Q2 2026 Martin Marietta Materials Inc Earnings Call

July 30, 2026

Operator: Ladies and gentlemen, welcome to Martin Marietta's Q2 2026 Earnings Conference Call. All participants are currently in a listen-only mode. A question-and-answer session will follow the company's prepared remarks. As a reminder, today's call is being recorded and will be available for replay on the company's website. I will now turn the call over to your host, Ms. Jacklyn Rooker, Martin Marietta's Vice President of Investor Relations. Jacklyn, you may begin.

Speaker #1: Ladies and gentlemen, welcome to MARTIN MARIETTA's second quarter 2026 earnings conference call. I'll participants are in currently in a listen-only mode. A question and answer session will follow the company's prepared remarks.

Speaker #1: As a reminder, today's call is being recorded and will be available for replay on the company's website. I will now turn the call over to your host, Ms. Jacklyn Rooker, MARTIN MARIETTA's Vice President of Investor Relations.

Speaker #1: Jacklyn, you may begin.

Speaker #2: Good morning, everyone, and thank you for joining Martin Marietta's second quarter 2026 earnings call. With me today are Ward Nye, Chair, President, and Chief Executive Officer; and Michael Petro, Senior Vice President and Chief Financial Officer.

Jacklyn Rooker: Good morning, everyone, and thank you for joining Martin Marietta's Q2 2026 Earnings Call. With me today are Ward Nye, Chair, President, 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. These statements relate to future events, operating results, or financial performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements except as legally required, whether due to new information, future developments, or otherwise. For additional details, 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 #2: As a reminder, today's discussion may include forward-looking statements as defined by United States Securities Laws. These statements relate to future events, operating results, or financial performance, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Speaker #2: Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements, except as legally required, whether due to new information, future developments, or otherwise.

Speaker #2: For additional details, 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 #2: Supplemental information summarizing our financial results and trends is available during this webcast and in the Investor section of our website. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the Appendix to the Supplemental Information in our SEC filings and on our website.

Jacklyn Rooker: Supplemental information summarizing our financial results and trends is available during this webcast and in the investor section of our website. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the appendix to the supplemental information in our SEC filings and on our website. Today's earnings call will begin with Ward Nye, who will discuss our Q2 and year-to-date accomplishments, 2026 outlook, and supporting market trends. Michael Petro will then review our financial results and capital allocation details, after which Ward will provide closing remarks. Please note that all comparisons are to the prior year's corresponding period. A question-and-answer session will follow. Please limit your Q&A participation to one question. I will now turn the call over to Ward.

Speaker #2: Today's earnings call will begin with Ward Nye, who will discuss our second quarter and year-to-date accomplishments, 2026 outlook, and supporting market trends. Michael Petro will then review our financial results and capital allocation details, after which Ward will provide closing remarks.

Speaker #2: Please note that all comparisons are to the prior year's corresponding period. A question and answer session will follow. Please limit your Q&A participation to one question.

Speaker #2: I will now turn the call over to Ward.

Speaker #3: Thank you, Jacklyn. Good morning, and thank you for joining today's teleconference. MARTIN MARIETTA delivered another strong quarter, highlighted by record second quarter revenues and adjusted EBITDA.

Ward Nye: Thank you, Jacklyn. Good morning, and thank you for joining today's teleconference. Martin Marietta delivered another strong quarter, highlighted by record Q2 revenues and adjusted EBITDA. Our results benefited from favorable demand in infrastructure and heavy non-residential markets, disciplined execution across the organization, and contributions from recent acquisitions. During the quarter, we also took significant steps to thoughtfully advance our SOAR 2030 priorities, positioning Martin Marietta for its next phase of growth. Specifically in May, we completed the acquisition of New Frontier Materials, or NFM, a complementary bolt-on to our aggregates position along the I-70 corridor in Missouri, creating opportunities to further leverage our existing scale across our differentiated central division footprint. Most recently, we announced a transformational agreement to combine with Lhoist North America Inc., or LNA, the nation's leading producer of lime and industrial mineral products.

Speaker #3: Our results benefited from favorable demand in infrastructure and heavy non-residential markets, disciplined execution across the organization, and contributions from recent acquisitions. During the quarter, we also took significant steps to thoughtfully advance our SOAR 2030 priorities positioning MARTIN MARIETTA for its next phase of growth.

Speaker #3: Specifically in May, we completed the acquisition of new frontier materials or NFM, a complementary bolt-on to our aggregates position along the I-70 corridor in Missouri creating opportunities to further leverage our existing scale across our differentiated central division footprint.

