Martin Marietta Materials, Inc.

Welcome to Martin Marietta's fourth quarter and full year 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. Jacqueline Rooker. Martin Marietta's Director of Investor Relations. Jacqueline, you may begin.

Good morning, and thank you for joining Martin Marietta's fourth quarter and full year 2023 earnings call. With me today are Ward and I, Chairman and Chief Executive Officer, and Jim Nicholas, Executive Vice President and Chief Financial Officer. 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, 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. Board and I will begin today's earnings call. with the discussion of our 2023 financial highlights and operating performance. Jim Nicholas will then review our financial results and capital allocation in more detail, after which Ward will conclude with end market trends and our 2024 outlook. 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.

Jackman, thank you. Good morning and thank you so much for joining today's teleconference. I'm pleased to report 2023 was the safest and most profitable year in Martin Marietta's history. We delivered both record financial performance eclipsing $2.1 billion in adjusted EBITDA and also world class safety results, achieving a world class total injury incident rate for the third year in a row and a world class lost time incident rate for the seventh consecutive year. This year was also highlighted by several portfolio-enhancing transactions, significantly strengthening both the durability of our business and our balance sheet, and which, cumulatively, positions us well to continue delivering sustainable growth. Our 2023 achievements were accomplished despite a macroeconomic environment encumbered by restrictive monetary policy, a housing slowdown, and heightened geopolitical tensions. that our team was able to successfully overcome these challenges further underscores the continued success of our strategic operating analysis and review or SOAR plan, the vitality of our purposefully curated geographic footprint, our team's steadfast execution of our proven value over volume commercial strategy, and the resiliency and earnings power of our aggregates-led business. Subsequent to year end, on January 12th, we closed the acquisition of Albert Fry & Sons, a leading aggregates producer in Colorado, expanding our aggregates platform in the high-growth Denver metropolitan area. More recently, on February 11, 2024, we entered into a definitive agreement to acquire the Alabama, South Carolina, South Florida, Tennessee, and Virginia aggregates operations of Blue Water Industries, a closely held pure play aggregates producer with a portfolio of 20 active operations in attractive southeast markets including Nashville, Knoxville, and Miami. Consistent with our SOAR plan, upon closing of the Blue Water Industries acquisition, which is expected to occur later this year, subject to regulatory approvals and customary closing conditions, these two pure play aggregates transactions will not only add approximately one billion tons of high quality reserves in specific SOAR targeted markets, but also enhance the product mix of our portfolio. Assuming these transactions had closed on January 1, 2024, we would have expected these two acquisitions to generate approximately $180 million of adjusted EBITDA in 2024, more than offsetting the adjusted EBITDA divested in the February 9, 2024 sale of the company's South Texas cement and related concrete business. As we turn the page to 2024, favorable commercial dynamics underpinned by our value over volume pricing strategy and giving effect to the recently closed Colorado acquisition and Texas divestiture, we expect to deliver consolidated adjusted EBITDA of $2.24 billion at the midpoint. However, assuming these transactions and the recently announced Blue Water Industries acquisition had all been completed as of January 1, 2024, We would have expected the new portfolio to generate adjusted EBITDA of $2.37 billion in 2024 at the midpoint. Before discussing our full year 2023 results, I'll highlight a few notable takeaways from our record fourth quarter. Aggregates pricing increased 15%, driving product line gross profit of $328.6 million, a year-over-year increase of 36.8%, and gross profit per ton of $7.04, a year-over-year increase of 39.8%, both fourth quarter records. While aggregate shipments decreased 2.1%, these financial results clearly demonstrate the success of our sales team's commitment to receiving appropriate commercial consideration for our valuable and long-lived reserves, the primary and disproportionate organic earnings growth driver of our business. Turning now to our full year 2023 results, as previously noted, we established new financial records in each of the following year-over-year metrics. Consolidated total revenues of $6.8 billion, a 10% increase. Consolidated gross profit of $2 billion, a 42.1% increase. Earnings per diluted share from continuing operations of $19.32, a 41% increase. adjusted EBITDA of $2.1 billion, a 33% increase, and aggregate gross profit per ton of $6.93, a 46.4% increase. Moreover, we successfully implemented mid-year price increases across the majority of our markets as we endeavor to pass through persistently high-cost inflation. Shifting now to our full-year 2023 operating performance, beginning with aggregates. Aggregate shipments declined 4.3%, the combined result of our value over volume strategy and softer demand in certain Midwest and Southwest markets, partially offset by continued strength in key Southeast markets. Aggregates pricing increased 18.9% or 17.2% on a mix-adjusted basis as pricing fundamentals remain attractive. Texas cement shipments decreased 3.4% to 4 million tons. Pricing increased 22% or 21.6% on a mix-adjusted basis, driven by favorable supply-demand dynamics in the Dallas-Fort Worth metroplex. Turning to our targeted downstream businesses, ready-mix concrete shipments decreased 12.1% But that reduction was largely driven by the April 2022 divestiture of the company's Colorado and Central Texas concrete businesses. Pricing increased to robust 20.4%. Asphalt shipments increased 3.5%, and pricing increased 6.7%. Before providing in-market trends and our 2024 outlook, Jim will now discuss our full-year financial results. Jim? Thank you, Ward, and good morning, everyone.