Page 54 - 2019 Annual Report

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
The Building Materials business is a mature, cyclical business, dependent on activity within the construction marketplace. As
of December 31, 2019, the nation’s current economic expansion, which started in June 2009, has lasted 126 months and is
the longest economic recovery in history. By comparison, the average trough-to-peak expansionary cycle since 1938 was 60
months. During the current economic expansion, however, governmental uncertainty, labor shortages and logistical
challenges have tempered the recovery pace of growth of heavy construction activity, resulting in a slow, steady, extended
construction cycle that is expected to continue over the next several years. The level of economic recovery varies within the
Company’s geographic footprint.

Magnesia Specialties
The Company operates a Magnesia Specialties business with production facilities in Michigan and Ohio. The Magnesia
Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental
applications. It also produces dolomitic lime sold primarily to customers in the steel and mining industries. Magnesia
Specialties’ products are shipped to customers worldwide.

Consolidated Strategic Objectives
The Company’s strategic planning process, or Strategic
Operating Analysis and Review (SOAR), provides the
framework for execution of Martin Marietta’s long-term
strategic plan. Guided by this framework and considering
the cyclicality of the Building Materials business, the
Company determines capital allocation priorities to
maximize long-term shareholder value. The Company’s
strategy includes ongoing evaluation of aggregates-led
opportunities of scale in new domestic markets (i.e.,
platform acquisitions), expansion through acquisitions that
complement existing operations (i.e., bolt-on acquisitions),
divestitures of assets that are not consistent with stated
strategic goals, and arrangements with other companies
engaged in similar or complementary businesses. The
Company finances such opportunities with the goal of
preserving its financial flexibility by having a leverage ratio
(consolidated debt-to-consolidated earnings before
interest, taxes, depreciation and amortization, or EBITDA)
within a target range of 2.0 times to 2.5 times within a
reasonable time following the completion of a debt-
financed transaction.
The Company, by purposeful design, will continue to be an
aggregates-led business (aggregates product revenues
represented 62% of 2019 total consolidated products and
services revenues) that focuses on markets with strong,
underlying growth fundamentals where it can sustain or
achieve a leading market position. Driven by this
intentional approach, the Company has leading positions in 90% of its markets. As part of its long-term strategic plan, the
Company may pursue strategic cement and targeted downstream opportunities. For Martin Marietta, strategic cement and
targeted downstream operations are located in vertically-integrated markets where the Company has, or envisions a clear
path toward, a leading aggregates position. Additionally, strategic cement operations are attractive where market supply
cannot be meaningfully interdicted by water.
Generally, the Company’s building materials products are both sourced and sold locally. As a result, geography is critically
important when assessing market attractiveness and growth opportunities. Attractive geographies exhibit (a) population
growth and/or population density, both of which are drivers of heavy-side building materials consumption; (b) business and
employment diversity, drivers of greater economic stability; and (c) a superior state financial position, a driver of public
infrastructure growth and support.

Annual Report ♦ Page 52 Celebrating 25 Years as a Public Company