Q4 2023 Martin Marietta Materials Inc Earnings Call

Operator: Welcome to Martin Marietta's fourth quarter and full year 2023 earnings conference. All participants are now in a listen-only mode.

Welcome to Martin Marietta's fourth quarter, and full year 2023 earnings conference call.

All participants are now in a listen only mode.

Operator: A question and answer session will follow the company's prepared remarks. I will now turn the call over to your host, Ms. Jacqueline Rivera, Martin Marietta's Director of Investor Relations. Jacqueline, you may begin.

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.

Speaker Change: I will now turn the call over to your host Ms Jaclyn Richard Mark.

Speaker Change: <unk> director of Investor Relations Jaclyn you may begin.

Speaker Change: Good morning, and thank you for joining Martin Marietta's fourth quarter and full year 2023 earnings call with me today are ward Nye, Chairman and Chief Executive Officer, and Jim Nicholas Executive Vice President and Chief Financial Officer.

Jacqueline Rivera: Good morning, and thank you for joining Martin Marietta's fourth quarter and full year 2023 earnings call. With me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nickolas, 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. 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 statement, as a result of new information, future developments, or other, Please refer to the legal disclaimer contained in today's earnings release and other public funds, which are available on both our own and the Securities and Exchange Commission's websites, we have made available during this webinar, and on the investors section of our website. Supplemental information that summarizes our financial results 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 in our filings with the SEC, and are also available on our website.

Speaker Change: 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.

Speaker Change: Yes.

Speaker Change: 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.

Speaker Change: We have made available during this webcast and on the investors section of our website supplemental information that summarizes our financial results and trends.

Speaker Change: As a reminder, all financial and operating results discussed today are for continuing operations.

Speaker Change: In addition, non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix of the supplemental information as well as our filings with the SEC and are also available on our website.

Speaker Change: Gordon I will begin today's earnings call with the discussion of our 2023 financial highlights and operating performance.

Jacqueline Rivera: Ward 9 will begin today's earnings 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. Your question and answer session will follow. Please limit your Q&A participation to one question. I will now turn the call over to Jacqueline. Thank you.

Gordon: Jim Nickolas will then review our financial results and capital allocation in more detail.

James A. J. Nickolas: After which we'll conclude with end market trends and our 2020 for outlook.

Gordon: A question and answer session will follow.

Gordon: Please limit your Q&A participation to one question.

Gordon: I will now turn the call over to ward.

Ward Nye: 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.

Ward Nye: 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, 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, which cumulatively positions us well to continue delivering sustainable growth. Our 2023 achievements were accomplished despite a macroeconomic environment encumbered by restrictive monetary policy, housing slowdown and heightened geopolitical tension, 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.

Ward Nye: We delivered both record financial performance eclipsing $2 1 billion and adjusted EBITDA and also World class safety results, achieving a world class total injury incident rate for the third year in a row.

Gordon: And a world class lost time incident rate for the seventh consecutive year.

Gordon: 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.

Gordon: Our 2023 achievements were accomplished despite a macroeconomic environment encumbered by restricted monetary policy.

Gordon: Housing slowdown and heightened geopolitical tensions.

Gordon: 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.

Gordon: 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.

Ward Nye: 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.

Gordon: Subsequent to year end on January 12, we closed the acquisition of Albert Fried <unk> sons, a leading aggregates producer in Colorado, expanding our aggregates platform and the high growth Denver Metropolitan area.

Gordon: 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, our Bluewater industries, a closely held pure play aggregates producer with a portfolio of 20 active operations and attractive south.

Gordon: East markets, including Nashville, Knoxville, and Miami.

Ward Nye: Consistent with our SOAR plan, upon the closing of the Blue Water Industry Sanctuary, 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 1 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 businesses. 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.

Gordon: Consistent with our store plan upon closing of the Bluewater industries acquisition, which is expected to occur later this year subject to regulatory approvals and customary closing conditions.

Gordon: These two pure play aggregates transactions will not only add approximately 1 billion tons of high quality reserves in specific SOR targeted markets, but also enhance the product mix of our portfolio.

Gordon: Assuming these transactions had closed on January one 2024, we would've expected. These two acquisitions to generate approximately $180 million of adjusted EBITDA in 2024 more than offsetting the adjusted EBITDA divested into February nine 2020 for sale of the company itself.

Gordon: Texas cement and related concrete business.

Gordon: 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 in Texas divestiture, we expect to deliver consolidated adjusted EBITDA of $2 billion to $4 billion at the midpoint. However.

Ward Nye: 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. Aggregate 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 $7.46.

Gordon: Assuming these transactions and the recently announced Bluewater industries acquisition had all been completed as of January one 2024, we would've expected the new portfolio to generate adjusted EBITDA of $2 $3 $7 billion in 2024 at the midpoint.

Gordon: Before discussing our full year 2023 results I'll highlight a few notable takeaways from our record fourth quarter.

Gordon: 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 <unk> a.

Ward Nye: A year-over-year increase of 39.8% for both fourth quarter rents. 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 periods, consolidated total revenues of $6.8 billion, so 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 percent increase, and aggregate gross profit per ton of $6.93, a 46.4 percent 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.

Gordon: Our year over year increase of 39, 8% both fourth quarter Records.

Gordon: While the aggregate shipments decreased two 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 to primary and disproportionate organic earnings growth driver of our business.

Gordon: Turning now to our full year of 2023 results. As previously noted we established new financial records in each of the following year over year metrics.

Gordon: Consolidated total revenues of $6 8, billion% to 10% increase.

Gordon: Consolidated gross profit of $2 billion or 42, 1% increase earning.

Gordon: Earnings per diluted share from continuing operations of $19 32.

Gordon: A 41% increase.

Gordon: Adjusted EBITDA of $2 1 billion or 33% increase in aggregates gross profit per ton of $6 and 93.

Gordon: 46, 4% increase.

Gordon: Moreover, we successfully implemented mid year price increases across the majority of our markets as we endeavor to pass through persistently high cost inflation.

Gordon: Shifting now to our full year 2023 operating performance beginning with aggregates aggregates.

Ward Nye: Shifting now to our full year 2023 operating performance, beginning with aggregate shipments declined 4.3 percent, 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. Aggregate pricing increased 18.9% or 17.2% on a mixed adjusted basis as pricing fundamentals remain attractive. Texas cement shipments decreased 3.4% to 4 million tons.

Gordon: Aggregate shipments declined four 3%.

Gordon: Bind 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 AG.

Gordon: Aggregates pricing increased to 18, 9% or 17, 2% on a mix adjusted basis as pricing fundamentals remain attractive.

Gordon: Texas cement shipments decreased three 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.

Ward Nye: Pricing increased 22% or 21.6% on a mix-adjusted basis, driven by favorable supply-demand dynamics in the Dallas-Fort Worth metropolitan area. Turning to our targeted downstream businesses, ReadyMix 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 business. Pricing increased to a robust 20.4%. Asphalt shipments increased 3.5%, and prices increased 6.7%.

Gordon: Turning to our targeted downstream businesses ready mixed 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 a robust 24%.

Gordon: Asphalt shipments increased three 5% and pricing increased six 7%.

Gordon: Before providing end market trends and our 2024 outlook, Jim will now discuss our full year financial results Jim.

Ward Nye: Before providing market trends and our 2024 outlook, Jim will now discuss our full year financial results. Thank you, Ward, and good morning, everyone. As Ward mentioned, we completed the sale of our South Texas cement and related concrete operations last week on February 9. While these businesses were classified as held for sale on the balance sheet as of December 31, revenues and profits from these operations through the divestiture date are included in the earnings from continuing operations.

Jim: Thank you and good morning, everyone.

Jim: As Ward mentioned, we completed the sale of our South Texas cement plant.

Jim: Related concrete operations last week on February 9th.

Jim: While these businesses were classified as held for sale on the balance sheet as of December 31.

Jim: Revenues and profits from these operations through the divestiture date are included in the earnings from continuing operations.

Jim: Accordingly, the revenues and profits from these assets are included in both 2023 as reported earnings from continuing operations and in our 2024 earnings guidance through the February 9th close date.

James A. J. Nickolas: Accordingly, the revenues and profits from these assets are included in both 2023's reported earnings from continuing operations and in our 2024 earnings guidance through the February 9th close date. The revenues and profits from the Colorado assets acquired on January 12, 2024, are also included in our Forward Earnings Guide.

Jim: The revenues and profits from the Colorado assets acquired on January 12, 2024 also are included in our forward earnings guidance.

Jim: Lastly, the <unk>.

James A. J. Nickolas: The Blue Water Industries transaction is not yet closed and remains subject to customary closing conditions and regulatory review. The Bulletproof Executive 2013, Contributions from the pending acquisitions are not included in our 2024 earnings guide. That said, we will provide updated earnings guidance after closing the Blue Water transaction, which is expected to occur later this year. Building Materials Business posted full year 2023 revenues of $6.5 billion.

Jim: Bluewater industries transaction has not yet closed and remains subject to customary closing conditions and regulatory review.

Jim: Accordingly, the contributions from the pending acquisition are not included in our 2024 earnings guidance.

Jim: That said, we will provide updated earnings guidance after closing blue water transaction, which is expected to occur later this year.

Jim: The building materials business posted full year 2023 revenues of $6 5 billion.

James A. J. Nickolas: An increase of 10.3 percent and gross profit of $1.9 billion, a notable 43.7% increase year-over-year, both new records. The aggregates business achieved all-time record revenues in 2023, growing 10.9% to $4.3 billion. Gross profit increased 40.1% to $1.4 billion, and gross margin increased 660 basis points to 32%.

Jim: An increase of 10, 3% and.

Jim: Gross profit of $1 9 billion.

Jim: A notable 43, 7% increase year over year, both new records.

Jim: The aggregates business achieved all time record revenues in 2023, growing 10, 9% to $4 $3 billion.

Jim: Gross profit increased 41% to $1 4 billion and gross margin increased 660 basis points to 32%.

James A. J. Nickolas: Again, both all-time records, solid price and growth more than offset lower, further demonstrating how the disciplined execution of our value over volume commercial strategy yields higher profits and higher margins, even without the benefit of growing value. Our Texas cement business extended its track record of outstanding performance and once again delivered record top and bottom line results. Revenues increased 17% to $725.5 million, and gross profit increased $34.6% to $333.6 million.

Jim: Again, both all time records.

Jim: Solid pricing growth more than offset lower shipments further demonstrating how the disciplined execution of our value over volume commercial strategy yields higher profits and higher margins, even without the benefit of growing volumes.

Jim: Our Texas cement business extended its track record of outstanding performance and once again delivered record top and Bottomline results.

Jim: Revenues increased 17% to $725 5 million and gross profit increased 64, 6% to $333 6 million.

Jim: Driven primarily by favorable supply demand dynamics in the Dallas Fort worth Metroplex and energy cost tailwind.

James A. J. Nickolas: This is driven primarily by favorable supply-demand dynamics in the Dallas-Fort Worth Metroplex and energy cost tailwinds. As a reminder, the new finished mill at a Midlothian, Texas, plant in North Texas is expected to be fully operational in the third quarter of 2024, adding approximately 450,000 tons of incremental high-margin annual production capacity. Turning to our targeted downstream business, our concrete revenues increased 5.9% to $1 billion, and gross profit increased 44.2% to $102 million, driven primarily by pricing gains and mega project contributions, more than offset higher upstream raw material and delivery. Asphalt and paving revenues increased 12.6% to $887.1 million.

Jim: As a reminder, the new finished mill at Midlothian, Texas plant in North Texas.

Jim: Is expected to be fully operational in the third quarter of 2024, adding approximately 450000 tons of incremental high margin annual production capacity.

Jim: Turning to our targeted downstream businesses.

Jim: Our concrete revenues increased five 9% to $1 billion.

Jim: And gross profit increased 44, 2% to $102 million.

Jim: Driven primarily by pricing gains and megaproject contributions, which more than offset higher upstream raw material and delivery costs.

Jim: Asphalt and paving revenues increased 12, 6% to $887 1 million.

Jim: Gross profit increased 34, 7% to $109 million.

James A. J. Nickolas: Gross profit increased 34.7% to $109 million, the result of strong demand and lower bitumen costs. Magnesia Specialty's full-year revenues increased 3.8% to $315.4 million, while its gross profit increased 6.9% to $97.1 million.

Jim: The result of strong demand and lower bitumen costs.

Jim: Magnesia specialties full year revenues increased three 8% to $315 4 million, while gross profit increased six 9% to $97 1 million.

