties business. Given the totality of the quarter's uncontrollable and exigent circumstances, these are notable records upon which we intend to build. In October, we acquired pure aggregate assets in South Florida and Southern California, both attractive and growing Martin Marietta markets. Consistent with our strategic operating analysis and review, or SOAR plan, these bolt-on acquisitions further enhance our gross profit contribution from the aggregates product line and improve the long-term durability of our business. Together, these accomplishments reflect our team's focus on matters we can control while underscoring the resiliency of our aggregates-led business, which is strategically positioned in the country's fastest-growing markets. Importantly, these results reinforce our expectation that our aggregates price-cost spread will continue to expand over time, enhancing unit profitability through macroeconomic cycles. As we look towards 2025, we remain focused on the long-term aspects of our business that we can meaningfully impact: world-class safety, the consistent and disciplined execution of our strategic plan, resolute adherence to our leading commercial strategy, and prudent cost management through ongoing operational excellence efforts. Equally, we expect product shipments will recover due to more normal weather patterns and an expected improvement in warehouse and residential construction. Preliminarily, we expect that 2025 overall aggregate shipments will increase by low single-digits and aggregates pricing will increase by mid to high single-digits. Moving now to end market trends. Regardless of the outcome of the upcoming elections, rebuilding and maintaining our nation's infrastructure remains a bipartisan national strategic priority. Record levels of state and federal investment through the Infrastructure Investment and Jobs Act, or IIJA, continue to support attractive demand for highways and streets construction. While growth rates in contract awards have predictably flattened, as reflected in the value of contract awards for the 12-month period ending August 31, 2024, the baseline for highway and street spending is well above historical levels. Looking ahead, funding certainty at the state and federal level will provide volume stability and support a healthy pricing environment in this aggregate-intensive, often countercyclical end market for years to come. Relative to heavy nonresidential construction, the build-out of artificial intelligence infrastructure supports emerging growth trends in both data centers and related energy requirements. Moreover, aggregates-intensive warehouse construction appears to be cyclically bottoming in select markets, as indicated by recent project announcements. For example, Amazon is planning to build one of its largest North American distribution centers in the Dallas-Fort Worth Metroplex. With our leading aggregates position, strategic and large-capacity cement plant, and affiliated ready-mixed presence in this dynamic market, Martin Marietta is uniquely positioned to supply materials to this project, which is expected to begin later this year. Shifting now to light nonresidential and residential activity, housing availability and affordability remain key issues impacting single-family demand. While a correction of these issues will not be immediate, we believe that loosening monetary policy is an important first step. It has passed its prologue, and we believe that to be the case as residential construction recovers, light nonresidential activity typically follows. In summary, we believe multiyear public construction activity, reshoring, the artificial intelligence infrastructure build-out, and the long-awaited single-family housing-led residential recovery all create supporting factors for durable aggregate shipment growth and continued attractive pricing momentum for years ahead. I'll now turn the call over to Jim to discuss our third quarter financial results. Jim?

