Page 167 - Martin Marietta - 2025 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Aportion of railcars andall ships inthe Company’slong-haul distributionnetwork areunder short- andlong-term leases, some
withpurchaseoptions, and contractsof affreightment. The limitedavailability ofwater and railtransportationproviders,
coupled with limited distributionsites,can adverselyaffect lease rates forsuchservicesand ultimately the freight rates.
The Company has agreements providingdedicated shipping capacity from its Bahamas and NovaScotiaoperationsto its coastal
ports that expire in 2026 and 2027, respectively. These contractsof affreightment aretake-or-pay contracts withminimum and
maximum shipping requirements. The minimum requirements were met in 2024. Therecan be no assurancethatsuchcontracts
will be reneweduponexpirationorthatterms will continue withoutsignificant increases.

Public infrastructure, historically the Company’s largest end-use market, is funded through a
combination of federal, state and local sources
Transportation investments generally boostthe economy by creatingjobsand enhancing mobilityand access, whichare
prioritiesofmany of the government’s economic plans. Public-sectorconstruction related to transportation infrastructure is
fundedthrough acombination offederal, stateand localsources. The federalhighway bill, currently the IIJ Act, provides annual
funding forpublic-sectorhighway construction projects and includesspending authorizations, which representthe maximum
financial obligationthatwill result from the immediate orfuture outlaysoffederal funds forhighway andtransit programs. The
federalgovernment’ssurface transportation programs are funded mostly throughthe receipts of highway usertaxes placed in
theHighway TrustFund,which isdivided into theHighway Account andthe Mass TransitAccount. Revenuescreditedtothe
Highway TrustFundare primarily derived froma federalgas tax, a federal tax oncertain othermotorfuelsand interest on the
accounts’ accumulatedbalances. Of thecurrently imposed federal gastax of $0.184 pergallon, whichhas been static since
1993, $0.15 isallocatedtothe Highway Account of theHighway TrustFund.
Since moststatesare required to balancetheir budgets, reductions in revenuesgenerally requirea reduction instates’
expenditures. However, the impactof state revenue reductionsonhighway investment will vary depending on whetherthe
moniescome fromdedicated revenue sources, such as highway user fees,or whether portions are paid forwith general funds.

In addition to federalappropriations,eachstate typically funds its infrastructure investment fromspecifically allocated
amountscollected from varioususer fees,typically gasoline taxesand vehicle fees. States have assumeda significantly larger
role in funding infrastructure investment, including initiating special-purpose taxesand raising state gastaxes.Management
believesthat financing at thestate andlocal levels, suchasbond issuances, toll roads, vehicle milestraveled feesand tax
initiatives, will continue to grow andhavea fundamental role in advancing infrastructure projects. State infrastructure
investmentgenerally leadsto increased growth opportunities forthe Company. Thelevel of state public-works spending is
variedacrossthe nation anddependent upon individual stateeconomies;the degree to whichthe Company could be affected
by a reduction or slowdown in infrastructure spending varies by state. Thestate economiesof the Building Materialsbusiness’
ten largest revenue-generating states may disproportionately affect the Company’s financial performance.
Governmental appropriations andexpendituresare typically less interest rate-sensitive than private-sector spending.
Obligations offederal funds area leading indicator of highway constructionactivityinthe United States. Beforea stateorlocal
departmentof transportationcan solicit bidsonaneligible construction project, it enters into an agreementwiththe Federal
Highway Administration to obligatethe federalgovernmentto pay itsportion of the project cost.These Federalobligations are
subjecttoannual funding appropriation reviews byCongress.

In addition to highways andbridges,transportation infrastructure includesaviation, mass transit, portsand waterways.
Railroadconstructioncontinues to benefit fromeconomicgrowth, whichultimately generates aneed for additional
maintenanceand improvements.

Erratic weather can significantly impact operations
Production andshipmentlevels for the BuildingMaterials businesscorrelate with generalconstructionactivity, most of which
occurs outdoorsand, asa result, isaffected by erratic weather, seasonalchanges andother environmentalconditions. Typically,
due to ageneral slowdown in heavy constructionactivity during winter months, the first and fourthquartersexperiencelower
productionand shipment activity.Assuch, temperatures in the monthsof March and Novembercan meaningfully affect the
Company’s first-and fourth-quarter results, respectively,where warm and/or moderate temperatures in Marchand November
allow the construction season to startearlier andend later, respectively.Additionally,extreme heat during summer months
can impactconstructionactivities, as outdoorwork may belimited to protectthe health andsafety of construction workers.

2024 Annual Report ♦ Page 59