Page 158 - Martin Marietta - 2024 Proxy Statement
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
BUSINESS ENVIRONMENT
Building Materials Business
The Building Materials business serves customers in the construction marketplace. The business’ profitability is sensitive to
national, regional and local economic conditions and cyclical swings in construction spending, which are affected byfluctuations
in levels of public‐sector infrastructure funding; interest rates; access to capital markets; and demographic, geographic,
employment and population dynamics.
The heavy‐side construction business, inclusive of much of the Company’s operations, is conducted outdoors. Therefore, erratic
weather patterns, precipitation and other weather‐related conditions, including flooding, hurricanes, extreme hot and cold
temperatures, earthquakes, droughts and wildfires, can significantly affect production schedules, shipments, costs, efficiencies
and profitability. Generally, the financial results for the first and fourth quarters are most subject to the impacts ofwinterweather,
while the second and third quarters can be subject to the impacts of heavy precipitation and excessive heat. The impacts of erratic
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weather patterns are more fully discussed in the Building Materials Business’ Key Considerations section.
Product Lines
Aggregates are an engineered, granular material consisting of crushed stone, sand and gravel, manufactured to specific sizes,
grades and chemistry for use primarilyin construction applications. The Company’s operations consist mostly of open pit quarries;
however, the Company is also the largest operator of underground aggregates mines in the United States, with 14 active
underground mines located in the East Group. The Company’s aggregates reserves average approximately 75 years at the 2023
annual production level.
Cement is the basic agent used to bind coarse aggregates, sand and water in the production of ready mixed concrete. As of
December 31, 2023, the Company had production facilities in Midlothian, Texas, south of Dallas/Fort Worth, and New Braunfels,
Texas, centrally located along I‐35 between San Antonio and Austin. The Company also operated several cement distribution
terminals. The two production facilities produce Portland limestone and specialty cements, with an annual capacity at
December 31, 2023 of approximately 4.5 million tons and collectively operated at approximately 71% utilization for clinker
production in 2023; clinker is the initial product of cement production. The Midlothian plant has a permit that allows for capacity
expansion of 0.8 million tons. The Company is currently undertaking a finishing capacity expansion project at the Midlothian plant,
which is expected to be completed in mid‐2024 and will provide 0.5 million tons of incremental annual capacity. Further, the
Company has converted its Midlothian and Hunter plants to manufacture a less carbon‐intensive Portland limestone cement,
known as Type 1L, which has been approved by the Texas Department of Transportation. On February 9, 2024, the Company closed
the sale of the Hunter cement business in South Texas, related distribution terminals and the Austin and San Antonio ready mix
concrete business to CRH Americas Materials. This divestiture optimizes the Company's portfolio and product mix and provides
additional balance sheet flexibility to redeploy net proceeds into pure‐play aggregates acquisitions.
Calcium carbonate in the form of limestone is the principal raw material used in the production of cement. As of December 31,
2023, the Company owned more than 600 million tons of limestone reserves adjacent to its cement production plants in Texas.
The cement grade limestone reserves used for cement production at the South Texas production facility were included with the
divestiture to CRH Americas Materials, Inc. During 2021, the Company purchased two cement plants in Redding and Tehachapi,
California, and related distribution facilities as part of the acquisition of Lehigh Hanson, Inc.'s West Region business (Lehigh West
Region). The Redding plant and related distribution terminals were sold on June 30, 2022. The Tehachapi plant was sold on October
31, 2023.
Ready mixed concrete is measured in cubic yards and specifically batched or produced for customers’ construction projects and
then typically transported by mixer trucks and poured at the project site. The coarse aggregates used for ready mixed concrete are
a washed material with limited amounts offines (i.e., dirt and clay). The Company operates ready mixed concrete plants in Arizona
and Texas.
Asphalt is most commonly used in surfacing roads and parking lots and consists of liquid asphalt, or bitumen, the binding medium,
and aggregates. Similar to ready mixed concrete, each asphalt batch is produced to customer specifications. The Company’s asphalt
operations are located in Arizona,California, Colorado and Minnesota and paving services are offered in California and Colorado.
Page 56 ♦ 2023 Annual Report