James A. J. Nickolas: Strong pricing and energy cost tailwinds more than offset weaker demand in certain manganese end markets, including TPO roofing and cobalt mining. We continue to balance our longstanding disciplined capital allocation priorities to responsibly grow our business. In 2023, we invested $650 million of capital into our business and returned $324 million to shareholders through both an increased dividend and share repurchase. Since our repurchase authorization announcement in February of 2015, we have returned a total of $2.6 billion to shareholders through both dividends and share repurchase. Our net debt to EBITDA ratio was 1.4 times as of December 31st. Assuming the Albert Frey & Sons and Blue Water Industries acquisitions and the South Texas Cement and Related Concrete Operations divestiture were effective as of January 1, 2024, after giving effect to the impacts of these transactions, our net debt to EBITDA ratio would have been 1.85 times, just below our targeted range of 2 to 2.5 times, which would provide ample dry powder Thanks so much.

Jim: Pricing in energy cost tailwind more than offset weaker demand in certain magnesia end markets, including GPO roofing and cobalt mining.

Jim: We continue to balance our long standing disciplined capital allocation priorities to responsibly grow our business.

Jim: In 2023, we invested $650 million of capital into our business and returned $324 million to shareholders through both an increased dividend and share repurchases.

Jim: Since our repurchase authorization announced in February of 2015, we have returned a total of $2 6 billion to shareholders through both dividends and share repurchases.

Jim: Our net debt to EBITDA ratio was one four times as of December 31 I.

Jim: Assuming the Albert Brian sons, and Bluewater industries acquisitions, and South, Texas cement and related concrete operations divestiture were effective as of January one 2024, after getting effect to the impacts of these transactions.

Jim: Our net debt to EBITDA ratio would've been $1 eight five times just below our targeted range of two to two five times, which would provide ample dry powder to take advantage of additional value enhancing acquisitions.

Speaker Change: With that I will.

Speaker Change: The call back toward to discuss end market trends, Tim Thanks, So much.

Ward Nye: We're enthusiastic about Martin Marietta's prospects in 2024 and beyond. We anticipate healthy demand in public and heavy non-residential construction will largely offset softness in the residential sector and expected moderation in light non-residential construction. However, anticipated decreases in mortgage rates should provide tailwinds for residential demand and an uptick in single-family home construction, as evidenced by recent starts data. As you've heard us say for years, in this business, where you are matters.

Tim: We're enthusiastic about Martin marietta's prospects in 2024, and beyond we anticipate healthy demand in public and heavy nonresidential construction will largely offset softness in the residential sector and expected moderation in light non residential construction, however, anticipated decreases in mortgage rates should provide.

Speaker Change: <unk> and residential demand and an uptick in single family home construction as evidenced by recent starts data.

Speaker Change: As you've heard us say for years in this business, where you are matters and Martin Marietta is uniquely positioned to capitalize on these long term secular trends.

Ward Nye: And Martin Marietta is uniquely positioned to capitalize on these long-term secular trends. Infrastructure activity is expected to remain resilient, as funds from the Infrastructure Investment and Jobs Act, or IIJA, along with record State Department of Transportation, or DOT, budgets, as well as voter-approved state and local transportation-related ballot initiatives, coalesce to spur years of steady investment and demand. The value of state and local government highway, bridge, and tunnel contract awards, a leading indicator for our future product demand, grew 8% to $113 billion in 2023. According to the American Road and Transportation Builders Association, or ARPA, Texas, Colorado, California, Georgia, and Florida, key Martin Marietta states, are among some of the largest growing markets based on contract awards. Importantly, our investment in our nation's infrastructure continues to maintain broad bipartisan support. During the November 2023 election, voters approved 88% of transportation-related state and local ballot initiatives, representing approximately $7 billion of additional infrastructure funding.

Speaker Change: Infrastructure activity is expected to remain resilient as funds from the infrastructure investment and jobs Act or Iga, along with record State Department of Transportation, where D. O T budgets as well as voter approved state and local transportation related valid initiatives coalesce to spur years, a steady <unk>.

Jim: Investment and demand.

Jim: The value of state and local government Highway bridge and tunnel contract awards, a leading indicator for our future product demand grew 8% to $113 billion in 2023.

Jim: According to the American Road, and Transportation Builders Association, or ARPA, Texas, Colorado, California, Georgia, and Florida Key Martin Marietta States are amongst some of the largest growing markets based on contract awards.

Jim: Importantly, our investment in our nation's infrastructure continues to maintain broad bipartisan support.

Jim: During the November 2023 election.

Jim: Rotors approved 88% of transportation related state and local ballot initiatives, representing approximately $7 billion of additional infrastructure funding. We expect this enhanced level of federal state and local infrastructure investment will yield.

Ward Nye: We expect this enhanced level of federal, state, and local infrastructure investment will yield steady, multi-year demand in this important, aggregates-intensive, often counter-cyclical end market. Moving to non-residential, and starting with heavy industrial, strong demand for large manufacturing and heavy side energy projects is expected to counterbalance ongoing moderation in warehouse and data center construction from its COVID peak. Construction spending for manufacturing in the United States continues to trend positively, with the December seasonally adjusted annual rate of spending for 2023 at $214 billion.

Jim: Steady multiyear demand in this important aggregates intensive often counter cyclical end market.

Jim: Moving to nonresidential and starting with heavy industrial strong demand for large manufacturing and heavy side energy projects is expected to counterbalance ongoing moderation in warehouse and data center construction from its Covid peak construction.

Jim: Construction spending for manufacturing in the United States continues to trend positively with the December seasonally adjusted annual rate of spending for 2023 at 214 Billion% to 61% increase from the December 2022 value.

Ward Nye: 61% increase from the December 2022 value of $133 billion. Manufacturing projects continue to be supported by demand from the ongoing reshoring of critical product supply chains, including semiconductors and electric vehicle battery manufacturing. As an example, in the fourth quarter of 2023, Toyota announced an $8 billion expansion to their battery manufacturing campus in North Carolina, bringing their total investment to approximately $14 billion. This incremental investment solidifies North Carolina as Toyota's central hub for lithium-ion battery production in North America, with its campus having over 7 million square feet.

Jim: $133 billion.

Jim: Manufacturing projects continue to be supported by healthy demand from the ongoing re shoring of critical product supply chains, including semiconductors and electric vehicle battery manufacturing as an example in the fourth quarter of 2023, Toyota announced an $8 billion of expansion to their battery manufacturing campus.

Jim: In North Carolina, bringing their total investment to approximately $14 billion. This incremental investments solidifies North Carolina is Toyota Central hub for lithium ion battery production in North America with its campus, having over 7 million square feet.

Ward Nye: Most importantly, our quarries are well positioned to supply the aggregate needs for this type of multi-year project. Shifting to light non-residential, while demand for this segment remains resilient through 2023 despite higher interest rates, high office vacancy rates, and tighter commercial lending conditions, we expect 2024 demand in this segment to moderate as it generally follows single-family residential development with a lag. Given the structural housing deficit and favorable population trends in Key Mart and Marietta, we fully expect the affordability-driven single-family residential slowdown will recover as interest rates decline further and monthly mortgage payments become relatively more affordable. Although there's still near-term uncertainty, we're encouraged by recent trends in single-family housing starts, a leading indicator of aggregate demand, which were 1 million units in December, an increase of 16 percent from a year ago.

Jim: Accordingly, our quarries are well positioned to supply the aggregates needs for this type of multi year project.

Jim: Shifting to light nonresidential, while demand remained resilient through 2023, despite higher interest rates high office vacancy rates and tighter commercial lending additions. We expect 2020 for demand in this segment to moderate is it generally follows single family residential development with a lag.

Jim: Given the structural housing deficit and favorable population trends in key Martin Marietta markets, we fully expect the affordability driven single family residential slowdown will recover as interest rates declined further and monthly mortgage payments become relatively more affordable.

Jim: Though theres still near term uncertainty we are encouraged by recent trends from single family housing starts a leading indicator of aggregates demand, which were 1 million units in December an increase of 16% from a year ago.

Jim: Yeah.

Ward Nye: Looking ahead, we expect 2024 to be another record year for Martin Marietta. As previously mentioned, we anticipate flat aggregate shipments as infrastructure and large-scale non-residential projects should largely offset softness in the residential and light non-residential sectors. With steady product demand supporting favorable commercial dynamics and the disciplined execution of our value over volume strategy, we expect double-digit aggregates price and growth to overcome inflationary pressures and lead to expanded gross margins and unit profitability growth. Combined with contributions from our cement, downstream, and magnesia specialties businesses, and contributions from our recently acquired Colorado assets, we are confident in our expectations for consolidated adjusted EBITDA of $2.24 billion at the midpoint. To conclude, we're extremely proud of our record-setting performance in 2023. We demonstrated our ability to successfully navigate another challenging macroeconomic environment and deliver superior returns for shareholders. As we begin the new year, our teams remain committed to employee health and safety, Commercial and Operational, Sustainable Business Practices, and the execution of our SOAR 2025 initiatives. We will build the safe.

Jim: Looking ahead, we expect 2024 to be another record year for Martin Marietta as previously mentioned, we anticipate flat aggregates shipments as infrastructure and large scale nonresidential projects should largely offset softness in the residential and light nonresidential sectors.

Jim: With steady product demand supporting favorable commercial dynamics and the disciplined execution of our value over volume strategy, we expect double digit aggregates pricing growth to overcome inflationary pressures and lead to expanded gross margins and unit profitability growth.

Jim: Combined with contributions from our cement downstream and magnesia specialties businesses and contributions from our recently acquired Colorado assets, we're confident in our expectations for consolidated adjusted EBITDA of $2 billion to $4 billion at the midpoint.

Jim: To conclude we are extremely proud of our record setting performance in 2023, we demonstrated our ability to successfully navigate another challenging macroeconomic environment and deliver superior returns for shareholders. As we begin the new year, our teams remain committed to employee health and safety.

Jim: Commercial and operational excellence sustainable business practices and the execution of our soar 2025 initiatives as we build the safest best performing and most durable aggregates led public company.

Operator: Best Performing and Most Durable Aggregates Led Public. We look forward to continuing our strong momentum and driving responsible and profitable growth in 2024 and beyond. If the operator will now provide the required instructions, we will turn our attention to addressing your questions. Thanks. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touch screen.

Jim: We look forward to continuing our strong momentum and driving responsible and profitable growth in 2024 and beyond.

Jim: The operator will now provide the required instructions, we'll turn our attention to addressing your questions.

Speaker Change: Thank you.

Speaker Change: Ladies and gentleman, who will now begin the question and answer session should you have a question. Please press the star followed by the one on you touched a lifestyle if you will.

Operator: You will hear a three-tone bump acknowledging your... Questions will be taken in order. Should you wish to cancel your request, please press the star followed by the number. If you are using a speakerphone, please lift the handset before pressing any button.

Speaker Change: Retail unbalanced acknowledging your request questions will be taken in the order received should you wish to cancel your request. Please press the star followed by the tail.

Speaker Change: If you are using a speaker phone please lift the handset before pressing Andy can you. Once again that is star one should you wish to ask a question.

Trey Grooms: Once again, that is star number one, should you wish to ask. Your first question is from Trey Grooms, from Stevens. Please ask your question. Good morning.

Speaker Change: Your first question is from Trey Grooms from Stephens. Please ask your question.

Trey Grooms: Yes, good morning, Jim.

Ward Nye: Wording, Jim. You guys have been quite busy, and first, I wanted to congratulate you and the team on the recent acquisition announcement. They look like great assets and a great fit for you guys. It's been a busy weekend, I'll tell you that. Yeah, I bet it was.

Trey Grooms: You guys have been quite busy and first I wanted to congratulate you and the team on the recent acquisition announcement, they look like great assets and a great fit for you guys.

Trey Grooms: Alright, Thank you very much aligned with the busy weekend I'll tell you that.

Trey Grooms: Yes, but it was.

James A. J. Nickolas: On that note, Jim, and you touched on it, but could you help us with a bit more detail on how to bridge the guide for the full year? Maybe help us understand and quantify, you know, what is included and what is not included as we look at the guide for 2400. So we've closed on two transactions, the acquisition of Alfry, that is in, and you can think about that maybe as between $40 and $45 million of EBITDA coming from that business. And then we've also closed the divestiture of our South Texas Cement and ReadyMix business, and you can think about that as around $170 of EBITDA that was divested. So those are coming out of what you would have seen maybe from the 2023 view.

Speaker Change: On that note Jim.

Trey Grooms: Touched on it but could you could you help us with a bit more detail on how to bridge the guide for the full year.

Trey Grooms: Maybe help us understand and quantify what is included what is not included as.

Trey Grooms: As we look at the guide for 'twenty four.

Trey Grooms: Yes.

Jim: To do that so we've closed now on two transactions the acquisition of <unk> that is in.

Trey Grooms: And that you can think about that maybe is between 40% and 45 million of EBITDA coming from that business and then we've also closed the divestiture of our south, Texas cement and ready mix business.

Trey Grooms: And you can think about that is around 170 of EBITDA that was divested. So those are those are coming out of what you would've seen probably from the 2023 view.

