Q2 2025 Martin Marietta Materials Inc Earnings Call
Welcome everyone. To Martin Marietta's, second quarter, 2025 earnings conference call. All participants are now in a listen-only mode. A question and answer session will follow the company's prepared remarks
As a reminder today's call is being recorded and will be available for replay on the company's website. I will now turn the call over to your host. Miss Jacqueline Rooker Martin Marietta's vice president of investor relations Jacqueline you may begin.
Good morning and thank you for joining Martin Marietta's, second quarter 2025 earnings call.
With me today. Our Ward, NY chair and chief executive officer and Michael Petro, senior vice, president, and Chief Financial Officer.
As a reminder, today's discussion may include forward-looking statements as defined by United States Securities laws in connection with future events future operating results or financial performance.
Like other businesses, Martin Marietta is subject to risks and uncertainties that could cause actual results to differ materially.
we undertake no obligation, except as legally required to publicly update, or revise, any forward-looking statements, whether resulting from new information future developments or otherwise,
Please refer to the legal disclaimers contained in today's earnings release and other public filings, which are available on both our own and the Securities and Exchange Commission's websites.
we have made available during this webcast and on the investor section of our website, supplemental information that summarizes our financial results and trends
Non-gaap measures are defined and reconciled to the most directly comparable gaap measure in the appendix to the supplemental information, as well as our filings with the SEC and are also available on our website.
Today's earnings call Will begin with board 9 whose remarks will focus on our second quarter operating performance continued, portfolio transformation, 2025 Outlook and related market trends.
Michael Petro will then review our financial results and capital allocation after which Ward will provide closing comments.
A question and answer session will follow, please limit your Q&A participation to 1 question, I will now turn the call over to Ward.
Thank you, Jacqueline. Good morning, and thank you for joining today's teleconference.
I'm pleased to report Martin Marietta delivered outstanding operational and financial results in second quarter, despite whether headwinds and subdued residential demand.
In addition to record financial performance in the first half of 2025. We also achieved our safest 6-month start to the year in our company's history, as measured by total reportable. Instant rates, which continued to exceed world-class safety levels.
Together, these results are a tribute to our team, steadfast dedication, and focus and reaffirm the Strategic advantages of our companies. Geographic footprint, the resiliency of our differentiated business model and our company's unwavering commitment to safety,
subsequent to the quarter. End on August 3rd, we entered into a definitive agreement with quickrete Holdings for the exchange of certain assets.
Specifically, Martin Marietta will receive aggregate operations producing, approximately 20 million, tons annually in. Virginia Missouri, Kansas and Vancouver British Columbia, as well as 450 million dollars of cash.
In exchange quickrete will receive our middle lohian cement plant related cement Terminals and North Texas. Readymix concrete assets.
This transaction is expected to close in the first quarter of 2026 subject to regulatory approvals and other customary closing conditions.
That is increasingly Aggregates LED, which possesses a more durable and resilient earnings profile through Cycles.
The Strategic exchange of our remaining cement plant and related readymix concrete operations for core. Aggregates achieves, the subjective enhancing the product mix of our portfolio. While preserving balance sheet, flexibility for continued, strategic plan execution,
As highlighted in this morning's release. Martin Marietta established new records for the second quarter with key metrics showing gains year-over-year as sustained. Pricing momentum and effective cost management, continue to yield strong results.
specifically, we reported
Consolidated adjusted EBITDA of $630 million, an 8% increase?
Consolidated adjusted. Evidam margin of 35% an increase of 170 basis points.
Aggregates revenues of 1.32 billion dollars an increase of 6%.
Aggregates gross profit of $430 million, an increase of 9%.
Aggregates gross margin of 33%. An increase of 94 basis points, and Aggregates gross profit per ton of 8.6 cents, an increase of 10%.
Magnesia Specialties, once again, established new records. In the second quarter, achieving new quarterly record revenues of $90 million and second quarter records for gross profit and gross margin, with gross margin increasing 605 basis points compared with the prior year quarter, reaffirming, as we previously indicated, that this business has earned the right to grow.
Accordingly on July 25th. A premier magnesia enhancing Martin Marietta's position as the leading producer of natural and synthetic magnesia based products in the United States.
Given our strong first half results and third quarter today. Shipping Trends, we're increasing our full year 2025 adjusted EPA guidance to 2.3 billion dollars at the midpoint,
This revised iPad guidance. Also reflects contributions from the premier acquisition for the remaining 5 months of 2025, most of which, will not occur until late in the year as we work through existing inventories, within up to fair value consistent with purchase price accounting.
As we progress through the second half of the year, our teams remain focused on the key levers within our control.
World class safety executing. Our strategic plan commercial discipline and prudent cost management.
