Page 161 - Martin Marietta - 2023 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

ChemRock/Rail
The remaining 5% of the Company’s 2022 aggregates shipments was to the ChemRock/Rail market, which includes ballast and
agricultural limestone. Ballast is an aggregates product used to stabilize railroad track beds. Agricultural lime, a high‐calcium
carbonate material, is used as a supplement in animal feed, a soil acidity neutralizer and agricultural growth enhancer.
Additionally, ChemRock/Rail includes rip rap, which is used as a stabilizing material to control erosion caused by water runoff
at embankments, ocean beaches, inlets, rivers and streams, and high‐calcium limestone, which is used as filler in glass, plastic,
paint, rubber, adhesives, grease and paper. Chemical‐grade, high‐calcium limestone is used as a desulfurization material in
utility plants.

Pricing Trends
Materials pricing for construction projects is generally based on terms committing to the availability of specified products of a
stated quantity at an agreed‐upon price during a definitive period. Since infrastructure projects span multiple years, announced
price changes can have a lag time before taking effect while the Company sells products under existing price agreements.
Pricing escalators included in multi‐year infrastructure contracts serve to somewhat mitigate this effect. However, during
periods of sharp or rapid increases in production costs, multi‐year infrastructure contract pricing may provide only nominal
pricing growth. Additionally, the Company may implement multiple price increases throughout the year, on a market‐by‐market
basis, where appropriate, as was done in 2022. Pricing is determined locally and is affected by supply and demand
characteristics of the local market. For further information on pricing, see the discussion in the Financial Overview section.

Cost Structure
Costs of revenues for the Building Materials business are components of costs incurred at the quarries, mines, cement plants,
ready mixed concrete plants, asphalt plants, paving operations and distribution yards and facilities. Cost of revenues also
includes the cost of resale materials, freight expenses to transport materials from a producing quarry or cement plant to a
distribution yard or facility and production overhead costs.

Annual Report ♦ Page 57