Trey Grooms: The Blue Water Acquisition, call it $135 million of EBITDA, that is not, that would be a full year run rate view, that is not included in our guide. We will, of course, include that. When that closes, we'll update our guidance for that additional EBITDA at that point, but hopefully, that provides the necessary ins and outs for you to make that work. Yeah, that's super helpful.

Trey Grooms: The blue water acquisition.

Trey Grooms: Call It 135, or so million of EBITDA that is not.

Trey Grooms: Full year run rate view that is not included in our guide we will of course include that one.

Trey Grooms: When that closes we'll update our guidance for that additional EBITDA at that point, but hopefully that provides the necessary ins and outs for you to make that work.

Speaker Change: Yeah, that's super helpful got it and one more if I could.

Ward Nye: Got it. And one more, if I could, you know, I'm located not too far from some of your locations. And you know, January weather was tough, particularly here in the south, where we aren't used to snow and ice or sub-freezing temps for long periods of time.

Trey Grooms: Located not too far from some of your locations and it's no secret January weather was tough.

Speaker Change: Particularly here in the south where we arent used to snow and ice or sub freezing temps for long periods of time.

Trey Grooms: Can you help us think about that in one cue and anything else to note that maybe we should be aware of as we think about this first quarter? Trey, thanks a lot. I mean, that's a really good question because, as you recall, last year in Q1, the weather was actually disproportionately good, and I think when people saw the Q1 numbers, they thought, wow, that's really something. And you know what I've long said, the first quarter can largely be made or broken by the last two weeks in March, but if you do have really challenging weather in January and February, it can put you So to that end, you should expect a different cadence.

Speaker Change: Can you help us on maybe how to think about that in <unk> and anything else to note that maybe we should be aware of as we think about this first quarter.

Speaker Change: Alright, Thanks, a lot I mean, that's a really good question because as you recall last year in Q1 weather was actually disproportionately good and I think when people saw Q1 numbers. They thought well, that's really something and you know what I've long said the first quarter can largely be made or broken by the last two weeks in March but if you do have really challenged.

Trey Grooms: Weather in January and February it can put you back a little bit so to that end you should expect a different cadence I'm going to turn to Jim and asks can we give you some more detail on what that cadence likely to look at look like this year. So Jim back to you for a moment on that place. Yes. So Q1 2023 as ward mentioned was unseasonably.

James A. J. Nickolas: I'm going to turn to Jim and ask him to give you some more detail on what that cadence is likely to look like this year. So Jim, back to you on that, please. Yeah, so Q1 2023, as Ward mentioned, was unseasonably good.

Jim: <unk> good.

James A. J. Nickolas: That year, Q1 represented 15% of our gross profits. I'm speaking on a consolidated basis, so it's not product by product, but on a consolidated basis, 15% of gross profits were earned in Q1. Again, it's a lower profit quarter, so small changes can have big percentage impacts. And then pointing out, as you did, the weather this year is worse in Q1, I'm now going to guess around 11.5% of our gross profits would occur in Q1 of this year. So that's about a 350 basis point drop.

Jim: That year Q1 represented 15% of our gross profit I'm speaking on a consolidated basis. So it's not a product by product, but on a consolidated basis, 15% of gross profits were earned in Q1.

Jim: Again, it's a lower EBIT lower profit quarter. So small changes can have a big percentage impacts.

Jim: And then pointing out as you did the weather this year was worse in Q1.

Jim: I'm not going to guess around 11, 5% of our gross profits occur in Q1 of this year. So that's about a 350 basis point drop I would say Q2, three and four would each be about a little bit more than one percentage points increasing versus what they were last year again thats percentages of total yearly profits does.

James A. J. Nickolas: I would say with Q2, three, and four would each be about a little bit more than one percentage point higher versus what they were last year. Again, that's percentages of total yearly profit. Did that help?

Jim: It helped.

Trey Grooms: Yes, sir. I got it. That's super helpful. Thank you and good luck. Thanks so much.

Speaker Change: Yes, Sir I got it that's super helpful. Thank you and good luck.

Speaker Change: Great. Thanks, so much.

Ward Nye: Just a bit more color on that. So obviously, January was a really challenging month for customers and everyone else, as you would imagine. February, as we've seen good weather come through, the business has done what we would have thought. So I think that's important to note as a footnote to what Jim just took you through. But Trey, thanks for the question.

Speaker Change: One bit more color on that so obviously January was a really challenging month for customers and everyone else as you would imagine February as we've seen good weather come through the business has done what we would have thought so I think that's important to note.

Speaker Change: The footnote to what Jim just took you through but Trey thanks for the question.

Speaker Change: Thank you.

Stanley Stoker Elliott: Thank you. Thank you. Your next question is from Stanley Elliott from Stifel. Please ask your question. Good morning, Ward, Jim.

Speaker Change: Thank you. Your next question is from Stanley Elliott from Stifel. Please ask your question.

Stanley Stoker Elliott: Hey, Good morning Ward, Jim Congratulations on another successful year.

Ward Nye: Congratulations on another successful year. Ward, maybe it's a good time to get an update on how you guys are thinking about SOAR 2025. You've effectively doubled the market cap since that came out in 2020-2021. Any comments on, I guess, the execution thus far?

Stanley Stoker Elliott: Maybe a good time to get an update on how you guys are thinking about soar 2025 immediate effectively double the market cap since that came out in 2000 22021.

Stanley Stoker Elliott: Any comments on I guess the execution, thus far maybe how are you thinking about recent future and future portfolio moves and maybe tie that back into your commercial efforts.

Ward Nye: Maybe how are you thinking about recent and future portfolio moves and maybe tie that back into your commercial efforts? Stanley, thanks for the question. You're right.

Speaker Change: Thanks for the question Youre right I mean, we've been.

Ward Nye: I mean, we've been really disciplined and very thoughtful in each of our SOAR five-year increments. So if you go back in time and remember the first one came out in 2010, and then that was through 15, then 15 we did SOAR 2020, then most recently again, very cleverly, SOAR 2025, and we've been able in each of those to effectively double our market cap, and we're almost there now, and obviously, we still have some way ahead of us in SOAR 2025. I would like to say a couple of things.

Speaker Change: Really disciplined very thoughtful in each of our SOR five year increments. So if you go back in time and remember the first one came out in 2010 and that was through 2015 than 15, we did sort of 2020 than most recently again very cleverly soar 2025.

Speaker Change: And we've been able in each of those to effectively double our market cap and we're almost there now and obviously, we still have some track ahead of us and so our 2025 I would say a couple of things.

Ward Nye: One, the commercial execution that you've seen us focused on is something that we will continue to be focused on. I think you see it in what we've given relative to our guide this year. Again, we're looking at ASP increases of 11 percent at the midpoint. And again, I think it's important to state, Stanley, that does not contemplate mid-years. That's the same type of conversation we had in 2023 as well.

Speaker Change: One the commercial execution that you've seen is focused on.

Stanley Stoker Elliott: Is something that we will continue to be focused on and I think youll see it in what we've given relative to our guide. This year again, we're looking at ASP increases at 11% at the midpoint.

Stanley Stoker Elliott: And again I think it's important to state Stanley.

Stanley Stoker Elliott: That does not contemplate mid years best the same type of conversation we had.

Stanley Stoker Elliott: In 2023 as well.

Ward Nye: And you'll recall that we came back and actually had mid-years in more than half of our market. So, again, we'll come back and revisit that at half a year and see where that is. The other thing that I think is important to keep in mind is that you've seen what I think is a lot of very productive, very appropriate M&A. I think it's totally consistent with what we've said to the market. We are an aggregate slut this, And part of what I'm moved by, if we look at simply what's occurred so far this year.

Stanley Stoker Elliott: And you'll recall that we came back and actually had mid years and more than half of our markets. So again come back and revisit that at half year and see where that is the other thing that I think is important to keep in mind as you've seen what I think is a lot of very productive very appropriate M&A.

Stanley Stoker Elliott: It's totally consistent with what we've said to the market. We are an aggregates led business and part of what I'm moved by if we look at simply puts occurred so far this year.

Ward Nye: Two large transactions with assets coming into the organization. Obviously, Blue Water still has some time to go through the Hartscott process, but we'll close on that transaction. Between Blue Water and what we've done with our Bryan Sons, those are two pure play aggregates.

Stanley Stoker Elliott: Two large transactions with assets coming into the organization, obviously blue water still has some time to go through the Hart Scott process, but we will close on that transaction between blue water and what we've done without Brian sons.

Stanley Stoker Elliott: Two pure play aggregates businesses.

Ward Nye: And what I'm particularly moved by, as well, if we look at our pipeline... That's what our pipeline looks like, too. I do believe our company is positioned from a quality growth perspective and is very compelling. And it's an overused term, but I almost think it's a unique position as well.

Stanley Stoker Elliott: And what I am, particularly move by as well if we look at our pipeline.

Stanley Stoker Elliott: That's what our pipeline looks like too.

Stanley Stoker Elliott: I do believe our company is positioned from a quality growth perspective, and a very compelling and it's an overused term, but I almost think unique position as well. So we'll commercial discipline via piece of it you bet will operational excellence be a piece of it and we think it will.

Ward Nye: So will commercial discipline be a part of it? You bet. Will operational excellence be a piece of it? And we think it will continue to be, particularly as we bring these businesses into our fold. But again, our ability to do shareholder value-increasing transactions, we think, here in the near-term, medium-term, and long-term, is a fundamental differentiator for our business. And if we think about what value creation looks like for Martin Marietta and its shareholders, we think those are the key drivers. But Stanley, I hope that's helpful and responsive to your question. It sure is. Thanks so much and best of luck!

Stanley Stoker Elliott: <unk> to be particularly as we bring these businesses into our fold.

Stanley Stoker Elliott: But again, our ability to do shareholder value increasing transactions, we think here in the near term medium term and long term is a fundamental differentiator for our business and if we think about value creation. It looks like for Martin Marietta and its shareholders. We think those are the key drivers.

Stanley Stoker Elliott: Stanley I hope that's helpful and responsive to your question.

Stanley Stoker Elliott: Sure does thanks, so much and best of luck.

Speaker Change: Thank you Brent.

Stanley Stoker Elliott: Thank you. Your next question is from Anthony Pettinari from... That's a good question. Good morning. Good morning. Good morning.

Stanley Stoker Elliott: Thank you. Your next question is from Anthony Pettinari from Citi. Please ask your question.

Anthony Pettinari: Hi, good morning.

Stanley Stoker Elliott: Morning.

Anthony Pettinari: The gross profit per ton guidance of 840, I think implies cost per ton up maybe mid single digit year over year. If I got that right. I was just wondering if you could bridge that between maybe some of your different cost inputs and any kind of assumptions around cost categories, maybe energy.

Anthony Pettinari: You know, the gross profit per ton guidance of 840 I think implies cost per ton up, https://www.tinyurl.com and any kind of assumptions around cost categories and maybe energy for the whole thing. I'll ask Jim to go through and give you a bucket-by-bucket view, but overall, you're entirely right. If we're just looking at general inflation, it's going to be in the mid-to That can obviously move around a little bit, but there are some components of our business that are seeing higher levels of inflation. I think it's important to say that labor is actually not one of those. Those numbers continue to be in a very comfortable place both for our workforce and for our company, but let Jim take you through some of the puts and takes on some of the other inputs.

Anthony Pettinari: For the for the balance of the year.

Speaker Change: I'm happy to tell you about all I'll ask Jim to go through and it gives you a bucket by bucket view, but overall you're entirely right. If we're just looking at general inflation, it's going to be in the mid to high single digits range that can obviously move around a little bit but there are some components of our business that are seeing higher pieces of inflation.

Speaker Change: Yes, I think it's important to say that labor is actually not one of those those numbers continue to be in a very comfortable place both for our workforce and for our company, but let Jim take you through some of the puts and takes on some of the other inputs.

Ward Nye: It's about 7% inflation on the COGS, on the agribusiness, COGS per ton. So here are the items that are above 7% or north of 7. Oil and lubricants are expected to be up quite a bit. Explosives still remain high.

Jim: It's about it's about 7% inflation on the Cogs on the acreage business Cogs per ton.

Jim: So here are the items that are above 7% or north of seven oil and lubricants, we are expecting to be up quite a bit explosive still remain high.

Jim: The parts and equipment for the plant also about in that ZIP code. So those are the areas that are pushing above seven areas that are pushing it below seven are as ward mentioned labor, which is our biggest cost component.

James A. J. Nickolas: The parts and equipment for the plant are also about in that zip code. So those are the areas that are pushing it above 7. Areas that are pushing it below 7 are, as Ward mentioned, labor, which is our biggest cost component, and also diesel and electricity and natural gas. Those are not expected to be headwinds in 2024. So those are the large buckets, I would say, that are deviating from the 7%. Some are more than 7.

Jim: And also diesel and electricity Nat gas those are not expected to be headwinds.

Jim: In 2024 so.

Jim: Those are the large buckets I would say that our.