Speaker #3: Most recently, we announced a transformational agreement to combine with LAWAS North America Inc. or LNA the nation's leading mineral products. The planned combination builds upon our aggregates-led foundation and is expected to substantially broaden our differentiated upstream specialties platform.

Ward Nye: The planned combination builds upon our aggregates-led foundation and is expected to substantially broaden our differentiated upstream specialties platform. The strategic fit is compelling. Like construction aggregates, lime production begins with limestone reserves and relies on many of the same core competencies that have long defined Martin Marietta's success, including quarry operations, mineral resource management, and reserves optimization. With nearly 200 heritage limestone quarries across our portfolio, we're uniquely positioned to unlock significant value through recognizing the full potential of the combined limestone reserve base. LNA brings to its leading positions in key geographies and end-user markets, an advantaged Sun Belt footprint, and more than 200 years of high-quality limestone reserves. Its products possess unique properties, making them mission-critical across industrial, infrastructure, manufacturing, environmental, and other applications. With limited substitutes and a modest share of customers' overall production costs, lime benefits from attractive and durable demand fundamentals throughout economic cycles.

Speaker #3: The strategic fit is compelling. Like construction aggregates, lime production begins with limestone reserves and relies on many of the same core competencies that have long defined MARTIN MARIETTA's success, including quarry operations, mineral resource management, and reserves optimization.

Speaker #3: With nearly 200 heritage limestone quarries across our portfolio, we're uniquely positioned to unlock significant value through recognizing the full potential of the combined limestone reserve base.

Speaker #3: LNA brings to its leading position some key geographies and end-user markets, an advantaged Sunbelt footprint, and more than 200 years of high-quality limestone reserves.

Speaker #3: Its products possess unique properties, making them mission-critical across industrial, infrastructure, manufacturing, environmental, and other applications. With limited substitutes and a modest share of customers' overall production costs, lime benefits from attractive and durable demand fundamentals throughout economic cycles.

Speaker #3: Upon closing, the combination will diversify our end-market exposure, enhance free cash flow conversion, and create significant opportunities to realize commercial and operational synergies across our aggregates and specialties businesses.

Ward Nye: Upon closing, the combination will diversify our end market exposure, enhance free cash flow conversion, and create significant opportunities to realize commercial and operational synergies across our aggregates and specialties businesses. Taken together, the NFM acquisition and planned LNA combination demonstrate our disciplined approach to capital allocation and continued commitment to executing a strategy designed to enhance the quality, durability, and long-term growth profile of Martin Marietta for the benefit of our shareholders, customers, and employees. Importantly, our SOAR 2030 priorities extend far beyond portfolio optimization and acquisitions. They encompass a wide range of operational and commercial initiatives. Operationally, we identified approximately $350 million of run rate pre-tax cash flow improvement opportunities driven by enhanced asset utilization, network optimization, and lower sustaining capital requirements.

Speaker #3: Taken together, the NFM acquisition and planned LNA combination demonstrate our disciplined approach to capital allocation and continued commitment to executing a strategy designed to enhance the quality, durability, and long-term growth profile of MARTIN MARIETTA for the benefit of our shareholders, customers, and employees.

Speaker #3: Importantly, our SOAR 2030 priorities extend far beyond portfolio optimization and acquisitions. They encompass a wide range of operational and commercial initiatives. Operationally, we identified approximately 350 million dollars of run-rate pre-tax cash flow improvement opportunities driven by enhanced asset utilization, network optimization, and lower sustaining capital requirements.

Speaker #3: Year to date, as compared with the prior year period, disciplined inventory management and reductions in capital spending alone have unlocked more than 200 million dollars of cash flow benefits.

Ward Nye: Year to date, as compared with the prior year period, disciplined inventory management and reductions in capital spending alone have unlocked more than $200 million of cash flow benefits. Combined with our organic Q2 cost performance, we've already made meaningful progress toward our efficiency and cash generation objectives with additional runway ahead of us. It's important to note that these benefits are not the result of deferred investment or actions that may negatively impact the business long term. Rather, they reflect a more efficient alignment of our footprint, production capabilities, and capital requirements with our current and evolving portfolio. Commercially, I'm pleased to report that in June, we completed the enterprise-wide rollout of our PreciseIQ mobile quoting application and associated pricing algorithm. PreciseIQ enables greater customer responsiveness, enhanced pricing precision, improved commercial insights, and more consistent execution of go-to-market strategies.

