Page 186 - Martin Marietta - 2025 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

QUANTITATIVE ANDQUALITATIVE DISCLOSURESABOUT MARKET RISK
As discussedearlier, the Company’s operations arehighly dependent uponthe interest rate-sensitive construction and
steelmaking industries. Consequently, these marketplacescould experience lowerlevelsof economicactivityinanenvironment
of rising interest ratesorescalatingcosts (see Business Environment section includedunder Item7– MD&A of this Form 10-K).
Managementhas considered thecurrent economic environmentand itspotential impact to the Company’s business. Demand
foraggregatesproducts, particularly in theinfrastructureconstruction market, is affected byfederal, stateand localbudget
and deficit issues.Further,delaysorcancellations of capital projects inthe nonresidential and residential construction markets
could occur if companies andconsumers areunabletoobtainaffordable financing forconstructionprojectsor if consumer
confidence iserodedby economicuncertainty.
Demand in thenonresidentialand residentialconstruction markets, which combined accounted for 58% of the Company's2024
aggregates shipments, is affected by interest rates. While theFederal Reservelowered thetarget federal funds rate several
times during2024, it remainsabove historical levels.

Aside from these inherent risks from within its operations,the Company’searningsare also affected by changes inshort-term
interest rates andchanges in enactedtax laws.

Variable-Rate Borrowing Facilities
At December 31, 2024, the Company hadan$800 million Revolving Facility and a$400 millionTrade Receivable Facility.
Borrowingsunderthese facilitiesbearinterestata variable interest rate.AsofDecember31, 2024, the Company didnot have
any outstanding variable-rateborrowings. However, anyfutureborrowingsunderthe credit facilitiesoroutstanding variable-
ratedebtare exposedto interest rate risk.

Pension Expense
The Company’s resultsof operationsare affected by itspension expense. Assumptionsthataffect pensionexpense include the
discount rateand, for the qualifieddefined benefitpension plan only,the expected long-term rateofreturnonpension assets.
Therefore, the Company has interest rate riskassociated with these factors. The impactof hypotheticalchanges in these
assumptionsonthe Company’sannual pension expenseand accruedpension obligation isdiscussed inthe Critical Accounting
o
f
Policiesand Estimates– PensionBenefit Obligationand Pension Expense– SelectionofAssumptions section includedunder
f
x
Item7– MD&A of this Form 10-K.
Income Tax
Anychanges in enactedtax laws, rules or regulatory or judicial interpretation,orany change in the pronouncements relating
toaccounting for income taxes, could materially impact the Company's effectivetax rate,tax payments,cash flow,financial
condition and results of operations.

Energy Costs
Energy costs, including diesel fuel,natural gas, electricity, coal andpetroleum coke, represent significantproduction costsof
the Company. Thecementproductlineand Magnesia Specialtiesbusinesseachhave varying fixed-priceagreements fora
portionof theirfuture energy requirements. The Company may beunabletopassalong increases inthe costsof energy to
customers in the formof price increases for the Company’s products.A hypothetical 10%change inthe Company’senergy
prices in2025ascompared with 2024, assuming constant volumes, wouldchange2025 energy expenseby $32 million.

Page78 ♦ 2024 Annual Report