Jim: Deviating from the 7% some are more than seven others are well below the 7%, but on a blended basis thats, where we're ending up.

James A. J. Nickolas: Others are well below the 7, but on a blended basis, that's where we're ending up. Got it, got it. And the assumption for diesel is just the current price. There's a smidge of a headwind for diesel, not much, off of the current spot price. So we hope we've been a bit punitive to ourselves, but we'll see how that plays out, Anthony. Thanks so much.

Speaker Change: Got it got it and then the assumption for diesel was just current current prices or.

Speaker Change: There's a smidge of headwind in for diesel not much.

Speaker Change: Current spot prices.

Speaker Change: So we hope we've been a bit punitive to ourselves that we'll see how that plays out Anthony.

Speaker Change: No that's very helpful I'll turn it over.

Speaker Change: Thanks, so much.

Speaker Change: Yes.

Anthony Pettinari: Thank you. Your next question is from Angel Costello from Morgan Family. Please ask your question. Hi, good morning.

Speaker Change: Thank you. Your next question is from Angel Castillo from Morgan Stanley. Please ask your question.

Angel Castillo: Hi, good morning, and thanks for taking my question just was curious on the recent acquisition. So I was wondering if you could help us quantify a little bit more or give us a little bit more color.

Angel Costello: And thanks for taking my question. Just curious about the recent acquisitions; I was wondering if you could help us quantify a little bit more or give us a little bit more color as to kind of the upside opportunity on the pricing side as you look at those assets in those regions, bringing those more to the value over volume strategy. If we look at the overall businesses, looking at the Frye business in Colorado, they were doing somewhere between three and a half and four million tons of stone per hour. Denver's a very attractive marketplace.

Angel Castillo: Of upside opportunity on the pricing side.

Angel Castillo: If you look at those assets in those regions in terms of bringing those mark to the value over volume strategy.

Speaker Change: Well look if we look at the overall businesses and looking at the Prime business in Colorado, They were doing somewhere between three and a half and 4 million tonnes of stone Brad.

Angel Castillo: With Denver.

Angel Castillo: Very attractive marketplace.

Ward Nye: We'll have to see how that plays out, but you can go back over time and get a good sense of how we've approached those markets. As you can imagine, the barriers to some degree of entry into hard rock can be quite high in a number of markets, so we feel very good about our team in Colorado. They're very cost-conscious, and they're very commercially focused, and we think the marketplace in Denver will continue to be very attractive for an extended period of time. Keep in mind, if we go back... Let's call it 13 years. We had no significant business at all in Colorado.

Angel Castillo: We'll have to see how that plays out but you can go back over time.

Angel Castillo: We had a good sense of commercially at least how we approach those markets as you can imagine the barriers to some degree of entry and hard rock.

Angel Castillo: It can be quite high and a number of markets. So we feel very good about our team in Colorado. They are very cost conscious.

Angel Castillo: We are very commercially focused and we think the marketplace and Denver will continue to be very attractive for an extended period of time keep in mind, if we go back.

Angel Castillo: Call. It 13 years, we had no significant business at all in Colorado, We look up and down the front range today, we're the clear leader in aggregates up and down the 25 Carter remember, that's where 80 plus percent of the population in Colorado lives and again, the biggest piece of it being in Denver and now between the Wall Street.

Ward Nye: We look up and down the front range today. We're the clear leader in aggregates up and down the I-25 corridor. Remember, that's where 80-plus percent of the population in Colorado lives.

Ward Nye: And again, the biggest piece of it being in Denver. And now, between the Wallstrom quarry, which we picked up, and our Spec Ag quarry, a very attractive position in that marketplace. If we go and look at Blue Water, obviously, that transaction has not closed. We're going through the hardscot process soon, and we're hoping to have that done in half-year-ish. Heavy on the ish, by the way.

Angel Castillo: Which we picked up in our spec Ed Corey.

Angel Castillo: A very attractive position in that marketplace.

Angel Castillo: If we go and look at Blue water, obviously that transaction has not closed we're going through the Hart Scott process.

Angel Castillo: Soon and we're hoping to have that done half year ish heavy on the ish by the way it could clearly pushed into the second half of the year. If we look at the overall tonnage that's going to be around 13 million tons of stone, but importantly, if you look at the markets in which it gives us a nice footprint. These are markets that we've long talked about wanting to have.

Ward Nye: It could clearly push into the second half of the year. If we look at the overall tonnage, that's going to be around 13 million tons of stone. But importantly, if you look at the markets in which it gives us a nice footprint, these are markets that we've long talked about wanting to have a natural position in. So suddenly, we find ourselves in Nashville. Suddenly, we find ourselves in Knoxville.

Angel Castillo: A natural position and so suddenly we find ourselves in Nashville suddenly we find ourselves in Knoxville now we find ourselves in a much more significant way in south, Florida and around Miami.

Ward Nye: Now we find ourselves in a much more significant way in South Florida and around Miami. So if you go back and take a look at the slide presentation that we gave to the analysts and investors in February of 2021, we talked about a series of markets that we wanted to enter. We talked about Northern California, Southern California, Arizona, and in and around Austin, Texas.

Angel Castillo: So if you go back and take a look at.

Angel Castillo: The slide presentation that we gave to the analysts and investors in February of 2021, we've talked about a series of markets that we wanted to enter and we talked about northern California, Southern California, Arizona.

Angel Castillo: In and around Austin, Texas, we talked about the middle Tennessee, We talked about South, Florida, and we've talked about northern Virginia.

Ward Nye: We talked about Middle Tennessee, we talked about South Florida, and we talked about Northern Virginia. We're literally in a place now that we're putting checks in most of those boxes. So again, if you take a look at the overall pricing at these facilities relative to our corporate average, it's modestly below our corporate average. So again, I'm hoping I'm giving you something directionally that you can work with. But that gives you a sense of the markets. It gives you a sense of the overall volume.

Angel Castillo: We're literally in a place now that we're putting checks in most of those boxes.

Angel Castillo: So again, if you take a look at the overall pricing at these facilities relative to our corporate average it's modestly below our corporate average so again I'm, hoping I'm, giving you something directionally that you can work worked with but that gives you a sense of the markets that gives you a sense of the overall volume.

Ward Nye: And I do think we will operationally bring increased efficiencies to these markets. And we're thrilled to, number one, have already brought the Frye team into the Martin Marietta fold. And we look forward to bringing the Blue Water team into our organization as well. So hopefully, Angela, that responds to your question. Thank you. You bet. Thank you.

Angel Castillo: Do think we will operationally, bringing increased efficiencies to these markets and we're thrilled to number one have already brought the fry team into the Martin Marietta polled.

Angel Castillo: And we look forward to bringing them to bluewater team into our organization as well so hopefully ensure that that response to your questions.

Speaker Change: That's very helpful. Thank you.

Speaker Change: You bet.

Angel Castillo: Thank you. Your next question is from Jerry Revich from Goldman Sachs. Please ask your question.

Jerry Revich: Your next question is from Jerry Revich from Goldman Sachs. Please ask your question. Yes, China. Good morning, everyone. Good morning, Jerry.

Jerry Revich: Yes, hi, good morning, everyone.

Angel Castillo: Jerry.

Jerry Revich: What I'm wondering is if we just take a step back historically.

Ward Nye: I'm wondering if we just take a step back historically, you know, in a flat and demand environment, the industry has realized four points of price or less, and obviously, we're putting up much better performance here, and the price-cost spread is widening. As you think about what the industry learned over the course of the hyperinflation period, I guess, do you think the fear of inflation stays with the industry beyond this year or not? Please see the complete disclaimer at www.google.com or at www.google.com/policies. Does that change the mindset for obviously you folks and others?

Jerry Revich: Flat and demand environment, the industry has realized four points of price or less and obviously, we're putting up much better performance here and the price cost spread widening.

Jerry Revich: As you think about what you've.

Jerry Revich: <unk> learned over the course of the hyperinflation period.

Jerry Revich: I guess do you think the fear of inflation stays with the industry beyond this year or could we return to slower pricing cadence.

Jerry Revich: 25 towards that historical rate I know, it's super early but.

Jerry Revich: I feel like the industry got burned with it.

Jerry Revich: <unk> project to the upside I'm wondering does that change the mindset.

Jerry Revich: Jerry, the only thing I can speak to is Martin Marietta, of course, and I would say several things. One, obviously, inflation has moved significantly over the last couple of years, and we took actions that were smart and prudent to protect our company as it went up. Secondly, at least here in our company, we recognize that having these long-lived preserves is significant. We're sitting here today at current extraction rates with reserves in excess of 70 years. Something that I think we talk about inside our company is that these reserves are worth more tomorrow than they are today. In some geographies, it's very difficult to replicate or replace these reserves.

Jerry Revich: Obviously, you folks and others in your markets.

Jerry Revich: Jerry the only thing I can speak to as Martin Marietta of course, and I would say several things.

Jerry Revich: One obviously inflation has moved significantly over the last couple of years and we took the actions that we're smart and prudent to protect our company as that went up.

Jerry Revich: Secondly.

Jerry Revich: At least here at our company, we recognize that having these long lived reserves.

Jerry Revich: Is significant.

Jerry Revich: We're sitting here today at current extraction rates with reserves in excess of 70 years something that I think we talk about inside our company as these reserves are worth more tomorrow than they are today.

Jerry Revich: In some geographies, it's very difficult to replicate or replace the reserves and I think as we think long term and that's how we tend to think about this business. If we go back to one of the questions that was earlier.

Ward Nye: And I think it's because we think long term, and that's how we tend to think about this business. If we go back to one of the questions that were earlier, they were asking about SOAR and the fact that we look at our business in five-year increments. But the simple fact is, Jerry, we think about our business in terms of decades, not years, not five years, but really decades. And as we look at it through that lens, we recognize that we have a product that is absolutely essential in every form of heavyside development. You don't need asphalt in every piece of it. You don't need concrete in every piece of it.

Jerry Revich: They were asking about soar and the fact that we look at our business in five year increments, but the simple fact is Jerry.

Jerry Revich: We think about our business in terms of decades not years, not five years, but really decades.

Jerry Revich: And as we look at it through that lens, we recognize that we have the product that is absolutely essential.

Jerry Revich: Every form of heavy side development, you don't need asphalt and every piece of it you don't need concrete and every piece of it but you need the aggregates and absolutely every piece of it so from our perspective as we look at what aggregate sales for on a per ton basis, and then we consider one its vitality.

Ward Nye: But you need aggregate in absolutely every piece of it. So from our perspective, as we look at what aggregate sells for on a per ton basis, and then we consider, one, its vitality to a product or to a project and its overall cost relative to the project. We think we're actually adding more to an individual project than we are costing a project. That's how we think about what we're doing. So if we go back to the notion of whether commercial excellence will continue to be a driver for our organization and, I think, make our pricing look fundamentally different going forward than it did a decade ago? Yeah, I think it probably will. Do I think operationally we will continue to bring great value to the organization by making our businesses better, faster, safer, more efficient, etc.? Yeah, I think we will.

Jerry Revich: To a product or to a project.

Jerry Revich: And its overall cost relative to the project.

Jerry Revich: We think we're actually adding more to it.

Jerry Revich: Individual project project, then were costing a project that's how we think about what we're doing so if we go back to the notion of Wil commercial excellence continued to be a driver for our organization and I think make our pricing look fundamentally different going forward than it did say it.

Jerry Revich: Decade ago, Yes, I think it probably will.

Jerry Revich: Do I think operationally, we will continue to bring great value to the organization by making our businesses better faster safer more efficient et cetera, Yes, I think we will.

Ward Nye: But I also think that what you should expect from us, and this ties in to a degree to it as well, Jerry, is that we will continue to be a very responsible, very visionary acquirer of attractive businesses and attractive geographies. And I think if you take those building blocks that I've taken you through, it gives you a good sense of how to think about a business overall from a commercial perspective, really appreciate the color. And then, you know, you folks have been super busy over the Super Bowl weekend.

Jerry Revich: But I also think that what you should expect from us and this ties to a degree to it is what I'm hearing is we will continue to be a very responsible very visionary acquirer of attractive businesses in attractive geographies and I think if you take those building blocks that I've taken you through it.

Jerry Revich: As you a good sense of how to think about our business overall from a commercial perspective.

Jerry Revich: Yes.

Speaker Change: Really appreciate the color and then.

Speaker Change: You folks have been super busy over Super Bowl weekend, and then I'm wondering if you look at the M&A pipeline today now.

Jerry Revich: And, you know, I'm wondering if you look at the M&A pipeline today, now that the M&A pipeline from here, Ward, what's the range of outcomes in terms of how much more capital we can deploy over the balance of, 24, you predicted 24 was going to be a really active M&A year, and I'm just wondering how much is left. All there is to do based on what's in the pipeline. Jerry, that's a great question. So here's the way that I would encourage you to think about it. Let's assume that Frye is closed, which it is, and let's assume that Bluewater is also closed.

