Page 126 - Martin Marietta - 2025 Proxy Statement

NOTES TO FINANCIAL STATEMENTS

Note A: Accounting Policies
Organization. rtin Marietta is anatural resource-based building materials company. The Company suppliesaggregates(crushed
stone, sandand gravel)through itsnetwork of approximately 390 quarries, minesand distribution yards in 28 states, Canadaand
The Bahamas.MartinMarietta also provides cement anddownstreamproductsand services,namely, readymixed concrete,
asphalt andpaving, in vertically-integratedstructured markets wherethe Companyalsohas aleading aggregates position.
Specifically,the Company has onecementplant andtwo cement distribution facilitiesinTexas; ready mixedconcreteplantsin
Arizona and Texas; and asphalt plants in Arizona, California, Coloradoand Minnesota.Paving servicesare located in Californiaand
Colorado. The Company’s heavy-side building materialsare used in infrastructure,nonresidentialand residentialconstruction
projects. Aggregates arealsoused inagricultural, utilityand environmentalapplications andas railroadballast. The aggregates,
cementand readymixed concrete andasphalt andpavingproduct lines are reportedcollectivelyasthe BuildingMaterials business.

AsofDecember31, 2024,the BuildingMaterials business includestwo reportable segments: East Group andWest Group. The East
Group consists of the Eastand Centraldivisions andoperates inAlabama,Florida,Georgia, Indiana, Iowa, Kansas, Kentucky,
Maryland, Minnesota, Missouri, Nebraska,North Carolina, Ohio,Pennsylvania, South Carolina, Tennessee, Virginia,WestVirginia,
NovaScotiaand The Bahamas. The West Groupiscomprised of theSouthwest andWest divisions andoperatesinArizona,
Arkansas,California, Colorado, Louisiana, Oklahoma, Texas,Utah, Washington andWyoming. The following tenstatesaccounted
for81% of the BuildingMaterials business’ 2024 revenues: Texas, North Carolina, Colorado, California,Georgia, Florida, Minnesota,
Arizona,South Carolina, and Iowa.
The Companyalsooperatesa Magnesia Specialtiesbusiness, which representsa separate reportable segment. The Magnesia
Specialties business produces magnesia-based chemical products used in industrial, agricultural andenvironmental applications,
and dolomiticlimesoldprimarily to customers for steel production andsoilstabilization. Magnesia Specialties’ production facilities
arelocated in Ohio and Michigan, andproducts areshippedtocustomers domestically and worldwide.
Basis of Presentation and Use of Estimates. e Company’s consolidated financialstatementsare presented inconformitywith
accountingprinciplesgenerally accepted in theUnitedStates, which require management to make certainestimates and
assumptionsabout future events. These estimatesand theunderlying assumptionsaffect theamountsof assets andliabilities
reported, disclosuresabout contingent assets andliabilitiesand reported amountsofrevenuesand expenses.Suchestimates
include the valuation of investments, accounts receivable, inventories,goodwill, other intangibleassets andother long-lived assets,
as well as assumptionsused inthe calculationofincometax expense, retirement andpostemployment benefits, stock-based
compensation,the allocation of the purchase price to the fairvaluesof assetsacquiredand liabilitiesassumedaspartof business
combinations and revenue recognition for servicecontracts. These estimatesand assumptionsare basedon management’s
judgment. Management evaluatesestimates andassumptionsonanongoing basisusing historical experience andotherfactors,
including thecurrent economic environment, andadjusts such estimatesand assumptions whenfacts andcircumstances dictate.
Changes in interest rates, credit,equityand energy marketsand changes inconstructionactivityincreasethe uncertaintyinherent
incertain estimatesand assumptions. Because futureeventsand theireffectscannot bedetermined with precision, actual results
could differ significantly from estimates.Changes inestimates, including those resulting from changes inthe economic
environment, are reflected in theconsolidated financialstatements for the period in which thechange inestimateoccurs.
Basis of Consolidation. Theconsolidated financialstatementsinclude theaccountsof the Companyand its wholly-ownedand
majority-ownedsubsidiaries.Partially-owned affiliates areeitherconsolidated or accounted forusing thecost methodorthe
equity method,depending on thelevel of ownership interestorthe Company’sability toexercisecontrol over theaffiliates’
operations. Intercompany balancesand transactions betweensubsidiaries have been eliminated in consolidation.

Revenue Recognition. Revenues include salesof productsand services provided to customers, netof discountsorallowances, if
any, and freightand delivery costs billedtocustomers.Product revenuesare recognized when controlof the promised good is
transferred to unaffiliatedcustomers,typically when finished products areshipped. Intersegmentand interproduct revenuesare
eliminated in consolidation. Service revenuesare derived fromthe paving businessand are recognizedusing the percentage-of-
completion method underthe cost-to-cost approach.Underthe cost-to-cost approach, recognizedcontract revenue is determined
by multiplyingthe totalestimated contract revenue by theestimated percentage of completion. Contractcosts are recognizedas
incurred. The percentageof completion isdeterminedona contract-by-contract basisusing projectcosts incurredtodateasa
percentageof total estimatedproject costs. The Company believesthe cost-to-cost approach is appropriate, as theuse of asphalt
ina paving contract is relatively consistent with the performance of the related paving services.Whenthe Companyarranges third-
party freighttodeliver products to customers, the Company haselected thedelivery tobea fulfillmentactivity ratherthana
separate performance obligation. Further, the Company acts as a principal in thedelivery arrangements and, as required by
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AccountingStandards Codification 606, RevenuesfromContracts with Customers (ASC 606), the related revenues andcosts are
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Page 18 ♦ 2024 Annual Report