Thank you, Ward, and good morning, everyone. For the third quarter, the Building Materials business generated revenues of $1.8 billion, a 6% decrease, and gross profit of $588 million, a 9% decrease. The decline in both metrics is due to the February divestiture of our South Texas cement and related concrete businesses, along with shipment declines in all product lines, partially offset by acquisition contributions. Aggregates gross profit per ton improved 3% to a quarterly record of $8.16, despite lower shipment volumes, highlighting the efficacy of our value over volume commercial strategy. Aggregates pricing increased 7.7% or 8.9% on an organic mix-adjusted basis. Cement and concrete revenues decreased 30% to $296 million, and gross profit decreased 37% to $89 million, again, driven primarily by the divestiture of our South Texas cement plant and its related concrete operations. I'm pleased to report that the construction of our new finished mill at Midlothian is complete, which will provide us with approximately 450,000 tons of incremental high-margin annual production capacity in the attractive North Texas market. Asphalt and paving revenues decreased 5% to $343 million, and gross profit decreased 8% to $61 million. Wet weather, project delays, and a softer nonresidential market drove the shipment decline, while lower revenues and higher aggregates costs negatively impacted profitability. Magnesia Specialties posted record third quarter revenues and gross profit of $82 million and $29 million, respectively, as benefits from strong pricing and improved lime shipments more than offset lower chemical shipments. Turning now to capital allocation and liquidity. As Ward mentioned, we achieved record third quarter cash flows from operations of $601 million, an increase of 32% compared to the prior year quarter due primarily to working capital improvements that more than offset lower net earnings. Consistent with our long-standing capital allocation priorities, for the nine months ended September 30, 2024, we deployed over $2.5 billion on pure-play aggregates assets, invested $622 million of capital back into our business, and returned $591 million to shareholders through dividend payments and share repurchases. In our 30 years as a publicly traded company, we have steadily maintained or increased our dividend, and this year is no exception. During the quarter, our Board of Directors approved a 7% increase to the quarterly cash dividend paid in September, reaffirming our confidence in the durability and sustainability of our company's future growth and free cash flow generation. We have now returned a total of $3.2 billion to shareholders through both dividends and share repurchases since the announcement of our share repurchase program in February 2015. Our net debt-to-EBITDA ratio was 2.0 times for the trailing 12 months ended September 30, at the low end of our targeted range of 2 times to 2.5 times, preserving financial flexibility to continue actively pursuing value-enhancing high-quality aggregates acquisitions and prudently reinvesting in our business, all while returning capital to Martin Marietta shareholders through dividend growth and opportunistic share repurchases. With that, I will turn the call back over to Ward.

Thanks, Jim. As our third quarter and year-to-date results demonstrate, Martin Marietta remains focused on matters we can control: an unwavering commitment to safety and the environment, commercial and operational excellence, and the disciplined execution of our strategic priorities. We have thoughtfully shaped and expanded our aggregates-led portfolio and deliberately built our business with leading positions in the nation's fastest-growing markets, making Martin Marietta an increasingly resilient, efficient, and cash flow generative business that can consistently drive shareholder value creation. With these attractive underlying fundamentals, our best-in-class teams, unparalleled growth opportunities, and proven strategic priorities, we're excited about the prospects in 2025 and beyond. If the operator will now provide the required instructions, we'll turn our attention to addressing your questions.

Your first question comes from Kathryn Thompson with TRG. Please go ahead.

Hi, thank you for taking my questions today. Probably my question on weather and then looking forward. So how did weather impact Q3 results, both from a volume and a pricing standpoint? And could you give color on how shipments have trended into October and really looking at post-storms? Thank you.

Kathryn, thanks for the question. It's a good one because that highlights much of what happened in the quarter. Number one, as we discussed before, Q2 was a washout. Q3 was as well, from a weather perspective, which is why we put that supplemental slide on Page 8 in the deck today because I think it gives good color relative to how significant the weather events were to our shipments. So as you can see, if you look at that slide, Q2 was really severe in DFW, and as Q3 rolled around, it wasn't as bad in DFW, and you saw a snapback in volumes at Midlothian. However, Q3 was tough across the Southeast and much of the East. We literally had a hurricane every 2.5 weeks in Q3, disproportionately hitting our Eastern and Southeastern businesses. To your point, Kathryn, if we're looking at businesses that have our highest ASPs, those were the segments that were hit hardest. So looking at it overall, yes, it affected the shipments. It was a notable decline that drove our profitability down. It also made it difficult to achieve the same degree of midyear price increases this year that we saw last year. So you had a trifecta of issues that emerged. Now regarding the second part of your question, October has been much more normal, and what we've seen in October is driving our aggregate forecast going forward. We anticipate aggregates to be up 5% in Q4, which is based on what we've seen in October. We're seeing good tonnage, customer backlogs are building, and contractors are hiring, which all indicate positive trends. To summarize, weather mattered a lot, both for volume and profitability.

It does. Thank you.

Your next question comes from the line of Trey Grooms with Stephens. Your line is open.

Hey, good morning, Ward and Jim. Hope you are doing well.

Yes.