Speaker Change: Rapid wrapping up the <unk>.

Speaker Change: Last deal hopefully that announced sued the M&A pipeline from here or what's the range of outcomes in terms of how much more capital we can deploy over the balance of 24, you predicted 24 was going to be a really active M&A year and I'm just wondering how much is left.

Speaker Change: We're there to do based on what's in the pipeline.

Speaker Change: Jerry that's a great question, so here's the way that I would encourage you to think about it let's assume that fries closed, which it is and thats assumed the blue water was closed we'd be leveraged at about 185 times. So keep in mind through a cycle, we'd like to be leverage two to two five times. So we're still despite that degree of acquisitive.

Ward Nye: We'd be leveraged at about 1.85 times. So keep in mind, through a cycle, we'd like to be leveraged two to two and a half times. So we're still, despite that degree of acquisitive activity, we're still below where we would typically like to be. So my point is this: when we've seen attractive transactions before, we haven't done it a lot, but we've gone over three times. We've de-leveraged actually very quickly and easily when we've done that. I continue to believe that there will be more transactional activity this year. I would be disappointed if there's not one.

Jerry Revich: <unk> were still below where we would typically like to be.

Jerry Revich: So my point is this when we've seen attractive transactions before we haven't done it a lot, but we've gone over three times, we've de Levered actually very quickly and easily when we've done that continue to believe that there will be more transactional activity. This year I would be disappointed if theres not youre right on our Q3 call back in <unk>.

Ward Nye: You're right on our Q3 call back in November. I said at that time that I thought 2024 would be a pretty busy year. Obviously, we're quite a month and a half into it.

Jerry Revich: Remember I said at that time, I thought 2024 would be a pretty busy year, obviously were quite a month and a half into it it's been a really busy year already but.

Ward Nye: It's been a really busy year already, but it's been a really busy year. Jerry, the fact is that I think there's gonna be more. I'd be disappointed if there weren't, and you should expect it to be more pure stone type transactions. Jerry. Thank you.

Jerry Revich: Jerry The fact is that I think theres going to be more I'd be disappointed if there wasn't and you should expect it to be more pure stone type transactions Jerry.

Jerry Revich: Okay Super Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Philip Ng: Your next question is from Philip Ng from Jefferies. Please ask your question. Hey guys, congrats on a really strong quarter. If I take your guidance, Jim, I think you're calling for flat-ish volumes for the full year. Not too dissimilar to what you told us back on the 3Q call, but I believe your guide now includes AFS, so that would imply maybe volumes are a little softer, but everything that you mentioned, Rohit, sounded pretty constructive, so I just want to make sure we're not, first of all, overthinking this. And when you look out to the back half and you kind of talk about rates coming down, that could be a good thing for housing. Could volumes kind of inflect in the back half and go into 2025? Is there a good way to think about this trajectory for us?

Speaker Change: Our next question is from Philip <unk> from Jefferies. Please ask your question.

Philip: Hey, guys congrats on a really strong quarter.

Philip: If I take your guidance, Jim I think you are calling for flattish volumes for the full year.

Philip: Not too dissimilar to what you told us back on the <unk> call, but I believe your guide now includes ASI. So that would imply maybe volumes are a little softer, but everything that you mentioned <unk> Janet pretty constructive so I just want to make sure we're not one where not all we're thinking about this.

Philip: When you look out to the back half and then you kind of talked about rates coming down that could be a good guy for housing.

Philip: Could volumes kind of inflect in the back half and go into 2025 is there a good way to think about the trajectory.

Philip: Yes.

Ward Nye: Phil, thanks for your question. There are a couple of things that I would say. Number one, you're right. I mean, if we're looking at bringing in fried chicken and let's call it, you know, three and a half million tons, you know. One thing that happened in our sale of the Hunter cement plant is that we were actually doing some stone production there as well that was going into the cement production. So, in fairness, that was probably about two million tons.

Speaker Change: Bill. Thanks for your question couple of things that I would say number one you're right I mean, if we're looking at bringing in fried and let's call. It.

Bill: Three and a half million tons.

Speaker Change: One thing that happened in our sale of the Hunter cement plant as we are actually doing some stone production there as well that was going into the cement production. So in fairness that was probably about 2 million tonnes. So really if you start taking a look at what went the other way and the Hunter transaction, what's going the other way.

Ward Nye: So, really, if you start taking a look at what went the other way in the Hunter transaction, what's going this other way near-term in fry, keep in mind that you've got a fairly seasonalally-impacted business in Colorado as well. Again, I think it leads you back to that relatively flat-ish. So, I wouldn't strain too hard on what those numbers look like because there's just enough movement on the surface of it that it could put you in a much more comfortable place. Yeah, it really does look and feel flat.

Speaker Change: Near term in Fry keeping in mind that you've got a fairly seasonally impacted business in Colorado as well again I think it leads you back to that relatively flattish so.

Philip: I Wouldnt strain too hard on what those numbers look like because theres just enough movement under the surface of it.

Philip: It puts you in a much more comfortable place yet right I was looking feel flat to your point, though.

Philip: I do believe if we see interest rate reductions and we see.

Ward Nye: I do believe if we see interest rate reductions and we see a steady, albeit somewhat slow, recovery in housing, and then what's likely to be degrees of light non-resale that come behind that in the second half of the year, I'm not sure how much it's going to push volumes up in half, too. But I certainly think it could push volumes up in half, too. I think what it's really doing is setting up 2025 to be even more productive. Obviously, on the infrastructure side, we think it's going to be pretty constructive all by itself. I mean, if you think about the fact that we're looking at what happened with highway contract awards and you're looking at basic and LTM from December 2019 through 2023, it's got almost an 11% CAGR involved in it.

Philip: Steady.

Philip: Albeit somewhat slow recovery in housing and then what's likely to be degrees of light non res that comes behind that in the second half of the year I'm not sure how much it's going to push volumes up in half two I think it certainly could push volumes up in half two I think what it's really doing is setting up 2025 to be even more productive.

Philip: Here, obviously on the infrastructure side, we think it's going to be pretty constructive all by itself. I mean, if you think about the fact that.

Philip: We're looking at what's happened on highway contract awards and Youre looking at basic and LTM from December 2019 through 'twenty, two 'twenty three that Scott almost an 11% CAGR involved in it.

Ward Nye: And then we're looking at our top 10 states and DOT budgets themselves, which are up on average 10%. Here are some percentages to keep in mind. Texas, which had a really hefty budget, is up 24%. Florida, which has been at record levels, is up 9%. North Carolina, our home court, is up 11%. Minnesota, when we bought the business there from Tiller several years ago, we said that it was a really attractive DOT.

Philip: And then we're looking at our top 10 states and D O T budgets themselves.

Philip: That are up on average, 10% and here's some percentages to keep in mind.

Philip: Texas, which had a really heady budget.

Philip: It's up 24%, Florida, which has been at record levels is up 9%.

Philip: North Carolina, our home Court is up 11%, Minnesota, when we bought the business there from til or several years ago. We said that was really attractive to Iot, it's up about 38%. So again as we're looking at public we think that that's going to be pretty compelling even as we sit and move to non res.

Ward Nye: It's up about 38%. So, again, as we're looking at the public, we think that that's going to be pretty compelling, even as we sit and move to non-res.

Ward Nye: If we're looking at manufacturing, the reshoring that we mentioned in our opening comments is pretty significant. We continue to see more activity in that space. I also called out what we're seeing consistently in energy. We got a new battery plant in Kokomo, Indiana. There's a new one coming in Bowling Green, Kentucky.

Philip: If we're looking at manufacturing the reassuring that we mentioned in our opening comments is pretty significant we continue to see more activity in that space I also called out what we're seeing consistently in energy.

Philip: We've got a new battery plant in Kokomo, Indiana, Theres, some new one coming into bowling Green, Kentucky.

Ward Nye: But what I've been a bit surprised by, and I think this may be more geographic intensive as well or sensitive, is that even in the areas that have had degrees of slowing, there are warehouses and data centers. I mean, we've got four data centers under construction right now in eastern Nebraska and western Iowa, and there's a new one that looks like it's coming online in Covington, Georgia. So, again, if we look across our geographic footprint and recognize that we've been very selective in where we operate, do I think there's a prospect that you could see some upside in the second half of the year in volumes? Yeah, I do, too.

Philip: But what I've been a bit surprised by and I think this may be more geographic intensive as well or sensitive.

Philip: Even in the areas that have had degrees of slowing warehouses and data centers I mean, we've got four data centers under construction right now in eastern Nebraska, and Western Iowa, and Theres, some new and it looks like its coming online in Covington, Georgia.

Philip: So again, if we look across our geographic footprint.

Philip: And recognize that we've been very selective in where.

Philip: Do I think there is the prospect that you could see some upside in the second half of the year on volumes, Yes, I do I think that cadence that Jim spoke to earlier, it's important to keep in mind because clearly.

Philip Ng: I think that the cadence that Jim spoke to earlier is important to keep in mind because, clearly, you know, we're not going to have a Q1 this year that looks like Q1 last year. But again, I think Q2, Q3, and Q4 can be attractive, recognizing a pretty heady Q4 we just had this year, too. So again, Phil, I hope that's helpful and constructive on the volumes and what the end uses look like. I appreciate the great color work.

Philip: We're not going to have a Q1 this year that it looked like Q1 last year, but again I think Q2, Q3, and Q4 can be attractive recognizing hey, pretty heavy Q4, we just had this year too. So again, Phil I hope that's helpful and constructive on the volumes and what the end users look like.

Phil: I appreciate the great color.

Patrick Tyler Brown: You bet. Your next question is from Tyler Brown from Raymond James. Please ask your question. Hey Tyler, are you with us? Yes, are you there?

Phil: You bet.

Phil: Yes.

Philip: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question is from Tyler Brown from Raymond James Please ask your question.

Patrick Tyler Brown: Hey, Bob.

Patrick Tyler Brown: With us.

Speaker Change: Yes.

Patrick Tyler Brown: Sorry. Yes, sir, we hear you. Hi Tyler.

Bob: Yes, Yes, we hear you Hi, Tyler.

James A. J. Nickolas: Alright, good deal. Hey, Jim, I'm curious about the CapEx guide. So it was a little bit higher than maybe we had expected, just considering the South Texas sale. Just curious what's in that CapEx number. Was there a sizable Midlothian spend in there?

Speaker Change: Yes.

Speaker Change: Hey, Tim I'm curious about the Capex guide so it was a little bit higher than maybe we had expected just considering the south Texas sale.

Speaker Change: Curious what all is in that Capex number was there a sizeable nickelodeon spend or more maybe outside of land acquisition.

James A. J. Nickolas: Maybe outsized land acquisition? It just seems like 9.5% CapEx to sales feels a bit higher than normal, just particularly considering Flatish Volume. Yeah, that's a good question, though. Our range is between 8% to 10%, typically. 9% is the most common as the midpoint.

Speaker Change: Seems like nine 5% capex to sales still feels a bit higher than normal just particularly considering flattish volume.

Speaker Change: Yes, no. Good question our range is between 8% to 10% typically 9% the most common at the midpoint, but we do have a couple of large projects in there and Youre right. The finished fuels have it is among those that's one of the larger spend in 2024 as you wrap up that project.

James A. J. Nickolas: But we do have a couple of large projects in there, and you're right, the finished mill 7 is among those. That's one of the larger spends in 2024 as you wrap up that project. Another one is that our Beckman plant in San Antonio is getting a significant upgrade there as well. So those are the two largest items that are helping to push that up to a little bit more than normal but still well within the range of what I think is typical for us. Hey, Tyler, let me add this, too, because Jim nailed it.

Speaker Change: Another one is our beckman plant in San Antonio is getting a significant upgrade there as well. So the two largest items that are helping to push that up to a limit a little bit more than normal, but still well within the range of what I think is typical for us.

Speaker Change: Let me add this too because Jim nailed it he's exactly right. The other thing that we're seeing though on occasion and we've seen it more in the last few months as real estate purchases tends to be highly opportunistic.

Ward Nye: He's exactly right. The other thing that we're seeing, though, on occasion, and we've seen it more in the last few months, is that real estate purchases tend to be highly opportunistic. And when the right real estate shows up, you don't always know when it's going to parachute in, and we have to have the ability to be pretty agile around that. So we're looking at some real estate purchases as well that we think will be important in the near, medium, and again, long-term for Martin Marietta. But broadly, very much in that range that Jim spoke to. But those are some of the moving parts, both above the water and under the water.

Philip: And when the right real estate shows up you don't always know when it's going to parachute in and we have to have the ability to be pretty agile around that so we're looking at some real estate purchases as well, but that we think will be important in the.

Philip: Near medium and again long term core Martin Marietta, but broadly very much in that range that Jim spoke to but those are some of the moving parts both above the water and under the water.