Speaker #3: Combined with our organic second quarter cost performance, we've already made meaningful progress toward our efficiency and cash generation objectives with additional runway ahead of us.

Speaker #3: It's important to note that these benefits are not the result of deferred investment or actions that may negatively impact the business long term. Rather, they reflect a more efficient alignment of our footprint, production capabilities, and capital requirements with our current and evolving portfolio.

Speaker #3: Commercially, I'm pleased to report that in June we completed the enterprise-wide rollout of our Precise IQ mobile quoting application and associated pricing algorithm. Precise IQ enables greater customer responsiveness, enhanced pricing precision, improved commercial insights, and more consistent execution of go-to-market strategies.

Speaker #3: Turning to our year-to-date results, we delivered the best first-half safety performance in our company's history as measured both by total injury and loss time incident rates.

Ward Nye: Turning to our year-to-date results, we delivered the best H1 safety performance in our company's history, as measured both by total injury and lost time incident rates. Safety is the foundation of everything we do and remains our most important measure of success. I am grateful to every Martin Marietta employee, long-term team members, and recent additions alike, for embracing our shared responsibility to care for one another and ensure that every team member returns home safely each day. Based on our strong H1 performance and continued momentum, we are raising our full year revenue guidance to $7.2 billion to $7.4 billion and reaffirming our adjusted EBITDA from continuing operations guidance of $2.36 billion to $2.5 billion. This guidance does not include contributions from the pending LNA transaction, which we will update following the closing.

Speaker #3: Safety is the foundation of everything we do, and remains our most important measure of success. I'm grateful to every MARTIN MARIETTA employee, long-term team members, and recent additions alike for embracing our shared responsibility to care for one another and ensure that every team member returns home safely each day.

Speaker #3: Based on our strong first-half performance and continued momentum, we're raising our full-year revenue guidance to $7.2 to $7.4 billion, and reaffirming our adjusted EBITDA from continuing operations guidance of $2.36 to $2.5 billion.

Speaker #3: This guidance does not include contributions from the pending LNA transaction, which we will update following the closing. Looking at our end markets, infrastructure remains the most durable and visible source of aggregates demand.

Ward Nye: Looking at our end markets, infrastructure remains the most durable and visible source of aggregates demand. Recent legislative proposals and continued bipartisan support for transportation investment reinforce our confidence in the long-term funding environment. Although a short-term extension of the current surface transportation authorization appears increasingly likely, we do not expect it to materially impact project activity or funding flows. State departments of transportation continue to advance large multi-year construction programs supported by elevated state revenues and the over $150 billion of federal infrastructure funds yet to be invested. As a result, we remain confident in sustained infrastructure demand over the coming years. Heavy non-residential construction continues to provide an important source of growth, supported by investments in data centers, warehouses, power generation, and domestic manufacturing across our markets.

Speaker #3: Recent legislative proposals and continued bipartisan support for transportation investment reinforce our confidence in the long-term funding environment. Although a short-term extension of the current surface transportation authorization appears increasingly likely, we do not expect it to materially impact project activity or funding flows.

Speaker #3: State departments of transportation continue to advance large multi-year construction programs supported by elevated state revenues and the over 150 billion dollars of federal infrastructure funds yet to be invested.

Speaker #3: As a result, we remain confident in sustained infrastructure demand over the coming years. Heavy non-residential construction continues to provide an important source of growth supported by investments in data centers, warehouses, power generation, and domestic manufacturing across our markets.

Speaker #3: According to Dodge Construction Network, more than 70% of planned or under-construction data center square footage, and 70% of manufacturing square footage, are located within 55 miles of a Martin Marietta facility.

Ward Nye: According to Dodge Construction Network, more than 70% of planned or under construction data center square footage and 70% of manufacturing square footage are located within 55 miles of a Martin Marietta facility. This proximity advantage positions us to participate meaningfully in several of the secular growth trends reshaping the United States industrial economy. Upon closing, the planned LNA combination is expected to broaden our participation in these long-term growth opportunities while adding exposure to other durable end markets. LNA's high calcium and dolomitic lime products are essential to steel production, soil stabilization, water treatment, and other industrial applications. With its advantaged Sun Belt footprint, LNA is uniquely positioned to benefit as domestic steel production capacity and data center construction continues to migrate to the Southeastern United States and Texas.

Speaker #3: This proximity advantage positions us to participate meaningfully in several of the secular growth trends reshaping the United States' industrial economy. Upon closing, the planned LNA combination is expected to broaden our participation in these long-term growth opportunities while adding exposure to other durable end markets.

