Page 166 - Martin Marietta - 2025 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Cement production is acapital-intensive operation withhigh fixed costs requiring plants to operatecontinuously,except during
maintenance shutdowns. Maintenanceofkilnand finishing mills typically necessitatesa temporaryplant shut-down for repairs.
The Company adjustsproduction levels in anticipation of these planned maintenance periods.
The productionofready mixedconcreteand asphalt requires theuse of cement andliquidasphalt raw materials, respectively.
Therefore, fluctuations inavailabilityand prices forthese raw materials directly affect the Company’s operating results.

Building Materials Business’ Key Considerations

Growth markets with limited supply of indigenous stone must be served via a long-haul distribution
network
TheU.S. Departmentof the Interioridentified possiblesources ofindigenous rock anddocumented its limited supplyincertain
areasof the United States, including thecoastal areas fromVirginiato Texas.Further,certain interior United States markets
may experience limitedavailability oflocally sourcedaggregates resulting from increasinglyrestrictive zoning,permitting
and/or environmentallawsand regulations. The Company’s long-hauldistributionnetwork is used to supplementor, in many
cases, wholly supply, thelocal crushedstone needsof these areasand provides the Company with the flexibility toeffectively
serve customersprimarily in theSouthwest andSoutheast coastal markets.

The long-hauldistributionnetwork canalsodiversify market risk forlocations that engage in long-haultransportationof
aggregates products. This isparticularly true where aproducing quarry bothservesa localmarketand transports products via
rail, waterand/or trucktobesold inother markets. The riskof a downturn in one market may be somewhat mitigatedbyother
distant marketsservedby the location.

Productshipments are moved by truck, rail and water throughthe Company’slong-haul distributionnetwork. The Company’s
railnetwork primarily serves itsTexas,Southeast andGulfCoast markets, while the Company’s Bahamasand Nova Scotia
locationstransport materials via oceangoing ships. The Company’s strategic focus includesexpanding inland andoffshore
capacityand acquiring distribution yardsand port locationstooffload transported material. As of December 31, 2024, the
Company'sdistributionnetwork consistedof 78aggregatesyards and 2 cement terminals.

The Company’s rail shipments result incontinued relianceon railroadoperations, whichare impacted by trackcongestion, crew
andlocomotiveavailability, theeffectsof adverse weatherconditionsand theability tonegotiate favorable railroadshipping
contracts.Further,changes in theoperating strategy of rail transportation providerscan create operational inefficienciesand
increased costs fromthe Company’s railnetwork.

Page58 ♦ 2024 Annual Report