Page 163 - Martin Marietta - 2025 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Readymixed concrete is measured in cubicyards andspecifically batchedorproduced for customers’ construction projects
andthentypically transportedby mixertrucksand poured at the project site of acustomerof the Company. Thecoarse
aggregates used for ready mixedconcreteare a washed materialwithlimited amountsoffines (i.e.,dirtand clay). The Company
operates ready mixedconcrete plants inArizona andTexas.
Asphalt istypically used insurfacing roadsand parkinglotsand consists of liquidasphalt,orbitumen (the binding medium),
andaggregates. Similarto ready mixedconcrete, each asphalt batch isproducedtocustomerspecifications. The Company’s
asphalt operations are inArizona, California,Colorado and Minnesota and related paving services areoffered in Californiaand
Colorado.
Market dynamics forthe downstream readymixed concrete andasphalt productlines include ahighly competitive environment
and lowerbarrierstoentry compared with the Company’s upstreamproduct lines of aggregates andcement.

End-Use Trends
The principal end-use markets of the Building Materials businessare public infrastructure (i.e.,highways; streets; roads;
bridges; andschools); nonresidential construction (i.e., manufacturing anddistribution facilities; data centers; industrial
complexes;office buildings;large retailers and wholesalers;healthcare; hospitality; andenergy-relatedactivity); and residential
construction (i.e., subdivision development; andsingle- and multi-family housing). Aggregates arealsoused inagricultural,
utilityand environmentalapplications andas railroadballast,collectively comprisingthe ChemRock/Rail market.
Public infrastructure projects can require severalyears to complete, while residentialand nonresidential construction projects
are usually completedwithinone year.Generally,customerpurchaseordersdonot contain firmquantity commitments,
regardlessof end-use market.

Infrastructure
The public infrastructure market accounted for37% of the Company’s aggregates shipments in2024. The Company’s shipments
tothisend-use marketare in line withthe most recent five-yearaverage of36% andthe most recent ten-year averageof 37%.
Public construction projects,onceawarded, are typically seen throughtocompletion. Thus,delays fromweather or other
factorscan servetoextendthe durationof the construction cycle. While construction spending in the public and private market
sectors isaffectedby economiccycles, public infrastructure spending hasbeen comparativelymorestabledue to the
predictabilityoffunding fromfederal, stateand localgovernments. The Infrastructure Investmentsand Jobs Act (IIJ Act) was
signed intolaw on November 15, 2021 andcontainsa five-yearsurface transportation reauthorizationplus$110 billion innew
funding for roads, bridgesand otherhard infrastructure projects.
State andlocal initiatives that support infrastructure funding, including gastax increases, newfunding mechanisms andother
ballotinitiatives, are increasing in size andnumberasthese governments recognize theneed fortheir expanded role in public
infrastructure investment. In November 2024,77% of all infrastructure funding measures up forvote wereapproved. These
approved infrastructure initiativesare estimatedtogenerate $41 billion inone-timeand recurring revenues, with initiatives in
Texas, the Company’s largest revenue-generating state, accounting for $5 billionof thistotal.

Nonresidential
Thenonresidentialconstruction marketaccounted for35% of the Company’s aggregates shipments in2024. Large industrial
projectsof scale ledby energyand domestic manufacturing continue to lead thesegment, accounting for the majority of total
nonresidentialshipments. The Company expects enhanced federal investments will furthersupport andaccelerate growth
trends in this enduse, witha renewed focus on data centers for artificial intelligence infrastructure.While light nonresidential
demand remained resilient through 2024, despitehigher interest rates,highoffice vacancyrates andtighter commercial
lending conditions, the Company expects2025demand inthissegment to moderate, as itgenerally follows single-family
residential development witha lag.
Residential
The residential construction market accounted for 23% of the Company’s aggregates shipments in2024. Thisend usetypically
moves in direct correlation with economic cycles. The Company’sexposureto residential construction is split between
aggregates used in theconstructionof subdivisions(including streets, sidewalks, utilities andstorm andsewagedrainage),
single-family homesand multi-family units. Constructionof bothsubdivisionsand single-family homes isnearly three times

2024 Annual Report ♦ Page 55