So, kind of a follow-on to that. Clearly, the Carolinas, particularly Western North Carolina, were unfortunately devastated by Helene. If you could talk about some of the recovery efforts there and what that could mean for Martin Marietta, given that it is right in your backyard.

Yes, Trey, it is in our backyard, and you're right. Western North Carolina felt the impacts disproportionately, so we’re doing all we can to help that area rebuild. NCDOT estimates the Helene recovery expenses will be between $5 billion and $6 billion, and typically, the federal government reimbursement rate for that is between 60% and 65%, meaning North Carolina’s share will be about $2 billion. We have operations in North Carolina that extend into the foothills, with sites in Eastern Tennessee following our Blue Water acquisition. NCDOT has stated construction and maintenance continues outside of Helene's work, and despite the challenges, we are directly positioned to assist in rebuilding efforts in that area. There will be extensive rebuilding, likely taking not just months or years, but probably a decade.

Great. Thank you for all the color on that. I’ll pass it on. Good luck.

You bet. Thank you, Trey.

Your next question comes from the line of Garik Shmois with Loop Capital. Your line is open.

Hi, thanks for having me on. I was wondering if you could go over the acquisitions in South Florida and California in a bit more detail.

Garik, thanks for the question. Both transactions are consistent with our SOAR strategy. They are complementary, pure aggregate bolt-ons, both percentage and unit margin accretive, and the combined reserves are over 150 million tons in areas with notable reserve shortages. Integration will be completed rapidly, with new pricing effective January 1. These transactions are under $1 billion, and our leverage remains within our target range, allowing us to pursue more high-quality aggregates acquisitions while returning capital to shareholders through dividend growth and share repurchases.

Yeah, sounds like it. Thanks, guys.

Thanks, Garik.

Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open.

Yes, hi, good morning everyone.

Hi, Jerry.

Ward, I'm wondering if you could just talk about the pricing revision and guidance.

Happy to. It’s several things. To answer your question, I believe we will see good, steady, durable pricing going forward. Mid- to high-digit pricing with emphasis on high is certainly the right outlook for next year. We expect more price in our heritage businesses and ongoing improvements from acquisitions. Weather-related delays and mix issues have impacted pricing this year, which means the carryover next year is smaller than it was this year. We're only looking at about 80 basis points carryover for next year, reflecting ongoing strong market conditions.

It does. Thank you.

Thank you, Jerry.

Your next question comes from the line of Anthony Pettinari with Citi. Your line is open.

Hi, good morning.

Good morning.

Can you just talk about how backlogs have trended? And if there's anything you pull up from either an end market perspective or a geographic perspective?

Thank you for the question. Current backlogs are up nicely compared to the prior year, both in the mid-single-digits range. This indicates strong potential for the upcoming year, with public spending expected to improve due to ongoing state budget increases. Resi has not turned around immediately, but we see signs of recovery that should lead to better performance. Overall, we expect steady multi-year public construction activity.

Okay. That’s very helpful color. I’ll turn it over.

Thank you, Anthony.

Your next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open.

Hi, good morning, and thanks for taking the question.

No, happy to.

Could you provide some color on the anticipated cost dynamics heading into 2025?

The underlying inflation for this quarter was close to what we expected, about mid-single-digits. The inflation contribution was largely due to our inventory drawdown for the quarter. Heading into 2025, I maintain my mid-single-digit cost inflation outlook, which is below our ASP expectations, indicating a favorable price/cost spread.

Very helpful. Thank you.

Thank you, Angel.

Your next question comes from the line of Philip Ng with Jefferies. Your line is open.

Hey, guys. Ward, great to hear that aggregates volumes are trending up 5% in the fourth quarter now that weather has cleared out. Does that include the recent acquisitions?

No, it does not. Q4 does not consider any contribution from the new acquisitions; we'll factor that in when we provide guidance for 2025 in February.

Okay. So forth quarter volume, up 5%. And next year up low single digits, largely organic. That's really encouraging to see.

That's correct. You bet. Take care.

Next question comes from the line of Tyler Brown with Raymond James. Your line is open.

Hey, good morning, everyone.

