Page 159 - Martin Marietta - 2024 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Market dynamics for the downstream ready mixed concrete and asphalt product lines include a highly competitive environment
and lower barriers to entry compared with the Company’s upstream product lines of aggregates and cement.

End‐Use Trends
y
0
y
 According to the latest available data published by the U.S. Geological Survey, for the nine months ended September 30,
2023, estimated construction aggregates consumption decreased slightly compared with the nine months ended
3
September 30, 2022, and for the eleven months ended November 30, 2023, cement consumption decreased slightly versus
3
2
0
0
the comparable prior‐year period.
 National not‐seasonally‐adjusted construction spending statistics for the twelve months ended December 31, 2023 versus
d
the twelve months ended December 31, 2022, according to U.S. Census Bureau, reveal:
u
- Total value of construction put in place increased 7%
- Public construction spending increased 16%
- Private nonresidential construction market spending increased 22%
- Private residential construction market spending decreased 6%
The principal end‐use markets of the Building Materials business are public infrastructure (i.e., highways; streets; roads; bridges;
and schools); nonresidential construction (i.e., manufacturing and distribution facilities; industrial complexes; office buildings; large
retailers and wholesalers; healthcare; hospitality; and energy‐related activity); and residential construction (i.e., subdivision
development; and single‐ and multi‐family housing). Aggregates are also used in agricultural, utility and environmental applications
and as railroad ballast, collectively comprising the ChemRock/Rail market.

Public infrastructure projects can require several years to complete, while residential and nonresidential construction projects are
usually completed within one year. Generally, customer purchase orders do not contain firm quantity commitments, regardless of
end‐use market. Therefore, management does not utilize a Company backlog in managing its business.

Infrastructure
The public infrastructure market accounted for 36% of the Company’s aggregates shipments in 2023. The Company’s shipments
to this end‐use market are in line with the most recent five‐year average of35% but remain slightly below the most recent ten‐
year average of 38%.
Public construction projects, once awarded, are typically seen through to completion. Thus, delays from weather or other factors
can serve to extend the duration of the construction cycle. While construction spending in the public and private market sectors is
affected by economic cycles, public infrastructure spending has been comparatively more stable due to the predictability offunding
fromfederal, state and local governments. The Infrastructure Investments and Jobs Act (IIJ Act) was signed into law on November
15, 2021 and contains a five‐year surface transportation reauthorization plus $110 billion in new funding for roads, bridges and
other hard infrastructure projects.

State and local initiatives that support infrastructure funding, including gas tax increases, new funding mechanisms and other ballot
initiatives, are increasing in size and number as these governments recognize the need for their expanded role in public
infrastructure funding. In November 2023, 248 state and local ballot initiatives, or 88% of all infrastructure funding measures up
for vote, were approved. These approved infrastructure initiatives are estimated to generate $7.0 billion in one‐time and recurring
revenues,with initiatives in Texas, the Company’s largest revenue‐generating state, accounting for $4.2 billion of this total.

Nonresidential
The nonresidential construction market accounted for 35% of the Company’s aggregates shipments in 2023. Large industrial
projects of scale led by energy and domestic manufacturing continue to lead the segment, accounting for the majority of total
nonresidential shipments. The Company continues to expect enhanced federal investment from the Inflation Reduction Act and
the Creating Helpful Incentives to Produce Semiconductors, orCHIPS Act, will further support and accelerate growth trends in this
end use, including restructured manufacturing and energy supply chains and electric vehicle transition. While light nonresidential
demand remained resilient through 2023 despite higher interest rates, high office vacancy rates and tighter commercial lending
conditions, the Company expects 2024 demand in this segment to moderate, as it generally follows single‐family residential
development with a lag.

2023 Annual Report ♦ Page 57