Patrick Tyler Brown: That is very helpful. Thank you. Your next question is from Kathryn Thompson from Thompson Research Group. Please ask your question. Hi, thank you for taking my question today. A lot of focus on all the great M&A and divestiture activities since November, certainly a busy holiday season through the Super Bowl. But one of the changes also, too, is just in the... Cadence and the Type of Flavor of Capital Extension CapEx as you divest some cement and take on more aggregate focus. Could you walk through what this does for free cash flow cadence and also how we should think about capital expenditure given the change in mix? And then thoughts on capital allocation going forward, given recent activity. Thank you.

Speaker Change: Yes, no that has not helped.

Speaker Change: Hum.

Speaker Change: Thank you. Your next question is from Kathryn Thompson from Thompson Research Group. Please ask your question.

Kathryn Ingram Thompson: Hi, Thanks for taking my question today.

Kathryn Ingram Thompson: A lot of focus.

Kathryn Ingram Thompson: On all the great M&A and divestiture activities.

Kathryn Ingram Thompson: Certainly a busy holiday season during the Super Bowl.

Speaker Change: One of the changes also too is just end.

Speaker Change: The cadence and the type of flavor of capital expenditure Capex as you divest some smiths and take on more aggregate focused assets.

Speaker Change: Could you walk through what this does for free cash cadence and also how we should think about capital expense given the change in mix.

Kathryn Ingram Thompson: And then thoughts on capital allocation.

Kathryn Ingram Thompson: Going forward.

Speaker Change: Given recent activity. Thank you.

Kathryn Ingram Thompson: I'm going to start with capital allocation, then come back to Jim, and he can just talk you through more degrees of cap backs and how things can move around. If you think about capital allocation, Kathryn, one of the more elegant things about our company is that it stays pretty consistent. Our view is that our best first dollar spent is on the right transaction. And again, I think our teams are good at that.

Speaker Change: So I'm going to start with capital allocation and then come back to Jim and he can just talk you through more degrees of Capex and how things can move around if you think about the capital allocation Kathryn one of the more elegant things about our company.

Kathryn Ingram Thompson: Is that stays pretty consistent.

Kathryn Ingram Thompson: Our view is our best first dollar spent is on the right transaction and again I think our teams are good at that I think they are good at identifying the deal. So I think they are good at going through the contracting process I think they are good at the integration process I think they are good at this synergy realization process. So the right transactions will be number one on capital allocation number two and Jim.

Ward Nye: I think they're good at identifying deals. I think they're good at going through the contracting process. I think they're good at the integration process. I think they're good at the synergy realization process.

Ward Nye: So the right transactions will be number one on capital allocation. Number two, and Jim will take you through more specifics, will be reinvesting in the business. As you know, if you're in the business of crushing stone, you're in the business of destroying iron.

Speaker Change: <unk> will take you through more specifics will be reinvesting in the business as you know if youre in the business of crushing stone you're in the business of destroying iron. So the fact is we will stay.

Ward Nye: So the fact is we will probably stay in those ranges that Jim spoke about a few minutes ago, but he'll go into more detail. And then lastly, the return of cash to shareholders through two things: a meaningful and a sustainable dividend, and we say both of those words very intentionally, and share buybacks at the right time. So the capital allocation priorities simply do not change.

Speaker Change: And those ranges that Jim spoke about a few minutes ago, but he'll go into more detail and then lastly is returning of cash to shareholders through two things are meaningful and sustainable dividend and we'd say both of those words very intentionally and share buybacks at the right time, so the capital allocation priorities.

Kathryn Ingram Thompson: Simply do not change now more to your question on how does this portfolio evolution that we've seen changed the way that we look at capex for that over to John Yeah. So so.

James A. J. Nickolas: Now, more to your question on how does this portfolio evolution that we've seen change the way that we look at CapEx for that average jump? Yeah. So I would expect it to either be very constant with historical levels or maybe a little bit higher as we look to replant many of our agri-plants to keep them efficient and highly automated. So as far as cadence for the year, I would expect it to be similar to last year and the year before, Q1 and Q4 a little bit heavier on the CapEx, Q2 and Q3 a little bit lighter. But of course, the things that can throw that out of whack on occasion would be the occasional opportunistic generational land purchase. That would be something that could, of course, throw those percentages and historical patterns out of kilter. But hopefully, that answers the question, KD.

John: I would expect it to go either be very constant with historical levels or maybe a little bit higher as we as we look to replant many of our our.

John: <unk> plans to keep them efficient and highly automated so as far as.

John: Cadence for the year I would expect to be similar to last year and year before Q1, and Q4, a little bit heavier on the Capex Q2, and Q3, a little lighter.

John: But of course, the things that can throw that out of whack on occasion would be the occasional opportunistic generational land purchase that would be something that could of course struggles percentages than historical patterns out of out of kilter, but.

Speaker Change: Hopefully that answers the question Katy and Catherine let me add one more note to that as well because keep in mind.

James A. J. Nickolas: And Catherine, let me add one more note to that as well, because keep in mind... When we're doing replants or otherwise, we do those because the internal rates of return on those projects are so compelling, we almost would feel silly if we didn't do them. At the same time, part of what's so compelling about an aggregates business is we have the capacity, if we need to, and we did it in COVID and we've done it before, to pull back on that capex lever if we ever need to. But we don't see a need to do that. We think we can do it very constructively. We think we can do it in a very value-additive way. But again, I think as you step back from our industry, compare it to others, and look at the degrees of agility that we can bring to something like capex in a heavy industry, it's decidedly different, and we think it's an advantage for Martin Marietta. So again, we hope that's responsive to your question. Jim's got one more point.

Speaker Change: When we're doing re plants or otherwise we're doing those because the internal rates of return excuse me on those projects is so compelling we almost would feel silly. If we didn't do them at the same time part of what's so compelling about an aggregates business is we have the capacity if we need to and we did it in COVID-19 and we've done it before to pull back on that Capex.

Speaker Change: Lever, if we ever need to we don't see a need to do that we think we can do it very constructively. We think we can do it in a.

Speaker Change: Very value additive way.

Speaker Change: But again I think as you just step back from our industry compare it to others and you look at the degrees of agility.

Speaker Change: That we can bring to something like Capex and a heavy industry.

Speaker Change: Is decidedly different and we think its advantaged Martin Marietta. So again, we hope that is responsive to your question. Tim has got one more 0.1 level point kind of an overall cash flow perspective, Catherine So our operating cash flows grew tremendously this year I'm comparing year over year now our capex did grow but our cash conversion ratio.

Ward Nye: One more point, kind of an overall cash flow perspective, Kathryn. So our operating cash flows grew tremendously this year. I'm comparing year over year now.

James A. J. Nickolas: Our capex did grow, but our cash conversion ratio improved meaningfully from 23 to 22. So we're very mindful of our cash flow. We think it's good and getting better. Even with slightly higher capex in 2024, we think that trend will continue. Great and very helpful

Tim: <unk> in 'twenty three over 22 meaningfully so.

Tim: We're very mindful of our cash flow, we think its good and getting better.

Tim: Yes, even with slightly higher Capex in 2024, we think that trend will continue.

Speaker Change: Okay great.

Speaker Change: Very helpful and just one quick clarification on guidance on interest expense.

Kathryn Ingram Thompson: And just one quick clarification on guidance on interest expense that you released today seemed a little light, but I just wanted to hopefully give a little bit of clarification on your interest expense guidance. Thank you. Sure, yeah, it's actually net interest expense. So it's gross interest expense of, call it $160, interest income of, call it $100. So net interest expense of about $60 million. Thank you very much.

Speaker Change: That you released today seem to add up.

Speaker Change: Little light, but just wanted to hopefully can give a little bit of clarification on your interest expense guidance. Thank you.

Speaker Change: Sure.

Speaker Change: Net.

Speaker Change: Interest expense so it's a gross interest expense of call. It 160.

Speaker Change: Interest income of call it.

Speaker Change: 100, so net interest expense of about 60 million at the midpoint.

Speaker Change: Great. Thank you very much.

Timna Beth Tanners: Thank you, Kath. Your next question is from Timna Tanners from Wolf Research. Please ask your question. Hey, good morning.

Speaker Change: Patrick.

Speaker Change: Thank you. Your next question is from Timna Tanners from Wolfe Research. Please ask your question.

Timna Beth Tanners: Hey, good morning.

Ward Nye: I wanted to follow up a little bit on the benefits you're seeing from IIJA and any color you can provide on the cadence that you're seeing there and your visibility. We all follow the ARTBA awards data, and it's been quite strong but kind of leveled off over the last several months, so just wondering if you can provide some more color on Number one, we are starting to see that begin to pull through. And what I would say, obviously, when you're looking at what you and I know is a $1.2 trillion bipartisan law, you know, that's a big amount of money. That's $110 billion for roads.

Timna Beth Tanners: So up a little bit on that.

Timna Beth Tanners: The benefits you're seeing from IAG and any color you can provide on the cadence that you're seeing there and your visibility. We all follow that awards data and it's been quite strong, but kind of leveled off over the last several months.

Timna Beth Tanners: Just wondering if you can provide some more color on what youre seeing there.

Speaker Change: Thank you for the question number one we are starting to see that.

Timna Beth Tanners: We can to pull through and what I would say, obviously when youre looking at what you and I know, it's a $1 two trillion dollar bipartisan law.

Speaker Change: That's a big amount of money. It that's 110 billion to roads at 66 billion for railroad maintenance, It's 42 billion for Port and airport infrastructure, but what's important.

Ward Nye: It's $66 billion for railroad maintenance. It's $42 billion for port and airport infrastructure. But what's important is to start drilling down and seeing what's going on in many respects on a state-by-state or, at times, MSA-by-MSA basis. So if we look at where NCDOT is, for example, their budget's up 11 percent. They're obviously going to see nice federal money flowing through as

Speaker Change: As to start drilling down and seeing what's going on in many respects on a state by state or times MSA by MSA basis. So if we look at where in C. D. O. T is for example, their budgets up 11%, they're obviously going to see a nice federal money.

Ward Nye: What we're basically seeing is they're increasing infrastructure funding here by $7 billion over the next decade. So, again, that starts to give you a good sense of how that money's flowing. Texas, they're looking for FY24 to be another record year of lettings.

Timna Beth Tanners: Flowing through as well, what we're basically saying is there increasing infrastructure funding here by $7 billion over the next decade. So again that starts to give you a good sense of how that money is flowing through Texas Theyre looking for FY 'twenty four to be another record year of Lettings, that's going to be at about almost 14 billion.

Ward Nye: That's going to be at about almost $14 billion. By the way, that's up about 15 percent year-over-year. Their unified transportation plan for FY24 is expected to exceed $100 billion.

Timna Beth Tanners: By the way that's up about 15% year over year their unified transportation plan for FY 'twenty four is expected to exceed $100 billion again, that's an 8% increase so against the federal funds that are flowing through a big part of that I'm, particularly moved by what we've seen happen in Florida because of the.

Ward Nye: Again, that's an 8 percent increase. So, again, the federal funds that are flowing through are a big part of that. I'm particularly moved by what we've seen happen in Florida.

Ward Nye: Because again, the recent Florida 24 budget increased to $17 billion. Again, that's an all-time high over what had been an all-time high last year. But again, as we think about what Florida's able to do because of what they're seeing from IHAA, you've got the Moving Florida Forward initiative that was announced in late Q3 that's going to bring $4 billion from the general revenue surplus into transportation in that state. And even as we look at what's going on in California, their recently passed FY24 budget includes $20.5 billion for Caltrans, and that's still a 5% year So if we're looking at where the states are, what they're doing with their budgets, how they're taking these funds that are also coming from the federal government, it's a pretty compelling story as we sit back and look at it. Jim's got a few things he wants to add as well, Timna.

Timna Beth Tanners: The recent Florida.

Timna Beth Tanners: For budget increased to $17 billion again, that's an all time high over what had been an all time high last year, but again as we think about what Florida is able to do because of what theyre seeing from IHA, a you've got the moving Florida forward initiatives. There was announced in late Q3, that's going to bring for <unk>.

Timna Beth Tanners: Billion dollars from general revenue surplus into transportation in that state and even as we look at what's going on in California that Theyre recently passed FY 'twenty for budget includes 25 billion for Cal Cal trends and that's still a 5% year over year increase from FY2023.

Timna Beth Tanners: So if we're looking at where the states are what theyre doing with their budgets how they're taking these funds that are also coming from the federal government. So it's a pretty compelling.

Timna Beth Tanners: <unk> story as we sit back and look at it Jim has got a few things he wants to add as well timing just yet our volumes were down 2% for the quarter, but I'll point out our infrastructure volumes were actually up 6%. So we think those are we're seeing its coming through.

James A. J. Nickolas: Yeah, just our volumes were down 2% for the quarter, but I'll point out our infrastructure volumes are actually up 6%. So we think those are, we're seeing it, it's coming through. Okay, that's Just one follow-up on all the M&A discussions. You highlighted an appetite for bolt-ons, but obviously, you also highlighted that you have spare bandwidth. So I'm just wondering, for the right deal, are you willing to kind of tap the capital market? Or is it still just kind of a priority for you?

