Martin Marietta Materials, Inc.

Welcome to Martin Marietta's first quarter 2024 earnings 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 Ruecker, Martin Marietta's Director of Investor Relations. Jacqueline, you may begin.

Good morning, and thank you for joining Martin Marietta's first quarter 2024 earnings call. With me today are Ward Nye, Chair 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 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 a discussion of our first quarter operating performance and our recently completed transactions, as well as market trends. Jim Nicholas will then review our financial results and capital allocation, after which Ward will provide some brief concluding remarks. 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, Jacqueline. and welcome everyone and thank you for joining today's teleconference. Martin Marietta's continued growth and results demonstrate our industry leading performance and disciplined adherence to and execution of our proven strategic operating analysis and review or SOAR plan. With the nadir that is always the industry's first quarter concluded and the 2024 construction season meaningfully underway, we remain confident that steady product demand supporting favorable commercial dynamics Continued adherence to our value over volume strategy, ongoing operational excellence undertakings, and portfolio optimizing transactions will position Martin Marietta for continued outperformance in 2024 and beyond. As detailed in today's earnings release, we raised our full year 2024 adjusted EBITDA guidance to a range to $2.30 billion to $2.44 billion or $2.37 billion at the midpoint. This increase reflects the benefits that will be realized from the recently acquired Blue Water operations, as well as strong realization of this year's pricing actions. As is customary, we'll revisit our guidance again at mid-year. Consistent with our SOAR 2025 initiatives, we've executed $4.5 billion of portfolio-enhancing transactions this year, reducing cyclical downstream exposure or redeploying the proceeds to expand our aggregates footprint and improve our ability to generate consistently higher margins. More specifically, on January 12th, we completed the acquisition of Albert Fry & Sons, a leading aggregates producer in Colorado, strengthening our aggregates platform in the high-growth Denver metropolitan area. And on April 5th, we acquired 20 aggregate operations from Blue Water Industries, providing us a new growth platform in Tennessee and Florida. These two pure-play aggregates transactions are expected to add approximately 17 million tons of annual shipments and generate approximately $180 million of annualized EBITDA, more than offsetting the EBITDA from the February 9th divestiture of the company's South Texas cement and related concrete business. These transactions are all reflected in our revised adjusted EBITDA guidance as of their respective closing dates. Turning now to the company's first quarter operating performance, Aggregate's pricing fundamentals remain subtractive, increasing 12.2% or 12.7% on an organic, mix-adjusted basis, underscoring the advantages of our value-over-volume commercial strategy and our sales team's unwavering commitment to receiving appropriate commercial consideration for our valuable and long-lived reserves. Aggregate shipments declined 12.3% due largely to the well-chronicled weather-impacted start to the year in our east and southwest divisions and softening demand in warehouse, office, and retail construction, partially offset by more favorable weather and relative strength in our central and west divisions. Aggregate's product line gross profit per ton increased 14 percent and gross margin expanded by 90 basis points, notwithstanding the shipment decline. Looking ahead, We remain enthusiastic about Martin Marietta's attractive market fundamentals and long-term secular trends across our three primary end uses of public works, non-residential, and residential construction. More specifically, we believe these markets and Martin Marietta's chosen geographies will drive aggregate intensive growth and favorable pricing trends for the foreseeable future. We expect robust multi-year demand in public infrastructure, U.S.-based manufacturing, energy projects, and data center construction will partially offset near-term softness in warehouse, light non-residential, and residential end markets. That said, we fully expect a housing recovery, particularly in single family, once affordability challenges subside as demand in our key markets remains robust. Infrastructure activity is expected to continue to grow in 2024. as Early Infrastructure Investment and Jobs Act, or IIJA, projects advance to the major construction phase. Notably, according to the annual market outlook provided by the American Road and Transportation Builders Association, or ARPA, public highway, pavement, and street construction, the largest market sector, is expected to increase 16% to $126 billion in 2024 as compared with $109 billion in 2023 as record State Department of Transportation or DOT budgets match federal funds and provide additional investments. The value of state and local government highway, bridge, and tunnel contract awards, a leading indicator for our future product demand, grew 11% to $116 billion for the 12-month period ending February 29, 2024. This generational investment in our nation's infrastructure supported by federal, state, and local actions provides state DOTs with certainty to advance projects in their backlogs, driving sustained multi-year demand in this aggregates-intensive, often counter-cyclical market. Shifting to the heavy non-residential market, manufacturing projects continue to be supported by steady demand from ongoing reshoring of critical product supply chains. Construction spending for domestic manufacturing continues to trend positively with the February season-adjusted annual rate of spending for 2024 at $223 billion, a 32% increase from the February 2023 value of $169 billion. Equally, we expect the long-term secular trends toward cloud-based services and artificial intelligence will drive renewed growth in data center construction which had moderated from its post-COVID peak. As an example, in March, Google announced a new $1 billion data center in Kansas City to help drive its artificial intelligence efforts, which requires nearly 800,000 tons of aggregates from our uniquely positioned underground operations. Looking at the light non-residential market, we expect 2024 demand will be challenged given higher for longer interest rates, high office vacancy rates, and the natural construction lag from the last two years of single-family residential declines. As for the residential market, despite near-term uncertainty around mortgage rates, we're encouraged by positive trends in single-family housing starts, a leading indicator of aggregate demand, which were at 1 million units in March 2024, a nearly 21% increase from a year ago. Notably, single-family housing starts have been at or above 1 million units since November 2023, indicative of a recovery from the 2023 trough. Given the well-publicized structural housing deficit in our company's key metropolitan areas, we expect Martin Marietta to benefit disproportionately from new home construction once interest rates moderate and monthly mortgage payments become more affordable. I'll now turn the call over to Jim to discuss our first quarter financial results. Jim?