Moving now to end market trends.
The Outlook across our core and markets remains varied with infrastructure, demonstrating relative strength, our residential and non-residential construction Trends remain mixed.
Infrastructure. Our most aggregate intensive venues remains a strong comparative performer during a decidedly wet second quarter, underpinned by robust federal and state investment.
Encouragingly, the value of state and local government highway bridge and tunnel contract awards—a leading indicator of future product demand—increased by 10% year-over-year to $126 billion for the 12-month period ended June 30, 2025, well above historical levels.
As we look beyond the late 2026, expiration of the infrastructure investment and jobs act or iija.
Early legislative efforts pertaining to surface Transportation. Reauthorization are centered on roads, Bridges and ports, which offer a compelling Pathway to extend infrastructure momentum into the next cycle.
The ongoing reliability of infrastructure investment at both federal and state levels points to a resilient years-long infrastructure Outlook marked by long-term planning stability.
Steady durable demand and sustained pricing Tailwind in this often counter cyclical public and Market.
Shifting to non-residential.
The heavy side continues to benefit from the increasing demand for data center development and an inflection in Warehouse Construction.
Texas is seeing substantial data center growth propelled by its low-cost energy grid accessibility and business-friendly tax and regulatory environment.
In July, 2025, open AI announced the expansion of its Stargate data. Center in ebene, Texas to develop 4.5, gigawatts of additional Data Center capacity,
To 8 buildings in compassing approximately 4 million square ft.
Secondarily on not yet a meaningful contributor to shipments. We expect medium-term upside from utilities investing in energy generation capacity to reinforce grid reliability to support this expanding Data Center and artificial intelligence infrastructure.
According to the Texas Tribune, the electric reliability Council of Texas or Urgot is projecting that Statewide electricity demand could nearly double by 2030.
To address this anticipated demand, Texas is actively expanding its generation capacity.
Currently 4 new natural, gas fired. Power plants are under construction and an additional 33. Have received permits and are positioned for future development.
The administration's prioritization of increasing semiconductor Manufacturing in the US is also driving significant Investments.
As an example in June 2025, Texas Instruments announced, its plans to invest more than 60 billion dollars across 3 manufacturing, Mega sites in Texas and Utah.
At the national level, we expect green shoots, will inevitably emerge from the newly? Enacted, reconciliation bill, which reinstates immediate expensing for capital investment, and expands R&D incentives and targeted. Tax credits establishing a strong foundation for a multi-year Resurgence in US, manufacturing and GDP growth.
turning to light non-residential and residential activity, we expect residential activity in the near term to remain subdued until affordability, headwinds received
That said long-term demand drivers for housing. Remain intact supported by demographic tailwind and under Supply across Mont Marietta's, high growth Sun, Belt markets,
based on historical Trends as residential, construction, recovers increased light, non-residential activity, typically follows
While near-term cyclical. Headwinds persist secular momentum across infrastructure data centers and energy related development, along with the eventual residential recovery continues to support our long-term growth Outlook. I'll now turn the call over to the company's newly appointed Chief Financial Officer. Michael Petro to discuss our second quarter Financial results. Michael
Thank you, ward and good morning, everyone.
The building materials business posted revenues of 1.7 billion dollars a 2% increase gross profit increased 3% to 517 million, in gross margin of 30%, improved modestly.
Importantly, our core Aggregates business achieved all-time quarterly record revenues of 1.32 billion and increase of 6% over the prior year quarter and second quarter, records for gross profit, gross margin and unit profitability of 430 million, 33% and 8.6 cents per ton respectively.
We are pleased to report that momentum is building as we enter the second half of the year. And as a result, we revised our full year guidance to reflect stronger, Aggregates pricing and effective cost management.
Specifically, we now anticipate a full year price cost, spread of 340 basis points and a 14% year-over-year Improvement, and gross profit per ton at the midpoint both, well ahead of historical levels.
Cement and concrete revenues, decrease 6% and gross profit. Decreased 25% to 245 million and 544 million respectively due to lower operating leverage and higher Ready. Mix raw material costs, pursuant to the asset exchange with quickrete, the results of operations for our cement and Texas.
Is ready. Mix concrete assets will be classified as discontinued operations beginning in the third quarter of 2025,
Asphalt and Paving revenues decreased 7% to 228 million and gross profit decreased 8% to 33 million due to lower shipments and higher costs.
As Ward indicated magnesia Specialties achieved all-time quarterly record revenues of 90 million and second quarter records for gross profit and gross margin of 36 million and 40% respectively driven by strong pricing and proved to Lime shipments and efficiency gains.
Turning now to Capital, allocation and liquidity.