Timna Beth Tanners: The infrastructure volumes.

Speaker Change: Okay. That's helpful. Thanks.

Timna Beth Tanners: <unk>.

Timna Beth Tanners: M&A discussion.

Timna Beth Tanners: Highlighted in appetite for bolt ons, but obviously you also highlighted that you have spare bandwidth capacity if you will.

Timna Beth Tanners: So I'm just wondering for the right deal are you willing to kind of tap the capital markets or is it still just kind of a priority for bolt ons.

Timna Beth Tanners: You know, for the right transactions, we would certainly do that, Timna, and again, we've demonstrated the capacity, if we've done the right transactions, to bring down leverage very, very quickly in the organization, so we'll just have to look at them on a transaction-by-transaction basis, but the short answer is, a lot of these, if they came along, you're only going to see them once. And And sitting at 1.85 times levered today, even having done all that we will have done this year, taking into account Frye and Blue Water, we've got a lot of dry powder. OK. Thank you, Tim.

Timna Beth Tanners: For the right transactions, we would certainly do that Timna and again, we've demonstrated the capacity if we've done the right transactions to bring down leverage very very quickly in the organization. So we'll just have to look at them on a transaction by transaction basis.

Timna Beth Tanners: But the short answer is a lot of these if they came along.

Timna Beth Tanners: You are only going to see them once and it again can be very opportunistic and sitting at 185 times levered today, even having done.

Timna Beth Tanners: All that we will have done this year, taking into account Fry and blue water.

Timna Beth Tanners: We've got a lot of dry powder right now.

Speaker Change: Got it okay. Thanks again.

Speaker Change: Thank you Kevin.

Michael Dudas: Thank you. Your next question is from Michael Dudas from Vertical Research. Please ask your question. Good morning, Jacqueline, Jim, and Board. Good morning.

Speaker Change: Okay.

Speaker Change: Thank you. Your next question is from Michael Dudas from vertical research. Please ask your question.

Michael Dudas: Good morning, Jacqueline Gym court.

Michael Dudas: Good morning.

Ward Nye: Um, following on the acquisition opportunities, just two thoughts. One, as you're going through your plan to SOAR 25 and maybe beyond, is there a percentage or a mix of aggregates that you're targeting for the contribution for the whole company? And given that you divested South Texas in a very efficient and cooperative manner with the purchaser, are there opportunities on the sell side that, again, as you move to that mixed target or where you want to be, could emerge over the next six to 12 months?

Speaker Change: Okay.

Michael Dudas: So following on on the acquisition opportunities just two thoughts one.

Michael Dudas: As you're going through your plan to sort of 25, and maybe beyond is there a percentage or a mix of aggregates that you that youre targeting for the contribution for the whole company and given that you divested South, Texas and are very efficient in a cooperative manner with our with the purchaser other opportunities on.

Timna Beth Tanners: On the sell side that again as you move to that mixed target or where you want to be that could emerge over the next six to 12 months.

Michael Dudas: Mike, thanks for the question. Number one, if we look at where we're going to be after the transactions that we've done, our 2024 pro forma gross profit mix would be at 77% aggregate. I mean, should you expect that number to continue to grow? The answer is yes, you should. But I would say this too, I think this is so important to state: The cement operation that we have in Midlothian, Texas, is a fantastic cement business, but it's a long way from the Gulf of Mexico.

Timna Beth Tanners: Mike. Thanks for the question I mean number one if we look at where we're going to be after the transactions that we've done our 2020 for pro forma gross profit mix would be at 77% aggregates. I mean should you expect that number to continue to grow the answer is yes, you should.

Timna Beth Tanners: But I would say this too I think this is so important to state.

Timna Beth Tanners: The cement operation that we have in Midlothian, Texas is a fantastic cement business. It's it's a long way from the Gulf of Mexico, We have our southwest headquarters in Dallas with a largest aggregates producer in Dallas, where the largest cement producer in Dallas that business has just from my perspective, I watering margins.

Ward Nye: We have our southwest headquarters in Dallas. We're the largest aggregate producer in Dallas. We're the largest cement producer in Dallas. That business has, just from my perspective, eye-watering margins. We like the businesses that we have very much. And if we've got the ability, desire, and capacity to go and grow our aggregates business, which we do, and take that number that I just gave you, that 77%, and push that to 80%, and then beyond that, frankly, you should expect us to do that. If we go back through the way that we've long described ourselves,

Timna Beth Tanners: Like the businesses that we have very much and if we've got the ability desire and capacity to go and grow our aggregates business, which we do and take that number that I. Just gave you that 77% and pushed that to 80% and then beyond that.

Timna Beth Tanners: Frankly, you should expect us to do that if we go back through the way that we've long described ourselves. We've said, we're aggregates led with strategic summit with targeted downstream I mean, those are again very.

Ward Nye: We've said we're an aggregate flood. With strategic cement, with targeted downstream, I mean, those are, again, very, well-conceived, well-thought-out adjectives before each one of those. And what you're seeing us do this year is totally consistent with an aggregates-led business and building a business that can outperform through cycles. And we think that's so vital to what we're doing.

Timna Beth Tanners: Well conceived well thought out adjectives before each one of those businesses and what Youre seeing US do this year is totally consistent with an aggregates led business and building a business that can outperform through cycles, and we think thats. So vital to what we're doing and that's part of what's so important.

Ward Nye: And that's part of what's so important about this value over volume philosophy that we're bringing to our business. So yes, sir, you should expect to see that aggregate number continue to go up. And again, that's very consistent with the pipeline that we're looking at today. Thank you, Ward. More. Thank you. Thank you. Thank you.

Timna Beth Tanners: <unk> about also this value over volume philosophy that we're bringing to our business. So yes, you should expect to see that aggregates number continue to go up and again thats very consistent with the pipeline that we're looking at today.

Speaker Change: Thank you.

Timna Beth Tanners: Mike.

Timna Beth Tanners: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question is from Keith Hughes from <unk>. Please ask your question.

Keith Brian Hughes: Your next question is from Keith Hughes from Truist. Please ask your question. Keith, are you there?

Timna Beth Tanners: Yeah.

Keith Brian Hughes: Keith are you there.

Keith Brian Hughes: Can you hear me now? Now we hear you, Keith. Yes, sir, about that. So a question on cement and the remaining cement business for 24. What kind of price and volume expectations do you have? You know, I'll give you some of that, Keith. It's getting increasingly challenging for us to get too much granularity around that cement business because that's the only cement business we have. So I'm torn. I want to make sure I'm transparent, giving you everything that you need.

Keith Brian Hughes: Yeah.

Keith Brian Hughes: Can you hear me now.

Keith Brian Hughes: Here you Keith yes, Sir Okay, sorry about that.

Timna Beth Tanners: So a question on cement.

Timna Beth Tanners: The remaining small business 24, what kind of price volume expectations do you have to go.

Speaker Change: I'll give you some of that Keith it it's getting increasingly challenging for us to give too much granularity around that cement business.

Timna Beth Tanners: Because that's the only some emphasis we have so.

Keith Brian Hughes: I'm torn between I want to make sure I'm transparent, giving you everything that you need.

Ward Nye: I also don't want to put ourselves at a remarkable competitive disadvantage. So I'll give you an overall sense. Obviously, give me what you can. I'll give you what I can with that prelude.

Timna Beth Tanners: Also don't want to put ourselves at a remarkable competitive disadvantage. So I'll give you an overall sense obviously.

Timna Beth Tanners: Ill give you what I can with that with that.

Ward Nye: So look, we obviously kept the larger of the two cement businesses. Look, from a volume perspective, it's gonna be modestly over two million tons. From a pricing perspective, we're looking at an increase in North Texas of around $15 per ton.

Timna Beth Tanners: Reload.

Timna Beth Tanners: Look we obviously kept the larger of the two cement businesses look from a volume perspective, it's going to be modestly over 2 million tons from a pricing perspective, we're looking at an increase in north Texas around $15 per ton that increase if I were you I'd be modeling that more than that.

Ward Nye: That increase, if I were you, I'd be modeling that more in an April timeframe as opposed to a January timeframe. Obviously, you saw very attractive margins in that business last year. And what I would suggest to you is that, on a full year basis, our aim would be to maintain the types of margins in that business that you saw in the overall cement business last year in Texas. So, Keith, I hope that gives you broadly what you need. That's fine. Thank you very much. Blue Cross Blue Shield is a proud sponsor of Second Opinion. Live Fearless.

Timna Beth Tanners: And in April timeframe as opposed to a January timeframe. Obviously, you saw very attractive margins in that business last year.

Timna Beth Tanners: And what I would suggest to you is our aim would be on a full year basis to maintain the types of margins in that business that you saw in the overall cement business last year in Texas. So so key that I hope that gives you broadly what you need.

Speaker Change: That's fine thank you very much.

Speaker Change: Scott.

Speaker Change: Thank you.

Speaker Change: Your next question is from organic choice.

Garik S. Shmois: Your next question is from Garik Shmois from Loop Capital. Please ask your question. Oh, hi, thanks.

Capital: Capital. Please ask your question.

Organic Choice: Oh, hi, Thanks, I wanted to just follow up on aggregates pricing the outlook.

Ward Nye: I wanted to just follow up on aggregates pricing, you know, the outlook is in line with how you framed it coming out of the 3Q call. But, you know, and we appreciate your value over volume strategy, but there was a competitor last week that spoke to both trying to take share this year and pricing maybe a little bit more closely to inflation or the rate of deflation that they were. I'm wondering if, you know, maybe you're seeing a change in the conversations about aggregates pricing going into this year. Are those becoming maybe a little bit more difficult? Maybe I'm overthinking it, but I just thought I'd ask the question. Helmholtz Discussion.

Organic Choice: In line with how you framed it coming out of the <unk> call, but and.

Organic Choice: And we appreciate your value over.

Organic Choice: Volume strategy, but there was a competitor last week that spoke to or trying to take share this year and pricing, maybe a little bit more closely to inflation or.

Organic Choice: The rate of deflation that they were seeing.

Timna Beth Tanners: I'm wondering if maybe youre seeing a change in the conversations at all.

Timna Beth Tanners: Aggregates pricing.

Timna Beth Tanners: Going into this year are those becoming they build the more difficult.

Timna Beth Tanners: Maybe I'm over thinking it but just thought I'd ask the question how those discussions have been going.

Ward Nye: No, Garik. It's a fair question. The conversations have actually been pretty constructive with our customers. And keep in mind, several things will happen. Number one, location is going to matter a lot. Number two, relationships are going to matter a lot.

Speaker Change: No characters a fair question.

Speaker Change: What the conversations have actually been pretty constructive with our customers and keep in mind. Several things happen number one location is going to matter a lot number two relationship is going to matter a lot.

Ward Nye: Number three, I think the swing factor in some places may be what the degrees of mid-years look like. Again, the only place right now that we've already got stated mid-years is in California, where we told people basically we're coming out of the gate in 2024 with $2 a ton up, and then we're going to do another $2 a ton at mid-year. Keep in mind, too, that most of our customers are not the owners. They tend to be general contractors, a first-tier sub, a second-tier sub, a third-tier sub, etc.

Speaker Change: Number three I think the swing factor in some places may be what degrees of mid years declined again, the only place right now that we've already got stated mid years or in California, where we've told people basically we're coming out of the gate in 2024 with $2 a ton up and then we're going to do another $2 a ton at mid year.

Timna Beth Tanners: Keep in mind too that most of our customers are not the owner they tend to be a general first yourselves second tier third tier stuff et cetera.

Ward Nye: And they tend to be cost-plus themselves. And if we're looking at 10% of the cost of a road, 2% of the cost of a home, and somewhere between those two numbers on a non-res project... You know, the price of the stone usually isn't why a project goes ahead or why a contractor gets the job. But at the same time, replacing that stone, once it goes out of our gate, can be pretty challenging.

Timna Beth Tanners: They tend to be cost plus themselves and.

Timna Beth Tanners: If we're looking at being 10% of the cost of a road, 2% of the cost of a home and somewhere between those two numbers on a non res project.

Timna Beth Tanners: The price of the stone usually isn't quite a project goes require contractor gets the job.

Timna Beth Tanners: But at the same time, replacing that stone once it goes out of our gate.

Timna Beth Tanners: It can be pretty challenging so.

Ward Nye: So, look, do I think we'll see years and years of price performance like we saw in 2023? No, I don't think that's going to be the norm. Do I think we're trending more toward what I think the norm will be for Martin Marietta this year? Yeah, I think we probably are.

Timna Beth Tanners: Look I think do I think we will see years and years of price performance like we saw in 2023, no I don't think that's going to be the norm. Due I think we're trending more toward what I think the norm will be for Martin Marietta. This year, Yeah, I think we probably are.

