Martin Marietta Materials, Inc.

Good morning, ladies and gentlemen, and welcome to Martin Marietta's third quarter 2021 earnings conference call. All participants are now 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 Osberg, Martin Marietta's Vice President of Investor Relations. Suzanne, you may begin.

Good morning. It's my pleasure to welcome you to Martin Marietta's third quarter 2021 earnings call. With me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nicholas, Senior Vice President and Chief Financial Officer. We've made available during this webcast and on the investors section of our website, Q3 2021 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 other filings with the Securities and Exchange Commission. As a reminder, today's discussion may include forward-looking statements as defined by United States securities laws in connection with future events, future operating results, or financial performance. Like other businesses, Martin Marietta is subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation, except as legally required, 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 public filings, which are available on both our own and the SEC websites. Ward and I will begin today's earnings call with a discussion of our third quarter operating performance and our recently completed acquisition of Lehigh Hanson's West Region. Jim Nicholas will then review our financial results, after which Ward will discuss market trends as we look ahead to 2022. A question and answer session will follow. Please limit your Q&A participation to one question. I will now turn the call over to Ward.

Thank you, Suzanne, and thank you all for joining today's teleconference. Martin Marietta's continued growth and record results demonstrate our industry-leading performance and disciplined execution of our proven Strategic Operating Analysis and Review, or SOAR, plan. And with fewer reportable and lost-time incidents than this time last year, our company-wide safety incident rates are surpassing world-class levels. I'm proud to report that we're on track to deliver the most profitable and safest year in our company's history. We're also excited about the progress we're making on our SOAR 2025 initiatives to further position our company for sustainable long-term operational and financial success. On October 1st, we welcomed more than 1,200 talented employees to the Martin Marietta team as we successfully completed the acquisition of Lehigh Hanson's West Region Business, With this outstanding team, strong business and key assets now a part of our offering, we're well positioned to benefit from favorable market dynamics and accelerating public and private construction activity in important California and Arizona regions, including San Francisco, Los Angeles, San Diego, and Phoenix. It also provides new growth platforms for our continued geographic expansion. I'm grateful to our colleagues for the dedication and perseverance in their efforts to complete the acquisition, the second largest in our company's history. We look forward to working together to seamlessly integrate the Lehigh West operations, quickly realize synergies, and deliver significant stakeholder value. Integration activities are progressing as planned from both an operational and customer-facing perspective. As highlighted in today's release, we once again established record results for revenues and gross profit for both the quarter and year to date. To recap, for the first nine months of 2021, our adjusted EBITDA increased 7% to a record $1.1 billion. Both our building materials and magnesia specialties businesses continue to capitalize on the ongoing economic recovery. During the quarter, organic shipment and pricing growth combined with value-enhancing acquisitions more than offset higher-than-expected energy-related costs and contributed to our record-setting results. Specifically, on a consolidated basis, products and services revenues increased 18% to $1.5 billion, adjusted gross profit increased 11% to $450 million, adjusted EBITDA of $490 million increased 13% on a comparable basis, and adjusted diluted earnings per share of $4.25 grew 11% on a comparable basis. As a reminder, the prior year quarter includes $70 million or 87 cents per diluted share of non-recurring gains on surplus land sales and divested assets that affect quarter over quarter comparability. Now for a review of our third quarter operating performance. We continue to experience growing product demand across our three primary end-use markets. Organic aggregate shipments increased 6%, notwithstanding contractor capacity constraints and wet weather in several markets that govern the overall pace of construction activity. Notably, all divisions contributed to this solid growth, demonstrating our ability to capitalize on the strong underlying demand trends across our geographic footprint. Total aggregate shipments, including shipments from acquired operations, increased 10%. Organic aggregates average selling price increased 2%, reflecting a higher percentage of lower-priced base stone shipments during the quarter. Additionally, our East Division, which has selling prices in excess of our corporate average, had the opportunity to meet customer needs with a low-priced excess fill product that, had we not shipped, we otherwise would have incurred costs to relocate. We expect shipments of this excess fill material, which are profitable and not a substitute for higher value products, to continue through the remainder of the year. That's why we updated our full year 2021 organic pricing growth guidance to now range from 2.5% to 3.5%. To be clear, aggregate's pricing fundamentals remain very attractive. In fact, supported by strong underlying demand and rapid cost inflation in the broader economy, we successfully implemented mid-year price increases in the Carolinas and Texas. These actions, combined with overall customer confidence and demand visibility, bode well for meaningful pricing acceleration in 2022. Our Texas cement business established a new quarterly record for shipments, which increased 4% to over 1 million tons. Large and diversified projects, recovering energy sector activity, and incremental pull-throughs from our internal downstream customers supported record monthly shipment levels in both August and September. Cement pricing increased 8% as the second round of price increases this year went into effect on September 1st. Turning to our targeted downstream businesses, ready-mix concrete shipments increased 23%, driven by large non-residential projects and operations acquired late last year in Texas. Concrete pricing grew 2% following the implementation of mid-year price increases in Texas. Additionally, we've announced a third price increase in the Dallas-Fort Worth market, effective October 1. Asphalt shipments increased 116% overall, driven by contributions from our Minnesota-based operations acquired earlier this year. Our Colorado asphalt and paving business experienced shipment declines and supply disruptions from mid-summer liquid asphalt allocations throughout the Rocky Mountains. This circumstance has now been resolved. Despite these short-term issues, market fundamentals remain strong across the Colorado Front Range. Organic asphalt pricing improved modestly. Before discussing our preliminary 2022 outlook, I'll turn the call over to Jim to conclude our third quarter discussion with a review of our financial results and liquidity. Jim?