While maintaining a healthy balance sheet, we aim to preserve financial flexibility to further enhance shareholder value.
Our Focus remains on value-enhancing acquisitions.
Prudent organic capital investment and the consistent return of capital to shareholders while maintaining the company's investment grade credit rating profile.
Full year. Capital expenditures are now expected in the range of 820 to 850 million.
An upward revision from the previous guidance of 7205 to 775 million.
This increase is due to attractive and opportunistic land purchases.
That said, following several years of capital expenditures above sustaining levels.
We expect 2026 Capital expenditures to return to more normalized amounts. Resulting, in increased free, cash flow conversion.
Importantly, with 1.4 billion dollars of total liquidity.
Strong free cash flow generation and a net debt to ibaa ratio of 2.4 times as of June 30th. We have ample balance sheet, flexibility to capitalize on what remains an active m&a pipeline.
With that, I will turn the call back over to Ward.
Thank you, Michael.
Our first half performance highlights the competitive advantage of our aggregate slant platform and the disciplined execution of our sore 2025 strategic plan.
These strengths combined with a solid Financial foundation in track record of navigating complex Market environments. Reinforces our confidence in achieving our full year, adjusted EPA guidance.
Looking ahead, Martin Marietta's, attractive, underlying fundamentals and long targeted runway for transformative growth offer compelling Horizon of future, shareholder value creation. If the operator will provide the required instructions, will turn our attention to addressing your questions.
Thank you, sir. And
Star 1 on your telephone keypad. We ask that you limit yourselves to 1 question. The first question will come from Katherine Thompson, Thompson, research group,
Uh good morning and thank you for taking my question this morning. Uh as you noted and as so many of your peers have also noted the Q2 was uh marked by some uh pretty tough weather conditions uh and as we look forward into the back half of the year and not to be um looking too close to near term Trends. It's still nonetheless helpful to get more color in terms of what you're seeing in July.
Uh, in in, in particular, um, you know, getting some assurance that, uh, you're seeing a fundamental increases in demand, um, and just getting a better read of what the Market's doing now. And and really what that means, not just for the quarter. But for the remainder of the year and into 2026, thank you very much and best of luck,
Katherine, thank you, good to hear your voice and and thanks for the question. I would say several things 1. I've read some of the commentary that others have had relative to July, and I will tell you our commentaries broadly, the same, um, maybe even a little bit better because I'm not going to limit it to any 1 geography. What we saw in July was actually nice, double-digit volume up across the Enterprise and and I think that's really important. It it's notable Catherine, we, we're trying to look really carefully at the guide and I think we've given what has been a really measured guide all year
And I said as much when we came out with our guide in February relative to pricing. And now what you've seen is pricing has trended toward the high end of the guide.
As I'm looking at volume through July. Yeah, frankly we're above the midpoint of the previous guide. So, you know, frankly I I'm I'm hoping that as we look at this guide relative to volume for the rest of the year.
I hope that looks like pricing has looked and and you know, the fact is we as an industry and have not been great at calling the volume, I'm tired of being on the wrong side of that call.
So again, I think we've taken a very measured view of that but July looked good on both sides, it looked good from a volume perspective. It looked good across the Enterprise and it looked good commercially as well. So I'd like to see a whole lot of July.
Thanks very much.
Yeah. Katherine.
Hey, good morning guys. Nice quarter. Hey thanks Adam.
We're just following up on on what you just said, given the, um, given the fact that you don't want to be on the wrong side of calling, the the volumes. What what gave you the confidence?
The annual guidance.
I, I guess several things that I'm first. Thanks for your question. Um, look, if we're looking at at what we're calling on ibida for the full year at the midpoint and that's up 2% over where we were before, but that's really on good strong first, half results through a pretty challenging whether period. Uh, if we're looking at the third quarter to date shipment trends, that helped a lot. If, if we're looking at where we see things working, commercially that looked awfully, good as well. The other piece of it that I think is worth noting and and I said, public, is looking nice and resilient and growing, I said private was a bit mixed.
I'm actually liking what I'm seeing relative to non-res and particularly on the heavy side of it. I'll just give you a few examples in markets that matter a lot to us. So in Greensboro, we're seeing a Walmart Distribution Center come in there, and we're seeing Microsoft come in and we're seeing Ross, Distribution, Centers, all all in and around Greensboro the Triad. Which frankly has not been a volume leader for us over the last several years, but it's a very attractive part of our footprint.
