Martin Marietta Materials, Inc.

Good day and welcome to Martin Marietta's first quarter 2023 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. Jennifer Park, Martin Marietta's Vice President of Investor Relations. Jennifer, you may begin.

Thank you. It's my pleasure to welcome you to our first quarter 2023 earnings call. Joining me today are Ward and I, Chairman and Chief Executive Officer, and Jim Nicklaus, Senior Vice President and Chief Financial Officer. 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 Securities and Exchange Commission's websites. We have made available during this webcast and on the Investors section of our website supplemental information that summarizes our financial results and trends. As a reminder, all financial and operating results discussed today are for continuing operations. In addition, non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix to the supplemental information as well as our filings with the SEC and are also available on our website. Ward and I will begin today's earnings call with a discussion of our operating performance. Jim Nicholas will then review our financial results and capital allocation, after which Ward will conclude with market trends and our outlook for 2023. The 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, Jenny. Welcome, everyone, and thank you for joining today's teleconference. I'm pleased to report that this year is off to a very strong start for Martin Marietta with first quarter records by nearly every measure. Given our focus on operating safely and responsibly, we're especially pleased that total and lost time incident rates were down 21% and 50% respectively in the first quarter. The exceptional quarterly performance is a testament to our team's focus on commercial and operational excellence. and the resiliency of our differentiated business model that separates us from others in our industry. We continue to adhere to a value over volume approach, focusing on an aggregates-led product strategy and carefully expanding and honing our service footprint, which today is national in scope. In brief, the results we've reported over the recent past, including the first quarter results announced today, are a tribute to our team's disciplined execution of our strategic plan and gives us confidence that we will deliver 2023 adjusted EBITDA of $1.9 billion, consistent with the high end of our previously announced guidance range. As is common practice, we will revisit our guidance more formally at mid-year. As for the first quarter, our product demand remained robust, We experienced a modest decline in aggregate shipments as historically wet weather in California was partially offset by a mild winter in the southeast. However, aggregate's pricing momentum continued to build with a 12.8% sequential increase driven by the carryover effects of our 2022 inflation management actions and by broad acceptance of our January 1, 2023 increases which were pulled forward from April 1st in the vast majority of our markets. These combined shipments and pricing results demonstrate the relative price inelasticity of aggregate demand where customer service and availability of quality materials tend to be of greater importance than product cost. Our intentional approach to capacity expansion investments at key facilities across our footprint has positioned us well to better serve our customers during this period of high product demand across many of our locations, including markets in the Southeast and Texas. Now, let's turn to our financial results. We established a number of first quarter records for Martin Marietta, including consolidated total revenues of $1.35 billion, a 10% increase, consolidated gross profit of $303 million, a 94% increase, diluted earnings per share from continuing operations of $2.16, a 454% increase, adjusted EBITDA of $324 million, a 64% increase, and $5.70 aggregate gross profit per ton, a 134% increase. These results demonstrate the advantages of our value over volume commercial strategy which was paramount to offsetting continued, albeit moderating, inflationary pressures. That said, the April OPEC Plus production cuts were broadly unexpected and are likely to put upward pressure on fuel expenses throughout the remainder of the year, which tends to flow through to other cost categories. As such, our teams are actively advising customers of mid-year price increases, which we anticipate will be more widely accepted and larger in scope and magnitude than we were initially considering a few months ago. Longer term, Martin Marietta is well positioned to benefit from what is expected to be an increasingly favorable and extended pricing cycle. Let's now turn to our first quarter operating performance, beginning with aggregates. We experienced solid aggregates demand across our geographic footprint, with total aggregate shipments decreasing only 300,000 tons despite an approximate 1 million ton shipment decline in weather-impacted California. Aggregate's pricing fundamentals remain attractive, with pricing increasing 22.6% or 19.6% on a mix-adjusted basis. The Texas cement market continues to experience robust demand and tight supply amid near-sold-out conditions, particularly in the Dallas-Fort Worth Metroplex. Yet largely due to wet and cold weather to start the year, first quarter shipments declined 6.8%. Importantly, we delivered pricing growth of 32.2%, more than offsetting the effect of lower weather-impacted shipments. We fully expect that favorable Texas cement commercial dynamics will continue for the foreseeable future and accordingly have announced a $10 per ton price increase effective July 1. Shifting to our targeted downstream businesses, ready mix concrete shipments decreased 37.1% and pricing increased 20.2%. As a reminder, our first quarter 2023 ready mix concrete results exclude the Colorado and Central Texas operations that were divested nearly 13 months ago on April 1st, 2022, impacting the comparability to the prior year quarter. Asphalt shipments decreased 25.1%, driven primarily by wet weather in California and Arizona. Pricing improved 9.9% following the increase in raw material costs, principally liquid asphalt or bitumen. Before discussing our outlook for the remainder of 2023, I'll turn the call over to Jim to conclude our first quarter discussion with a review of the company's financial results. Jim?