Page 168 - Martin Marietta - 2025 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Excessive rainfall jeopardizesproductionefficiencies, shipmentsand profitabilityinall marketsservedby the Company.In
particular,the Company’soperationsnearthe Atlantic Oceanand GulfCoast regions of theUnitedStatesand The Bahamas are
at risk for hurricaneactivityfromJunethrough November,but most notablyinAugust, Septemberand October. The Company’s
Californiaoperationsare at risk for flooding, wildfire activity and water use restrictions inseveredrought conditions.

Capital investment decisions are driven by capital intensity of the Building Materials business and focus
on land
The Company’s organiccapital program isdesignedtoleverageconstruction marketgrowththrough investment in both
permanentand portable facilitiesatthe Company’soperations. Over an economic cycle, the Company typically investsorganic
capitalatanannuallevel that approximates depreciation expense. At mid-cycleand throughcyclical peaks, organiccapital
investmentusually exceedsdepreciationexpense, asthe Companysupportscurrent capacity needsand future growth.
Conversely, at acyclicaltrough, the Company mayreducelevelsof capital investment. Regardlessof cycle,the Companysetsa
priority ofinvesting capitaltoensuresafe, environmentallysound andefficient operations, as wellastoprovide thehighest
quality of customer serviceand establisha foundation forfuture growth.

The Company is diligentinits focusonlandopportunities,including potentialnew sites(greensites) andexisting siteexpansion.
Landpurchases areusually opportunisticand can include contiguous property around existing quarry locations. Such property
can serveasbufferproperty oradditional mineral reserves, assuming regulatory hurdlescan be clearedand theunderlying
geologysupportseconomicalaggregates mining. Ineither instance, theacquisition of additional property around an existing
quarrytypically allows theexpansion of the quarry footprintand an extensionof quarry life.
Magnesia Specialties Business
The Magnesia Specialtiesbusiness manufactures magnesia-basedchemicals products for industrial, agricultural and
environmental applications at itsManistee, Michigan facility. Thechemicalproductsbusiness focuses on higher-margin
specialty chemicals that canbe producedatvolumes that support efficientoperations. TheMagnesiaSpecialties business also
produces andsells dolomiticlime from its Woodville,Ohio facility. Dolomiticlime productssoldtoexternalcustomers are
primarily used by thedomesticsteel industry, while the remaining limeshipments areused internally as a raw material forthe
manufacturing of chemical products.

With 44% of Magnesia Specialties’ 2024 revenues related to products used in thesteel industry, a portion of thesegment’s
revenuesand profits isaffected by production and inventory trends within thesteel industry, whichare guided by the rateof
consumerconsumption,the flow of offshore importsand othereconomic factors. The dolomiticlimebusiness runs most
profitablyat70% or greatersteel capacity utilization. Domestic steel production averaged 70% of capacityin2024 and 74%in
2023.

While revenuesof the Magnesia Specialtiesbusiness were predominantly derived fromdomesticcustomers in 2024, financial
results canbeaffectedbyforeign currency exchange rates,increasingtransportationcosts orweak economic conditionsin
foreign markets. To mitigate theshort-termeffect of currency exchange rates, foreign transactions aredenominated in United
Statesdollars.

Page60 ♦ 2024 Annual Report