Martin Marietta Materials, Inc.

Good morning, ladies and gentlemen, and welcome to Martin Marietta's fourth quarter and full year 2018 earnings conference call. My name is Sonia, and I'll be your coordinator today. At this time, all participants have been placed in a listen-only mode. A question-and-answer session will follow the company's prepared remarks. As a reminder, today's call is being recorded. I will now turn the call over to your host, Ms. Suzanne Osberg, Vice President of Investor Relations for Martin Marietta. Ms. Osberg, you may be in.

Good morning and thank you for joining Martin Marietta's fourth quarter and full year 2018 earnings call. With me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nicholas, Senior Vice President and Chief Financial Officer. To facilitate today's discussion, we have made available during this webcast and on the investor relations section of our website, 2018 supplemental information that summarizes our financial results and trends. As detailed on slide two, this conference call may include forward-looking statements as defined by securities laws in connection with future events, future operating results, or financial performance. Like other businesses, we are subject to risks and uncertainties that could cause actual results to differ materially. Except as legally required, we undertake no obligation to publicly update or revise any forward-looking statements. whether resulting from new information, future developments, or otherwise. We refer you to the legal disclaimers contained in today's earnings release and other filings with the Securities and Exchange Commission, which are available on both our own and the SEC websites. Please note that all financial and operating results discussed today are for full year 2018. Any comparisons are versus the prior year unless otherwise noted, and all margin references are based on revenues. Furthermore, Non-GAAP measures are defined and reconciled to the nearest GAAP measure and our 2018 supplemental information and SEC filings. We will begin today's earnings call with Ward Nye, who will discuss our operating performance as well as market trends and expectations for 2019. Jim Nicholas will review our 2018 financial results. A question and answer session will follow. I will now turn the call over to Ward.

Thank you, Suzanne, and thank you all for joining today's teleconference. Martin Marietta's success is rooted in our commitment to our core values and the disciplined execution of our strategic operating analysis and review, or SOAR, process. Today's reported results clearly demonstrate the benefits of our approach as we once again delivered record financial and safety performance and did so without the benefit of meaningful shipment growth across our heritage building materials business. For the full year, consolidated revenues increased 7% to a record $4.2 billion, and adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, increased 9% to a record $1.1 billion. These outstanding results were driven largely by solid pricing gains across the building materials business and the bluegrass materials acquisition, the second largest transaction in our company's history. We also established new records for net earnings and earnings per diluted share, excluding the one-time benefit from the Tax Cuts and Jobs Act of 2017 on prior year earnings. As you've heard us say before, every facet of our business starts with safety. We're particularly proud to have built upon 2017's record results to achieve the best heritage safety performance in our company's history. Teams at our newest operations have also worked diligently to improve their safety performance, embracing our guardian angel and wingman cultures. Company-wide, we achieved world-class lost-time incident rate levels for the second year in a row. Elevated safety awareness across the company has also reduced downtime from workplace incidents, leading to higher revenues and profitability. Our ability to repeatedly deliver record financial and safety performance validates the importance of SOAR and our successful execution of that plan, especially in light of last year's environment where aggregate shipments on a comparable basis remained only modestly above 2010 trough levels. To emphasize, Martin Marietta has continued to steadily improve key financial metrics, chief among them profits, even its shipment volumes adjusted for acquisitions, that approximate great recession levels. Importantly, we continue to strengthen our foundation for longer-term success through strategic geographic positioning, price discipline, and prudent capital allocation. That's why we're more confident than ever about Mark Marietta's ability to drive continued profitability growth and enhanced shareholder value. In sum, we expect 2019 to be another record year for our company. What gives us that confidence for 2019? It's all about our geography and culture. Construction growth from the combination of emerging public sector activity and continued private sector strength in our key geographies should outpace the nation as a whole, driving improved shipment, pricing and profitability. Our geographic footprint is concentrated in areas with attractive underlying market fundamentals, including notable employment gains, population growth, and superior state fiscal health. These fundamentals should promote steady and sustainable construction growth for the foreseeable future. Robust underlying demand, customer optimism, and third-party forecasts also bolster this positive outlook. Moreover, throughout 2018, we experienced strong shipment volumes on days not adversely impacted by extraordinary precipitation and or extreme temperatures as further demonstrated during the fourth quarter. These trends, combined with a favorable pricing environment, are clear indicators of underlying market strength and customer demand, underscoring the near-term growth trajectory of our business. Importantly, too, we have the right teams, structure, and organizational culture to leverage these positive trends for the great benefit of our many stakeholders. Before we discuss in more detail where we're headed in 2019, Let's quickly review full year 2018 operating results. We and our entire industry started last year with high expectations. Martin Marietta, along with our customers, peers, and third-party forecasters, anticipated accelerated construction activity. These expectations formed the basis of our original 2018 aggregates volume guidance of a 4% to 6% increase. Weather, contractor capacity issues, and logistics disruptions, however, challenged both our company and the sector throughout the year. These dynamics precluded customers from meaningfully addressing their mounting books of business. As a result, heritage aggregate shipments adjusted for shipments from the Forsyth County, Georgia quarry we divested in April 2018, in conjunction with the Bluegrass Materials acquisition, increased only slightly over 2017. It's important to remember that these well-chronicled headwinds are transient in nature and will ameliorate. serving to extend the construction cycle. The silver lining from these project delays is a notable increase in both customer and Martin Marietta backlogs as we head into 2019. In 2018, heritage aggregates pricing improved 3% in line with our expectations. This improvement was achieved despite the negative impact of product mix, which lowered the company's full year average selling price by 13 cents per ton, or 1%. Underlying market demand should continue to support ongoing pricing momentum. Acquired operations shipped 13 million tons at selling prices 10% to 15% below the corporate average, but in line with our expectations. We're pleased to report that integration is substantially complete and synergy realization has exceeded our expectations at the time of acquisition. Full-year cement shipments increased 1%, as an extended maintenance outage at our Midlothian plant put us behind early in the year and was further compounded by record precipitation in Texas in February, September, and October. Cement pricing increased 3%, consistent with our expectations. Our cement operations will continue to benefit from a tight supply environment, as forecasted demand is expected to exceed domestic production capacity by 10% in 2019. Ready-mix concrete shipments increased slightly in 2018 as weather dampened construction activity. Pricing improvement of 1.5% is best described as a tale of two markets, where solid pricing gains in Colorado were partially offset by product and geographic mix in Texas. In Colorado, project delays and permitting issues negatively impacted our asphalt and paving business throughout 2018, as more contractors bid on both a reduced number of, as well as a more geographically concentrated, Colorado Department of Transportation projects. This transitory situation should improve in 2019 with greater Colorado DOT funding and more dispersed public works. We remain highly confident in the strength of the Colorado market. I'll now turn the call over to Jim to discuss more specifically our four-year financial results. Jim? Thank you, Ward. Thank you.