Page 167 - Martin Marietta - 2023 Proxy Statement

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

Environmental operating permits are, or may be, required for certain of the Company’s operations; such permits are subject
to modification, renewal and revocation. New permits are generally required for opening new sites or for expansion at existing
operations and can take several years to obtain. Moreover, land use, rezoning and special or conditional use permits are
increasingly difficult to obtain. Once a permit is issued, the location is required to generally operate in accordance with the
approved site plan.
The Clean Air Act, originally passed in 1963 and periodically updated by amendments, is the United States’ national air pollution
control program that granted the Environmental Protection Agency (EPA) authority to set limits on the level of various air
pollutants. To be in compliance with National Ambient Air Quality Standards, a defined geographic area must be below
established limits for six pollutants. Environmental groups have been successful in lawsuits against the federal and certain state
departments of transportation, delaying highway construction in municipal areas not in compliance with the Clean Air Act. The
EPA designates geographic areas as nonattainment areas when the level of air pollutants exceeds the national standard.
Nonattainment areas receive deadlines to reduce air pollutants by instituting various control strategies or otherwise face fines
or control by the EPA. Included as nonattainment areas are several major metropolitan areas in the Company’s markets, such
as Houston/Brazoria/Galveston, Texas; Dallas/Fort Worth, Texas; Bexar County in San Antonio/New Braunfels, Texas; Denver,
Colorado; Boulder, Colorado; Fort Collins/Greeley/Loveland, Colorado; Atlanta, Georgia; Baltimore, Maryland; Los Angeles‐San
Bernardino Counties, California; Los Angeles – South Coast Basin, California; Phoenix/Mesa, Arizona; San Diego County,
California; San Francisco Bay Area, California; San Joaquin Valley, California; and Sacramento County, California. Federal
transportation funding has been directly tied to compliance with the Clean Air Act.

Large emitters (facilities that emit 25,000 metric tons or more per year) of greenhouse gases (GHG) must report GHG generation
to comply with the EPA’s Mandatory Greenhouse Gases Reporting Rule (GHG Rule). The Company files annual reports in
accordance with the GHG Rule relating to operations at its three cement plants in Texas and California, as well as its Magnesia
Specialties facilities in Woodville, Ohio, and Manistee, Michigan, each of which emit certain GHG, including carbon dioxide,
methane and nitrous oxide. IfCongress passes additional legislation limiting GHG emissions, these operations will likely be
subject to such legislation. The Company believes that any increased operating costs or taxes related to GHG emission
limitations at its cement or Woodville operations would be passed on to its customers. The Manistee facility may have to absorb
extra costs due to the regulation of GHG emissions in order to maintain competitive pricing in its markets. The Company cannot
reasonably predict how much those increased costs may be.
The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities. In the
opinion of management, based upon currently available facts, the likelihood is remote that the ultimate outcome of any
litigation or other proceedings, including those pertaining to environmental matters, relating to the Company and its
subsidiaries, will have a material adverse effect on the overall results of the Company’s operations, cash flows or financial
position.

FINANCIAL OVERVIEW

In 2022, the Company achieved its eleventh consecutive year of growth for consolidated products and services revenues, gross
profit and Adjusted EBITDA. This section presents metrics for continuing operations.

Results of Operations
he discussion and analysis that follow reflect management’s assessment of the financial condition and results of operations
(MD&A) of the Company and should be read in conjunction with the audited consolidated financial statements. As discussed
in more detail, the Company’s operating results are highly dependent upon activity within the construction marketplace,
economic cycles within the public and private business sectors, and seasonal and other weather‐related conditions.
Accordingly, financial results for anyyear presented, or year‐to‐year comparisons of reported results, may not be indicative of
future operating results. As permitted by the Securities and Exchange Commission (SEC) under the FAST Act Modernization and
Simplification of Regulation S‐K, the Company has elected to omit the discussion of the earliest period (2020) presented as it
was included in its MD&A in its 2021 Form 10‐K filed on February 22, 2022, incorporated by reference from Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” thereto.
The Company’s Building Materials business generated the majority of consolidated total revenues and earnings from continuing
operations. The following comparative analysis and discussion should be read within this context. Further, sensitivity analysis
and certain other data are provided to enhance the reader’s understanding of MD&A and are not intended to be indicative of
management’s judgment of materiality.

Annual Report ♦ Page 63