Martin Marietta Materials, Inc.

Good morning, ladies and gentlemen, and welcome to the Martin Marietta Second Quarter 2020 Earnings Conference Call. My name is Kevin, and I'll be your coordinator today. All participants are currently 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 and will be available for replay on the company's website. I will now turn the call over to your host, Ms. Suzanne Hausberg, Martin Marietta's Vice President of Investor Relations. Suzanne, you may begin.

Good morning, and thank you for joining Martin Marietta's Second Quarter 2020 Earnings Call. With me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nicholas, Senior Vice President and Chief Financial Officer. As a reminder, today's discussion may include forward-looking statements, as defined by the United States, 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. Please refer 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's website. We have made available during this webcast and on the Investor Relations section of our website due to 2020 supplemental information that summarizes our financial results and trends. In addition, any non-GAAP measures discussed today are defined and reconciled to the most directly comparable GAAP measure in our earnings release and SEC filings. Today's earnings call will begin with Ward Nye, whose remarks will focus on our second quarter operating performance, as well as current and emerging market trends. Jim Nicholas will then review our financial results and liquidity position, and Ward will then provide some closing comments. A question and answer session will follow our prepared remarks. I will now turn the call over to Ward.

Thank you, Suzanne, and thank you all for joining today's teleconference. We sincerely hope that you and your families are remaining safe and healthy as we continue to manage through these unprecedented times. As highlighted in this morning's release, Mark Marietta delivered outstanding operational, financial, and safety performance, notwithstanding some localized weather headwinds in the quarter and the broader uncertainties presented by the COVID-19 pandemic. This performance is a testament to our company's commitment to our values, the world-class attributes of our business, and the disciplined execution of our strategic plan. Martin Marietta established new profitability records for both the second quarter and the first half of the year, driven by favorable pricing and proactive cost management across the building materials business. For the second quarter specifically, consolidated gross margin expanded 200 basis points, despite slightly lower revenues as compared with the prior year period. Selling, general and administrative, or SG&A expenses as percentage of total revenues improved 10 basis points to 5.6%. Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, increased 7.5% to $407 million, and fully diluted earnings per share was $3.49, a 16% improvement. In addition to record financial performance, and despite the challenging conditions, we also achieved the best safety performance in our history. Company-wide, both our lost time and total injury incident rates are better than world-class safety levels. These superior results are directly attributable to our dedicated and talented employees who have continued to demonstrate resiliency during these uncertain times. I'm extraordinarily proud of how our team has adapted to our new health protocols while remaining steadfastly focused on caring for one another, working safely and efficiently, and seamlessly meeting our diverse stakeholders' needs. Though Martin Marietta, along with many of our customers, has operated as a designated essential business throughout the COVID-19 shutdowns and subsequent phases, we still experienced impacts from the macroeconomic slowdown. Despite these challenges, second quarter product demand for our building materials business remains strong across a number of our key geographies, including North Texas and the Front Range of Colorado, two of our leading vertically integrated markets. Contractors continued construction on projects already underway and have, in some instances, benefited from jobs that were accelerated to better leverage lower traffic volumes during shelter-in-place orders and new projects. In addition, we saw aggregate shipments growth in Georgia and Florida despite above-average rainfall in these states during the quarter and in Indiana. Overall, quarterly aggregate shipments declined approximately 4% compared with near record prior year period volume. As a reminder, our second quarter 2019 results benefited from weather-deferred carryover work, sizable energy sector projects, and Midwest flooding repair activity. Aggregate pricing improved 3.3%. All divisions contributed to this growth underscoring the health of our markets, and the importance of our locally driven pricing strategy. By region, the West Group posted a 5.5% increase, reflecting favorable product mix. Pricing for the Mid-America Group improved 2%. The Central Division, which has selling prices below the corporate average, contributed a higher percentage of the Mid-America Group shipments, consistent with the first quarter trends. Product mix limited Southeast Group's pricing growth as a higher percentage of lower-priced finds and base zone were shipped. Underlying demand for our Texas-based cement business remains largely stable. However, second-quarter cement shipments decreased 3%, driven primarily by the decline in energy sector activity that has resulted from lower oil prices. West Texas oil well cement shipments were down over 75% from pre-COVID expectations, a trend expected to continue until oil prices stabilize at a level that fosters additional investment and drilling activity in the Permian Basin. Throughout the quarter, we saw attractive and consistent pricing strength in our north and central Texas cement operations. Specifically, Cement prices in Dallas and San Antonio, the markets most proximate to our Midlothian and Hunter facilities, were up 4%. That said, notably lower shipments of higher-priced oil well specialty cement products found for West Texas limited overall pricing growth. Turning to our targeted downstream businesses, the ready-mix concrete shipments increased nearly 9%, excluding prior-year shipments from our southwest ready-mix divisions Arkansas, Louisiana, and eastern Texas business, known generally as Arcflow-Tex, which we divested earlier this year. Overall, concrete pricing increased modestly but was hindered by an unfavorable product mix. Our Colorado asphalt and paving business established a new quarterly record for asphalt shipments. Shipments increased 35% to 1.1 million tons. benefiting from market strength and pent-up demand following a weather challenge 2019. Asphalt pricing declined 1% as customer segmentation was weighted more heavily toward publicly bid municipal projects as opposed to negotiated private work. The company's magnesia specialties business experienced the most pronounced COVID-19 headwinds during the second quarter. Domestic and international chemicals demand declined as customers confronted COVID-19-related disruptions. Demand for our lime and paraplase products also slowed significantly as steel-producing customers temporarily idled their facilities in response to the COVID-19-induced shutdown of certain domestic auto manufacturers. Before discussing near-term and emerging trends, I'll now turn the call over to Jim for a review of our second quarter financial results and liquidity. Jim?