Page 158 - Martin Marietta - 2024 Proxy Statement
P. 158

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.





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