Page 182 - Martin Marietta - 2024 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
 the impact of the level of demand in the Company’s end‐use markets, production levels and management of production
costs on the operating leverage and therefore profitability of the Company;
 the possibility that the expected synergies from acquisitions will not be realized or will not be realized within the expected
time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt
covenant;
 the strategic benefits, outlook, performance and opportunities expected as a result of acquisitions and portfolio
optimization;
 changes in tax laws, the interpretation of such laws and/or administrative practices, including acquisitions or divestitures,
that would increase the Company’s tax rate;
 violation of the Company’s debt covenant if price and/orvolumes return to previous levels of instability;
 downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations;
 the possibility of a reduction of the Company’s credit rating to non‐investment grade; and
 other risk factors listed from time to time found in the Company’s filings with the SEC.
Further, increased highway construction funding pressures resulting from eitherfederal or state issues can affect profitability. If
these negatively affect transportation budgets more than in the past, construction spending could be reduced. Cement is subject
to cyclical supply and demand and price fluctuations.

The Company’s principal business serves customers in construction markets. This concentration could increase the risk of potential
losses on customer receivables; however, payment bonds normally posted on public projects, togetherwith lien rights on private
projects, mitigate the risk of uncollectible receivables. The level of demand in the Company’s end‐use markets, production levels
and the management of production costs will affect the operating leverage of the Building Materials business and, therefore,
profitability. Production costs in the Building Materials business are also sensitive to energy and raw material prices, both directly
and indirectly. Diesel fuel, natural gas, coal and other consumables change production costs directly through consumption or
indirectly by increased energy‐related input costs, such as steel, explosives, tires and conveyor belts. Fluctuating diesel fuel pricing
also affects transportation costs, primarily through fuel surcharges in the Company’s long‐haul distribution network. The Magnesia
Specialties business is sensitive to changes in domestic steel capacity utilization as well as the absolute price and fluctuation in the
cost of natural gas.

Transportation in the Company’s long‐haul network, particularly the supply of railcars and locomotive power and condition of rail
infrastructure to move trains, affects the Company’s efficient transportation of aggregates products in certain markets, most
notably Texas, Colorado, Florida, North Carolina and the GulfCoast. In addition, availability of railcars and locomotives affects the
Company’s movement of essential dolomitic lime for magnesia chemicals to both the Company’s plant in Manistee, Michigan, and
its customers. The availability of trucks, drivers and railcars to transport the Company’s product, particularly in markets
experiencing high growth and increased demand, is also a risk and pressures the associated costs.
All of the Company’s businesses are also subject to weather‐related risks that can significantly affect production schedules and
profitability. The first and fourth quarters are most adversely affected bywinterweather. Hurricane and cyclone activity in the
Atlantic Ocean, Pacific Ocean and GulfCoast generally is most active during the second, third and fourth quarters.

Risks also include shipment declines resulting from economic events beyond the Company’s control.
In addition to the foregoing, other factors that could cause actual results to differ materially from the forward‐looking statements
in this Annual Report include but are not limited to those listed above in Item 1, “Business – Competition,” Item 1A, “Risk Factors,”
and “Note A: Accounting Policies” and “Note N: Commitments and Contingencies” of the “Notes to Financial Statements” of the
audited consolidated financial statements included in this Form 10‐K.
You should consider these forward‐looking statements considering risk factors discussed in the Company’s Annual Report on Form
10‐K for the year ended December 31, 2023 and other filings made with the SEC. All of the Company’s forward‐looking statements
should be considered in light of these factors. In addition, other risks and uncertainties not presently known to the Company or
that the Company considers immaterial could affect the accuracy of its forward‐looking statements, or adversely affect or be
material to the Company. All forward‐looking statements are made as of the date offiling or publication and we assume no
obligation to update any such forward‐looking statements.

Page 80 ♦ 2023 Annual Report