Similarly, if we go to places like Charlotte, we're seeing big jobs at the airport. We're seeing highways 74 which is a Shelby, bypass taking material product as well, Scout production Center, in South Carolina and some nice jobs here in the Raleigh area and over Nordisk manufacturing. Plant has a big job underway. I mentioned before that, we're now seeing nice green shoots relative,
Ship to Amazon in particular, in Wilmington, North Carolina. We're seeing a nice fulfillment center there. So when we're seeing good steady public and we're seeing that portion of non-res and we continue to see the commercial environment working well in our business. You know, that that's really powerful for Martin Marietta. And if, if you think about what made this quarter look good. I mean this was an Aggregates and magnesia driven quarter
And our headwinds were primarily around what was happening in the quarter on cement. And what was happening? Relative to Ready, Mix? So as we were looking at the way the quarter finished up at the way, the end uses were evolving at the way pricing continued to evolve.
You take all those together again. I, I think we're in a very sensible place on raising the guide, but I, I hope those comments gives you a better sense of where the levers were. Within that, that movement.
Great color. Thank you would thank you.
Next up, Anthony pinari. From city has the next question.
Uh, good morning.
Anthony, um,
Hey award. The The quickrete Exchange is is going to give you some Assets in Virginia, Missouri Kansas and I guess British Columbia just wondering if you could talk more about sort of strategic fit asset quality, maybe how long you've been looking at these assets. And then I think with BC, that would be, uh, kind of an entry point maybe in the Pacific Northwest. Um, just just generally if you can talk about, uh, the attractiveness of those assets and potential fit
Anthony, thank you for that. So I'd say, several things, 1. Let's begin with the notion. It's about 1.3 billion tons, I mean, so it's, it's a very nice transaction, a lot of tonnage that's coming in. And by the way, most of it crushed on you, you know, I always break down, puts crushed stone puts sand and gravel. I have a natural bias toward crushed stone because I just view it as the higher quality product. So number 1, I like it from that perspective. Number 2 to your point the geographies line up very much with what we were talking about in February of 2021 when we outlined what we wanted to do in sore 2025. As you may recall, we put a slide up on that day and that hour and we outlined geographies across the United States that we were going to be particularly focused on during that 5-year period and 1 of the areas in which we had not, yet been able to put a check in the box was in Virginia. This does that very elegantly and the other was in the Pacific Northwest. And if you think about it in Anthony really there are 2.
2 ways to drive an event market in a meaningful way, either coming in through Seattle.
Or coming in through Vancouver. This gave us some nice opportunity to come in through Vancouver. Um from how long had we been looking at the assets? Look, we we've long admired portions of of those assets that quickrete acquired in the transactional summit and quickrete. Did an did a nice transaction there, uh, and noon. And her team did a magnificent job managing that business as well. So these are some very attractive markets including those that were picking up in the Central Division. So what we're picking up in
You overlooked markets relative to their attractiveness in overall Martin Marietta. So again, if we're looking at the geographies, we think we landed in the right place as we look at the overall transaction.
From a tax efficiency perspective, it was really quite compelling. Um, midloathian is a great facility and we've got a team there. That is incredibly talented. And the toughest part of this transaction is being in a position that we won't have that team and that that asset with us. But we've long said, we're an aggregate sled organization. This is our core and this gave us the opportunity to do a transaction and redeploy. The funds and do it in a tax efficient transaction, all very consistent with our sewer plan, 1 of the things that we tried to do is never surprised people. If people listen to us
We won't surprise them. And again, I think if you go back and look at what we said in February of 2021 and what we've announced earlier this week, it actually ties in nice bow around, what we indicated would happen over a 5 year period.
Okay, that's very helpful. I'll turn it over.
Thank you, Anthony.
The next question is from Phillip Jeffries.
Hey guys, uh strong uh, momentum pricing quarter on, on the aggregate side or uh 1 of your bigger competitors, actually called out, giving them strength and infrastructure. There could be some mix headwind from base pricing. 1, are you seeing that and then 2? How, how is uh, mid-years kind of progressing? And lastly, when we think about 26, um, how's the price limit? Some kind of playing out, um, just given what you're you're seeing out there.
So I'd say several things know, on on the mix thing, we haven't seen a a lot that's been a mixed driver so far, of course this year. So I mean, I think what you're seeing is just good solid year-over-year pricing. So no big surprises there. Secondly relative to the mid years they played out about like we thought they would um we got them primarily in areas where we've been more inquisitive over the past several years because since we've indicated Phil, those asps don't tend to be where Heritage asps are uh with respect to 2026. It's a little bit early for me to lean in. I, I I thought I was leading in a little bit when I just talked about July. Um, so I'm not going to go too much into 2026, but I appreciate you. Putting the bait out there for me. Um, we'll we'll talk more about that. But but my take is this, Phil
We're just in a different place relative to the way pricing is going to work. I I think you've seen that play out this year. I think you'll continue to see it play out in in varying degrees again next year. And keep in mind, the midi years that we've gotten this year, really aren't so much a 2025 event. They're really something that builds as we go into 2026. So Phil I I hope I gave you all I can
Thank you, appreciate it. Hope.