Hey, good morning, Tyler.

I think, if I look at CapEx, I think it's up to $875 million at the midpoint from $700 million last quarter. Any color there?

It's largely due to the two acquisitions that Ward mentioned. One of those is structured as CapEx, increasing our CapEx guide for the year. For next year, we typically guide to 9%, 9.5% of revenues.

Okay. That answers my question. Thank you.

Welcome. Thank you, Tyler.

Your next question comes from the line of Brent Thielman with D.A. Davidson. Your line is open.

Hey, thanks, good morning. Ward or Jim, just with respect to the Midlothian expansion. Would you expect to sell out that incremental capacity next year, or is there a ramp-up period with that new capacity?

Thanks for the question. The short answer is, this will have a ramp-up period. Midlothian is performing well, and we'll be methodical with how we approach that growth. Don't expect all of that next year; expect it over time.

Okay. Thank you.

Thank you.

Your next question comes from the line of David MacGregor with Longbow Research. Your line is open.

Yes, good morning, everyone. Thanks for taking my question.

Hi, David.

On the clarification regarding the delta going from $5 to $3 a ton, how many tons would that apply to?

I can't provide precise tonnage on that, but I would refer you back to Blue Water and Frei as the applicable transactions covering specific geographies.

Right. So you're caught up in California now?

We are largely caught up in California. That's correct.

Thanks very much.

Thank you, David.

Your next question comes from the line of Mike Dudas with Vertical Research. Your line is open.

Good morning, Jacklyn, Jim, Ward.

Hi, Mike.

As you look at your volume and pricing guidance from a geographic basis, any areas that may surprise us?

Several areas show promise, particularly Southern California and Texas. Florida remains important due to historical infrastructure presence and new in-state operations enhancing private work. North Carolina faces rebuilding challenges, but budgets are up in Indiana, Georgia, Colorado, and Arizona, providing a favorable outlook overall.

Excellent work. Thank you.

You’re most welcome.

Your next question comes from the line of Timna Tanners with Wolfe Research. Your line is open.

Yeah, hey, good morning. I wanted to dig a little bit more into the end market outlook on Slide 7 of your supplemental information. Specifically regarding the non-res private sector piece, what are you seeing in data centers?

For data centers, there are several significant projects tied to AI, including Google in Kansas City and Microsoft data centers in North Carolina. These coming developments indicate robust tonnage requirements. Additionally, warehouse construction appears to be cyclically bottoming out, and Amazon's facility in Texas will demand considerable aggregates.

Thanks. Also, a question about infrastructure funding post-IIJA; what's driving activity in 2025?

2024 has seen significant federal IIJA dollars flowing. With carryover into 2025, this upcoming year will involve new projects coming to bid. Many state budgets remain robust, reinforcing a positive outlook for public expenditures.

Okay, very helpful. Thanks again.

Most welcome.

Your next question comes from the line of Michael Feniger with Bank of America. Our line is open.

Great. Thank you for squeezing me in. Just a clarification question, Ward.

Michael.

On your shipment guide, if underlying demand was flat, how much do you think weather weighed on growth?

It was certainly significant; weather largely affected Q2 and Q3 volumes. If we return to a normal weather pattern next year, we can be optimistic about growth trends.

That's really helpful, Ward. And on pricing, how is that expected to trend through the year?

Mid-year pricing isn't included in our initial guidance for next year, providing a potential tailwind. That will clarify further in February when we finalize our projections.

This concludes the question-and-answer session. I'll turn the call to Ward for closing remarks.

Thank you again for joining our third quarter 2024 earnings call. Martin Marietta's future is bright, thanks to the consistent and thoughtful execution of our strategic priorities by our world-class teams. Looking ahead, we're confident in our ability to continue delivering leading financial safety and operational performance while extending our long track record of delivering sustainable growth and superior shareholder value. We look forward to sharing our fourth quarter and full-year 2024 results in February. As always, we're available for any follow-up questions. Thank you again for your time and your support of Martin Marietta.

This concludes today's conference call. Thank you for joining. You may now disconnect.