Page 165 - Martin Marietta - 2024 Proxy Statement

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

The Magnesia Specialties business manufactures magnesia‐based chemicals products for industrial, agricultural and environmental
applications at its Manistee, Michigan facility. The Magnesia Specialties business produces and sells dolomitic lime from its
Woodville, Ohio facility. Of 2023 total Magnesia Specialties revenues, 66% was attributable to chemicals products, 33% was
attributable to lime and 1% was attributable to stone.

In 2023, 78% of lime shipments was sold to third‐party customers, while the remaining 22% was used internally as a raw material
for the manufacturing of chemicals products. Dolomitic lime products sold to external customers are primarily used by the
domestic steel industry and, overall,38% of Magnesia Specialties’ 2023 total revenues was related to products used in the steel
industry. Accordingly, a portion of the segment’s revenues and profits is affected by production and inventory trends within the
steel industry, which are guided by the rate of consumer consumption, the flow of offshore imports and other economic factors.
The dolomitic lime business runs most profitably at 70% or greater steel capacity utilization. Domestic steel production averaged
74% of capacity in 2023 and 75% in 2022. The chemical products business focuses on higher‐margin specialty chemicals that can
be produced at volumes that support efficient operations.
While total revenues of the Magnesia Specialties business were predominantly derived from domestic customers in 2023,financial
results can be affected by foreign currency exchange rates, increasing transportation costs or weak economic conditions in foreign
markets. To mitigate the short‐term effect of currency exchange rates, foreign transactions are denominated in United States
dollars.
A significant portion of the Magnesia Specialties business’ costs is of a fixed or semi‐fixed nature. The production process requires
the use of natural gas, coal and petroleum coke; therefore, fluctuations in their pricing directly affect operating results. To help
mitigate this risk, the Company has fixed‐price agreements for 81% of its 2024 energy needs for coal, petroleum coke and natural
gas. For 2023, the segment’s average cost per MMBtu (1,000,000 British thermal units) of natural gas decreased 19% versus 2022.
Given high fixed costs, low capacity utilization can negatively affect the segment’s results ofoperations. Management expects
future organic profit growth to result from increased pricing, commercialization of new products, entry into new markets and
optimization of overall product mix.

2023 Annual Report ♦ Page 63