Angel, Castillo from Morgan. Stanley has the next question.
Hi. Good morning and, and uh, congrats on another strong quarter here. Just, uh, 2 questions, I wanted to hopefully, get your, your thoughts on. First on the quick, create acquisition you noted in Missouri is often overlooked as a geography for for MLM. Can you just expand a little bit more perhaps? Maybe the what the spread is in terms of the, the price of the uh that the quick rate assets that you're acquiring are at in terms of aggregate price versus maybe you know what, you think the fair value is in those in those geographies and then on the data center point, um, about the strength you're seeing there. I was wondering if you could maybe, you know, provide a little bit of color there because it's it seems like every week we get, you know, several new announcements, uh, of new projects. And yet, when you look at the kind of put in place, construction data for data centers, um, the growth there has been swelling. So, it's, it's a little bit confusing. Just curious, if if you have any kind of visibility here as to what might be holding up construction, um, spend or growth of those projects and, you know anything, you know,
You're aware of or you know, maybe looked at a different way is it just a coiled spring and and based on what you see in terms of quoting and ordering activity? When when should we kind of expect that to start to re accelerate?
Thanks for your question. It says several things with respect to your pricing observation.
Continue to be the overall philosophy.
Relative to part 2 of your question on non-res. I do think probably what you're seeing more than anything else, is degrees of land use at work because it, it's fascinating Angel, you you've heard, and I've heard the same things, I mean, obviously, for example, Amazon has come out and said, look, we're going to put a hundred billion dollars over a decade and, and this type of investment whether its warehousing data, or otherwise,
And again, we're seeing things as I mentioned earlier, in, in the prepared, commentary and last time and clear in Texas, in Fort Meyers. I mentioned Wilmington already in the conversation that I had with Adam. Um, I think part of that Cold Spring is probably to be found in dialogue. Like we saw yesterday at the White House where Tim Cook was also announcing a big investment coming from Apple. Now part of what's interesting in that is some of that's going to be new and some of that's going to be additive to different markets. So for example,
when they discuss adding on to a facility that they have in Maiden North Carolina, you know what, you probably don't know where Maiden North Carolina is but I do because it's in our backyard and we very clearly have a quarry in Maiden that we call our Maiden Quarry. Um, so so the fact is we're going to see those types of projects. Go the ones that are basically a new phase will go more quickly. The ones that are going to be brand new
That's where your coiled spring is because they can announce that, that's what they're going to do. But in some instances, they're still going to have to get the permitting. They're still going to have to get everything in place, including on occasion utilities, which tells me. This is going to be a nice long steady climb over multiple years and selfishly from our company's perspective, that's when we're at our best.
Very helpful. Thank you.
Thank you.
The next question is from Trey, Grooms Stevens.
Hey, good morning, Ward and uh, Michael. Congrats on the new role.
That's right.
Um,
So you've touched on, uh, the swap midloathian for quickrete. Makes a lot of sense. Um, on on the premier magnesia deal. Uh, any additional color you could give us there, sorry if I I missed it. But you know, understanding the impact is going to be limited this year due to purchase accounting but any additional color you could give us on the size you know expected impact their how it fits into and and compares to the existing mag Specialties business which is clearly performing really well.
Troy, thank you for the question. I'm going to turn that over to Michael to talk about some of the specifics. I'll give you some broad Strokes on that. So, if you really think about it strategically, we're building as I'm indicated before, an Axe and mag business, and it's going to be heavily emphasized on the axe piece of it. Uh, if you think about the criticality though, to your question on magnesia,
The business that we've had very impressive business, High margins, just had a record quarter and its primarily synthetic magnesium.
If you look at the business that we just acquired, it's more natural magnesia. And what's important to remember is they both begin with varying degrees of quarrying and I think it's easy for the uninitiated to look at mag and a and not have a sense of how tightly they overlap and and what the required skills are between the 2 and how they go back and forth. Uh, obviously Michael drove that process before he started wearing 2 different hats. So I'll ask him to go back and talk a little bit about what that business looks like and what you can expect from a contribution perspective.
Yep. No, thank you. Ward at at Trey. Just, uh, you, you're you hit the nail on the head with the guide. Um, we were saying, you know, only about 10 million of of contribution this year and and what we're saying is that's really 2 months out of 12.