Ward Nye: And to me, that feels like an appropriate place for us to be, given the economy, given the difficulties that you can have in replacing some of these reserves in some of these key markets. Remember, we have some urban quarries in locations that are trying to find opportunities to come back behind quarries if they're depleted would be hugely challenging. And building new quarries will put you farther away from the city centers and take degrees of efficiency away.

Timna Beth Tanners: To me that feels like an appropriate place for us to be given the economy given the difficulties that that you can have and replacing some of these reserves and some of these key markets remember we have some urban quarries in locations that trying to find opportunities to come back behind if there.

Timna Beth Tanners: <unk> would be hugely challenging and building new cars will puts you farther away from the city centers.

Timna Beth Tanners: And take degrees of efficiency away. So again I hope that gives you number one our philosophy on how we approach. It number two what is our dialogues it looks like with our customers and number three how do I think it's going to play out at least for Martin Marietta over a period of years.

Ward Nye: So again, I hope that gives you, number one, a philosophy of how we approach it. Number two, what our dialogue looks like with our customers. And number three, how I think it's going to play out, at least for Martin Marietta, over a period of years.

Timna Beth Tanners: Yes.

Garik S. Shmois: Just wanted to follow up just quickly on cement margins recognizing Inc., www.patreon.com No, I don't think so. To the extent, I mean, we're gonna be very disciplined about bringing that online. It won't be disruptive to price. We think we'll be able to bring it online gradually in terms of operational approach as well as marketplace impact. It'll be very disciplined, and we think it won't be very disruptive at all.

Speaker Change: Just wanted to follow up just quickly just on cement margins recognizing that the decreasing importance in size in that segment.

Speaker Change: With the finishing Yo coming on later this year is there any choppiness or inefficiencies that we should be aware of.

Speaker Change: No I don't I don't think so.

Speaker Change: To the extent I mean, we're gonna be very <unk>.

Timna Beth Tanners: <unk> about bringing that online we won't be disruptive to price, we think we'll be able to bring online gradually in terms of operational.

Timna Beth Tanners: Our approach as well as marketplace impact it would be very <unk>.

Timna Beth Tanners: Disciplined and we think.

Timna Beth Tanners: It won't be very disruptive. It also we're out looking for any kind of.

James A. J. Nickolas: So we're not looking for any kind of noticeable effect from an external viewpoint at this point, and margins should be enhanced when those come online. So we think it's really going to fit. The market is sold out by and large, and we think it'll fit nicely with the growing demand there. Understood. Thanks again and congrats on the quarter. Thanks so much, Garik. Your next question is from David McGregor from Longbow Research. Please ask your question. Hey, good morning. This is Joe Nolan on for David.

Timna Beth Tanners: Noticeable effect from external view on this point and the margin should be enhanced when those come online. So we think it's really going to fit the market is sold out by and large and we think it will fit nicely with the.

Timna Beth Tanners: The growing demand there.

Speaker Change: Understood. Thanks, again, and congrats on the quarter.

Speaker Change: Thanks, so much Gary.

Timna Beth Tanners: Thank you. Your next question is from David Macgregor.

David Macgregor: Research. Please ask your question.

Speaker Change: Hey, Good morning. This is Joe Nolan on for David.

David McGregor: Hi Joe. I just had one quick question on the aggregate volumes guidance you provided up or down 2%. Just within that, what would be the primary drivers that you're monitoring to drive the high-end or low-end?

Joseph Nolan: Hi, Joe I just had high.

Joseph Nolan: Just had one quick question on the.

Joseph Nolan: The aggregates volume guidance, you provided up or down 2%.

Joseph Nolan: What would be the primary drivers that youre monitoring to drive the high end or low end.

Ward Nye: And just within that, can you talk about how the value over volume strategy might play into that? Yeah, happy to. I mean, here's a good way to think of it. This is not a bad laboratory to give it some thought.

Speaker Change: And just within that can you talk about how the value over volume strategy might play into that.

Speaker Change: Yes, happy to I mean, here's a good way to think of it and this is this is not a bad laboratory to give it some thought so if we look in Q2.

Ward Nye: So if we look at Q2, volume is down 2%. So last year, we were 47.7%; the year just ended, 46.6. If we're really looking at that and saying, what were your swing markets or what were your swing factors, value over volume was probably modestly higher over a million tons of that. So again, if we think we actually had a better return for shareholders, we kept those reserves in the ground, or we kept them in stockpiles, we'll sell them another day, we'll sell them for higher. That was your primary driver.

Speaker Change: It was down 2% so last year, we were at 47 seven.

Speaker Change: The year just ended $46 six.

Speaker Change: We're really looking at that and saying you know what were your swing markets are probably a swing factors value over volume was probably modestly over a million tons of that so again, if we think but we actually had a better return for shareholders. We kept those reserves in the ground or we kept them in stockpiles, we'll sell them.

Speaker Change: Other day, we'll sell them for higher that was your primary driver there was some degrees.

Ward Nye: There was some degrees, as has been well chronicled, of market softening in degrees of residential and non-res, but the biggest piece of that was value over volume. So if we're looking at what swing factors can be, as Jim pointed out... In the quarter, we saw infrastructure volumes up 6%.

Speaker Change: As is well chronicle of market softening in degrees of residential and non res, but the biggest piece of that was value over volume. So if we're looking at what swing factors can be as Jim pointed out.

Timna Beth Tanners: In the quarter, we saw infrastructure volumes up 6%.

Ward Nye: That wasn't a surprise, but really, it was a nice affirmation of what's happening. So if we continue to see public grow sensibly, if we see res start to do what, you know, we're not predicting it, but you can certainly see that res could have a nice recovery beginning in half two. We think that's important. And again, as we're looking at these megaprojects, if we're looking at non-res projects of size and of scale, depending on how some of those play out, you know, it doesn't take a lot of those. I mean, it could take one or two of those to really change the trajectory of degrees of volume.

Timna Beth Tanners: That wasn't a surprise, but really it was a nice affirmation of whats happening. So if we continue to see public grow sensibly, if we see rez start to do what.

Timna Beth Tanners: We're not predicting it but you can certainly see that brad's could have a nice recovery beginning in half two we think that's important and again as we're looking at these mega projects that we're looking at non res projects.

Timna Beth Tanners: The size and the scale, depending on how some of those play out.

Timna Beth Tanners: It doesn't take a lot of those I mean, it could take one or two of those two to.

Timna Beth Tanners: To really change the trajectory of degrees of volume and obviously, we're still having significant conversations on a number of large non res projects in the Gulf of Mexico, and if some of those go I think those are your swing factors Joe as you think about volume so I hope that helped.

Ward Nye: And obviously, we're still having significant conversations on a number of large non-res projects in the Gulf of Mexico. And if some of those go, I think those are your swing factors, Joe, as you think about volume. That's very helpful detail. Thanks. I'll pass it on. You bet. Take care.

Joseph Nolan: That's very helpful detail, Thanks, I'll pass it on.

Adam Robert Thalhimer: Thank you. Your next question is from Adam Thalhimer from Thompson Davis. Please ask your question. Hey, good morning, guys.

Speaker Change: Take care.

Timna Beth Tanners: Thank you. Your next question is from Adam.

Timna Beth Tanners: Thompson Davis, please ask your question.

Speaker Change: Hey, good morning, guys, great quarter, great outlook.

Ward Nye: Great quarter. Great outlook. Thank you so much, Adam. Good to hear your voice. What have you got?

Adam: Thank you so much that I'm getting here good to hear your voice.

Speaker Change: Alright.

Adam: You talked about data center weakness in Q4 that surprised me what are you seeing going forward there.

Adam Robert Thalhimer: Ward, you talked about data center weakness in Q4. That surprised me. What are you seeing going forward? I was talking more broadly about what some of the writers have said. I think what I was saying is, in our world, it hasn't been as bad as people would have thought. Now, keep in mind, it was against a really tough cop.

Kathryn Ingram Thompson: I'm not sure. It was so much that I was talking more broadly about what what some of the writers have said I think what I was saying is in our world.

Kathryn Ingram Thompson: It hasn't been.

Kathryn Ingram Thompson: As down as people would have thought now keep in mind. It was against a really tough comp. So that's more of it than anything else, but if you just look at general trade publications Theyre going to say look in warehousing and data center, you're going to start to see some some moderation simply because the comps are so high.

Ward Nye: So that's more open than anything else. But if you just look at general trade publications, they're going to say, look, in warehousing and data centers, you're going to start to see some moderation simply because the comps are so high. I guess my point was, not all markets are going to be equal. And I think when we start looking at the southeastern, southwestern, and interestingly, these midwestern markets where there's a lot of data center activity, which is why I was calling out in particular what's happening in Nebraska and Iowa, because those have actually been really resilient markets in that particular space, Adam. So it wasn't that I was really calling out high degrees of weakness. It was more that comps are tough. And the overall commentary around that is a little bit softer than in some other areas.

Kathryn Ingram Thompson: I guess my point was not all markets are going to be equal.

Kathryn Ingram Thompson: When we start looking at these southeastern and southwestern and interestingly These Midwestern markets, where theres a lot of data center activity pushes while I was calling out in particular part of what's happening in Nebraska, and Iowa, because those have been actually really resilient markets in that particular space. Adam So it wasn't that I was really calling out.

Kathryn Ingram Thompson: High degrees of weakness it was more comps are tough and the overall commentary around that is a little bit softer than in some other areas, but again I think we're holding up better than most.

Adam Robert Thalhimer: But again, I think we're holding up better than most. And then clients ask me this, so I'll just ask you, are we still early in you guys seeing the benefit from IIJA? Yeah, I think, look, I think if we're talking about that in innings, I mean, we're in the very early innings of that. I mean, I think it's a practical matter.

Speaker Change: Okay and then.

Speaker Change: Clients asked me. This so I'll just ask you or are we still early and you guys see in the benefit from II J a.

Speaker Change: Yeah, I think look I think if we're talking about that in earnings I mean, we were wearing.

Speaker Change #101: We're in the very early innings of that I mean, I think as a practical matter.

Ward Nye: 2024 is really the first year that we're going to start to see significant progress go out the gates on IHAA. So here's the way I would think of it, Adam. Twenty-four on that's going to be better than 23, 25 is likely to be better than 24, and I think 26 could be better than 25. So, in baseball parlance, we're not anywhere near the seventh inning stretch. I mean, we're in a very healthy spot right now, and it's likely to be that way for a number of years.

Speaker Change: 2024 is really the first year that we're going to start to see significant stone go out of the gates on the IHA. So here's the way I would think of it Adam 24 on that's going to be better than 'twenty. Three 'twenty five is likely to be better than 'twenty, four and I think 26 could be better than 25.

Speaker Change: So in baseball parlance, we're not anywhere near the seventh inning stretch I mean, we're in a very healthy spot right now and it's likely to be that way for a number of years.

Adam Robert Thalhimer: Great answer. Thanks, Ford. The bill.

Adam: Great answer Thanks Ward.

Ed: Thank you Ed.

Garik S. Shmois: Thank you, Adam. There are no further questions at this time. I will now hand the call back to Ward for him.

Adam: Okay.

Speaker Change #103: There are no further questions at this time.

Ward Nye: Now I'll hand, the call back to work hard to closing remarks.

Ward Nye: Again, thank you so much for joining today's earnings conference call. Martin Marietta's impressive 2023 results underscore the durability and resiliency of our aggregate split business and unparalleled markets and the efficacy of a value over volume market approach. This solid foundation, together with our unyielding commitment to enterprise excellence in the execution of our strategic priorities, gives us confidence in our ability to continue delivering industry-leading safety, financial, and operational performance. With our attractive underlying fundamentals, proven strategic priorities, and best-in-class teams, we are excited about our prospects for continued sustainable growth and value creation for our shareholders for the foreseeable future. We look forward to sharing our first quarter 2024 results in the spring. As always, we are available for any follow-up questions. Thank you again for your time and continued support of Martin Marietta. Ladies and gentlemen, the conference has now concluded. Thank you all for joining us; you may all

Ward Nye: Again, thank you so much for joining today's earnings conference call Martin Marietta's impressive 2023 results underscore the durability and resiliency of our aggregates led business and unparalleled markets and the efficacy of our value over volume market approach. This solid foundation together with our unyielding commitment to enterprise excellence through the execution.

Ward Nye: One of our strategic priorities gives us confidence in our ability to continue delivering industry, leading safety financial and operational performance with our attractive underlying fundamentals proven strategic priorities and best in class teams were excited about our prospects for continued sustainable growth and value creation for our shareholders.

Speaker Change: For the foreseeable future, we look forward to sharing our first quarter 2024 results in spring as always we're available for any follow up questions. Thank you again for your time and continued support of Martin Marietta.

Speaker Change: Thank you, ladies and gentlemen, the conference.

Speaker Change #100: This has now ended thank you all for joining you may all disconnect.