Uh, given the purchase accounting impacts for the first 3 months, as we, uh, sell through. The, the inventory that's valued at fair market. Um, so if you just did the quick math that would imply on an annualized basis about 50 million of IBA. Um, so that's, that's what you can use for now, on a, on a presenter gy basis, uh, we do expect, um, you know, pretty, pretty good synergies to come from this, both commercially and, and operationally, but, um, more to come as we get into integration there.
All right, perfect, I'll leave it there. Uh, thanks a lot for all the color. Very helpful. Thank you. Trey.
Next up is Steven Fischer from UBS.
Of of corporate was there? Any special item in there? It seemed a bit low. And then, the real question is, I just want to make sure I get the, the volume message, right? Uh, the new guidance, reflects about 3 million tons lower expectation than what you had in the first quarter. So, I was wondering if you could just sort of break that down into the Q2 weather Impact versus other factors, is this somewhat lower guide. Your as you were talking about before trying not to be on the wrong side of it. Uh, in other words, you know, there still could be some upside, because it sounds like you're seeing a bit more positive momentum. Thank you. I take 1, I'll, I'll you bet, Stephen, I'll take the volume piece of it. Then Michael will come back. Um, yeah. I I think we're being
Measured and thoughtful on the way, that we look at that. Um, clearly whether through half 1 was an impediment, I don't want to count on even normal whether through have to and I'm not counting on a kind November and December, you know, the fact is, if we've got a, a warmer and dry, November and December, and this season is extended.
Then I could see there would be upside in the volume piece of it. As I indicated, if we're just looking through July right now, we would be above the midpoint of the prior guide. So I don't look at volume and feel in any respect, we can the knees. Again, I'm tired of being on the wrong side of that. Michael, you want to address the rest? Yeah, no, I think the question was on corporate.
Expense or sgna in the quarter and 2 items, really impacting the comp to to Prior 1 is uh, the only adjusted metric. We we report now is adjusted ibaa. And there was, um, roughly 20 million dollars of acquisition related expenses that got added back to ibida last year, um, which would be in that corporate expense line item and then the other piece of the comp is really, just effective sgna cost management. We we've been focused on that. So those are really the, the 2 levers. If you're trying to say, well, you know, Eva dog grew at 8% and, and that earnings grew double digits. That's, uh, it was that adjustment, um, for the acquisition expenses,
Specific. Thank you.
The next question comes from Garrick Shmoo, Lube Capitol.
Hey good morning. This is actually Zach Pacheco on for Derek today. So thanks for uh taking my question. You bet. Yeah. Maybe just
MCA reduction, any more color of of what the main driver was and I guess how to think about run rating that into into the second half. Thanks.
Yeah, no. We we would typically say to just run rate right around 7% of of sales for a full year. Um, sgna is a percent of sales that that's a good modeling number. Uh, so you know, it may take back between quarters, it may may ebb and flow a bit, but I think 7% is a good uh, number to keep in your model.
Understood, I'll pass it on, thanks.
So much.
Up. Next, we'll hear from David McGregor from Longbow, research?
Yeah, good morning. Uh congrats Ford and Mike on the transaction. Thanks David. Good to hear your voice.
Yeah, thanks on. On the time that you've acquired the 20 million tons. Just, how would you characterize the pricing on those tons within the context of their respective market. So they underpriced or they fairly priced is there a future? ASP lift opportunity there, uh, and then if I could just squeeze in maybe some commentary around the rail mergers and and the potential impact there. Thanks.
Thank you very much David. I'd I'd say a couple of things that I think where I was before is probably right and that is I I do think we are very focused on value and I think we're appropriately focused on value and I think this is a good quarter, the demonstrates it right. Um you saw pricing outperform, you saw volume properly about where you thought it was going to be frankly maybe even a little bit better. Uh and and you see very good financial performance that comes from that I think that opportunity continues to exist as we go forward particularly in the markets in in which
You'll see us either entering or or just having more business then David. So I think that that's a piece of it. Um, relative to the railroad mergers. Um, I I'll say this 1. We move more Stone by rail in the United States than any other Aggregates producer. And and we have good and valued relationships with all of the class 1 railroads and and think well of those businesses think well of their management. Um,
Um, we have a lot of experience obviously with the up, um, because we probably send more on up than any other railroad. Um, there are efficiency has been very good. You're really not changing the structure per se in the eastern United States because right now you got CSX on 1 hand and Norfolk Southern on the other. And after this, you would still have CSX on 1 hand and now you'd have up or the combined organization on the other. So we don't look at it and feel that there's any Peril to our business. Uh, they are good business partners, they move material for us, from producing locations to yards throughout the United States. And keep in mind, we've got nearly 90 yards that are out there. So, the Quantum of yards that we have either by ship or rail is much more significant than others, but at the end of the day,
They're all good customers too, because they do buy balance material from us, to make sure their rail bonds operate as they should. And, and again for the uninitiated when you're driving across a railroad crossing, if you look to your right and look to your left and you see all the stone on, which the rails are sitting, hopefully that's our Stone. So I I've tried to answer both your questions, the first 1 and the second 1 relative to the proposal between up and ands. And I hope that helps David
Okay. Thanks. Ward.
The next question is from Michael, dudus from vertical research.
Good morning. Jacqueline. Michael Ward.
Hey, how you doing, Michael?
I'm fantastic. Thank you ward. Um, maybe just share some thoughts on unit cost performance, again, driving the double digits quite helpful. Um, you know, above that if you need any line, some of the trends you see there and just on the transaction, net, net of all is going on. You're going to get 40050 million of cash and is that going to be kind of pointing us towards some debt reduction or some other in in in near-term uses that you may have on it, you know what? I'll type the cost portion. I'll ask Mike to come back and, and take the boot portion. So, as we look at the cost, I thought the cost was actually okay in the quarter cost could have been better in the quarter. And here's the big issue it ranked. I mean the fact is, it's really difficult to have your cost flow through the way that you would like. If you've got a lot of stop start in an outdoor sport, that's a heavy industrial use and and that's what we had in Q2. And even with that
I I like the overall cost performance. I mean, obviously what we're seeing is inflation, coming down and, and we're seeing our costs also come down and we're seeing our ASP go up and, and you're seeing that margin continue to grow. So I would, I would expect, we would continue to see very good cost Behavior as you may recall, I think Bob carton was right in q1. When he said, look, we had a home run quarter on cost control but that was actually a quarter because so much of it was January and February that, you know, exactly what what you're having to do, and where the levers are, it gets a little bit more complicated when you're in Q2 and you need to be running everywhere. I think that's the answer to part 1 of your question. Part 2 of your question was relative to the boot and for that over to Michael.
Yeah, no, thank you, word. Um, relative to the boot, I I think a couple of things 1, you know, Capital allocation priorities are going to stay focused on on dollar 1 to m&a. Uh, that being said, we did close the premier transaction in July. Uh, so, you know, you can almost think of that boot as, as already, having a home m&a. Wise, we do have um, actually our first 30-year Bond ever issued as a public company uh, coming due at the end of this year, for it was 125 million Bond at a 7% interest rate. So, we are, we're going to go ahead and uh, pay that off when it becomes due. Uh, that being said, we should, you know, end the year well, within our leverage range. Um, and as we
reset in the prepared remarks, you know, m&a, uh, pipeline remains active, so hopefully more to come
I wish I had to own some of those 7%. Bonds, thanks. Thanks, guys. You and me both.
And the next question is from Jonathan Benton hen from truist securities.
Hey guys. Uh, I'm on for your teeth this morning. So, you know, obviously Aggregates pricing is still, you know, really solid and last quarter was no exception. Um, but, you know, given that weather has been a drag on volumes for this many quarters and we know that this impacts the, the pace of price realization. Can you quantify how much or, you know, even if whether it's set back pricing in the industry. Um, and then, you know, so, like, is this a gap that can be closed if we get say, 12 months of notably below? Average. Rainfall,
That's a good observation. It, it's certainly more difficult, um, to to realize price when when volumes are are subdued as a result of whether um, so yeah, no, I I think there's certainly could be, um, some uptick, as a result of that, if we get a nice clean dry run like we saw in July, uh, that being said this,
You know, pricing environment at, you know, 7 and a half percent price is well above historical normal levels. Um, we've we've been saying we we think that there is a new normal in pricing. We said it wasn't going to be double digits forever. Um, but it certainly wasn't going to go back to kind of the 3 to 4%. Um, preco levels either. So we'll see where that ultimately shakes out. But but we feel pretty confident and and the price guide that we've put out for the full year, Jonathan activity begets confidence, confidence, begets pricing and and I believe the activity could be higher if the weather had permitted. And and I think when I go back to the, to the Genesis of your question, I think that really does answer it. If, if we see activity continued to ramp up, if contractors continue to see their backlogs grow. Uh, I think all of that actually pretends quite well for overall asps.
Perfect, that that's helpful caller. Thanks guys, you bet
Your next question is from Garrett Greenblat from JP Morgan.
Hi, thanks for taking my question. I just wanted to lean in a little more on the uh magnesia side of the business. Um I think of a focus is is going forward in terms of Acquisitions and how big do you think this business could become over time?
Thank you for the question. Look it it's never going to be a huge part of what we do but it's going to be an important part of what we do and it's going to be additive. I think to overall margins cash flow because they have some of the highest cash flow conversions of of any business we've ever seen. And I think it adds that nice differentiating component that's important to us 1 of the things that we've long talked about is as we went through the financial crisis.
I don't know if any other heavy side company in our space who could say we never cut or suspended a dividend all the way through that time. Period and 2 things made that happen, 1 was magnesia Specialties and and its ability to go through Cycles in a very resilient fashion and the other was the mid Midwestern United States where we're just adding more quarries today because those are the areas that as you go through. More challenge times tend to outperform. So do I expect us to to, to continue doing bolt-ons? Maybe here or
There in mag. I I think that's entirely possible and I think you should look for that. Uh do I think you're ever going to see a a transaction there that you're going to say boy that that doesn't look like an aggregate sled company. Know. I I don't think you're going to see that but I I do think it's a nice differentiator and I think when you look at that combined with the aggregate operations that are coming in with this transaction with quickrete and the geography in which that's occurring, it's actually a very nice and very consistent story with what helped us come through a financial downturn, very differently than others.
The next question is from Brian Broy from Stifel.
Thanks, good morning, everybody. Appreciate you taking the question. Um, just any more color on the land purchases. You mentioned in the prepared, comments. These related to potential Green Field opportunities, or these more adjacent to current operations. Thanks Brian. Nice to hear your voice. And thanks for the question. No, they tend to be more adjacent and
in my view, that's the more constructive way to go about that today. Because when your green Fielding look, do we have that as a tool in our kit? The answer is. Yes, we do. But I would rather go to existing operations that we can expand. Uh, if if you think of it this way, Brian, if you buy the property next door and you already have necessary setbacks.
When you buy the property, it's not just that you're buying the property next door on which you'll expand your operation. You're actually opening up some of your own reserves that used to be in a setback that no longer are
So you end up winning multiple times when you're buying adjacent reserves and that's primarily what we're doing, you know, it's a practical matter.
when, when we look at queries and they have less than
20 years.
A a very attractive operation and typically buy it for numbers that would not be commensurate to the value that it's going to create when it's under our ownership, we move on that. So that that's what you're primarily seeing and it's Michael indicated in his prepared remarks
we have been a capex numbers over historic the last several years. We do anticipate that coming back down to more normal metrics next year, but to answer your question directly. No, it's not Greenfield. And yes, it is a Jason. It is reserves and that's the overall philosophy.
Very helpful. Thank you.
You.
Next up is Ivan ye from Wolfe research.
Morning Ivan. Thanks for taking.
Good morning. Thanks for taking my
upcoming Capital markets today. What should we expect to hear from you all? Will you be providing any long-term guidance on revenues or ibida? For example, just any color would be great. Thank you.
Ivan, thank you very much. Look, we'll be together early next month at the Mandarin Oriental in New York. As you know, we refresh our store plans every five years.
Part of what we've done in every store plan to date and and Ivan. I'm not saying this is what we're going to say when we're together, but but we have been in a position that we have doubled our our market cap every 5 years. Um, I think this company has an exciting growth trajectory ahead of it. I want to talk about that. I think this company has exciting geographies in which that will be focused. I want to talk about that. I think there are a lot of new tools that are coming out today, particularly relative to what's going on commercials and the industry and and our business. I want to talk about that. I think we've got an outstanding team that I get to see every day. I want to put you in a position that you get to see that in a more granular basis as well. So, is this about long-term markets? Yes. Is it about what? M&a can look like for this company for the next 5 years and Beyond absolutely? Will we give you a sense of how we're going to Market and the sophistication that's increasingly being brought
To bear in that of course. And will you get to see what what I think? And I'm not talking about me, I'm talking about the rest of them that I believe is the most talented team in the industry. Absolutely. And I want to make sure you investors and others get time with them and can can affirm my judgment that you're going to like what you see.
Thank you.
You bet. And at this time, there are no further questions. I'd like to hand the conference back to Mr. Ward and I for any additional or closing remarks.
Again, thank you for joining today's earnings conference call.
Through deliberate and disciplined execution of our sore plans, we fortified our portfolio and aligned our business. And structurally advantaged markets that offer both resilience and compelling long-term potential growth.
With this durable foundation and a clearly defined differentiated growth strategy, underpinned by our strategic framework, we remain well positioned to manage through macroeconomic volatility while continuing to create meaningful long-term shareholder value.
As a final reminder. And as we were just discussing with Ivan, we'll be holding our Capital markets day on Wednesday, September, 3rd, in New York, where our leadership team will discuss. Strategic opportunities for long-term value creation. Through our updated 5-year, strategic operating analysis, and review, plan, or sore 2030. We look forward to your participation and as always, we're available for follow-up questions. Thank you for your time and your continued support of Martin Marietta.
Once again, ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.