Speaker #3: LNA's high calcium and dolomitic lime products are essential to steel production, soil stabilization water treatment, and other industrial applications. With its advantaged sunbelt footprint, LNA is uniquely positioned to benefit as domestic steel production capacity and data center construction continues to migrate to the southeastern United States, and Texas.

Speaker #3: Taken together, these end markets provide an attractive balance of demand, a durable infrastructure base, compelling secular growth in heavy non-residential construction, and meaningful upside from an eventual residential recovery.

Ward Nye: Taken together, these end markets provide an attractive balance of demand, a durable infrastructure base, compelling secular growth in heavy non-residential construction, and meaningful upside from an eventual residential recovery. I will now turn the call over to Michael to discuss our Q2 financial results and capital allocation. Michael, over to you.

Speaker #3: I'll now turn the call over to Michael, to discuss our second quarter financial results and capital allocation. Michael, over to you.

Speaker #2: Thank you, Ward, and good morning, everyone. Our core aggregates business generated record revenues of 1.5 billion dollars, an increase of 16%. Supported by strong infrastructure and heavy non-residential demand across our footprint, organic shipments increased 2.3%, while total shipments increased 17% to 61.6 million tons, reflecting contributions from QuickReach and a partial quarter contribution from the NFM acquisition.

Michael Petro: Thank you, Ward, and good morning, everyone. Our core aggregates business generated record revenues of $1.5 billion, an increase of 16%. Supported by strong infrastructure and heavy non-residential demand across our footprint, organic shipments increased 2.3%, while total shipments increased 17% to 61.6 million tons, reflecting contributions from Quikrete and a partial quarter contribution from the NFM acquisition. Average selling prices decreased 2%, but increased 3.7% on an organic basis after adjusting for geographic mix. The impact of acquisitions on headline ASP is expected to become more pronounced in the H2 of the year as NFM contributes for the full period. That said, we expect strong realization of mid-year increases in those relevant markets that are well below the company average.

Speaker #2: Average selling prices decreased 2%, but increased 3.7% on an organic basis after adjusting for geographic mix. The impact of acquisitions on headline ASP is expected to become more pronounced in the second half of the year as NFM contributes for the full period.

Speaker #2: That said, we expect strong realization of mid-year increases in those relevant markets that are well below the company average. Organic cost of goods sold per ton increased 3.6%, inclusive of a 150-basis-point headwind from higher pass-through external freight costs.

Michael Petro: Organic cost of goods sold per ton increased 3.6%, inclusive of a 150 basis point headwind from higher pass-through external freight costs, such that our controllable cost growth was notably below the implied 3% in our guidance. This strong performance underscores the execution of our operating teams and the effectiveness of our cost management initiatives. While we expect energy costs to remain elevated through year-end, our focus will remain on what we can control to mitigate the current inflationary pressures and to protect and enhance margins. Reported aggregates gross profit of $418 million was negatively impacted by a $52 million non-cash inventory step-up charge, of which $45 million was an adjustment to EBITDA, as well as $42 million of higher depreciation, depletion, and amortization expenses.

Speaker #2: Such that our controllable cost growth was notably below the implied 3% in our guidance. This strong performance underscores the execution of our operating teams and the effectiveness of our cost management initiatives.

Speaker #2: While we expect energy costs to remain elevated through year-end, our focus will remain on what we can control to mitigate the current inflationary pressures and to protect and enhance margins.

Speaker #2: Reported aggregates gross profit of 418 million dollars was negatively impacted by a 52 million dollar non-cash inventory step-up charge. Of which, 45 million was an adjustment to EBITDA.

Speaker #2: As well as $42 million of higher depreciation, depletion, and amortization expenses. With most of the fair value inventory charges now behind us, we anticipate only modest residual impacts on aggregates gross profit during the balance of the year.

Michael Petro: With most of the fair value inventory charges now behind us, we anticipate only modest residual impacts on aggregates gross profit during the balance of the year, allowing reported results to more closely align with the true underlying economics of the business. Our Magnesia Specialties business delivered record quarterly revenues of $152 million and gross profit of $50 million, reflecting contributions from the July 2025 Premier Magnesia acquisition and organic pricing gains across all products. As illustrated on slides seven and eight of our supplemental information, our single heritage lime plant in Woodville, Ohio, has demonstrated the ability to compound profitability through macroeconomic cycles. Of note, during the financial crisis, Woodville volumes declined only 7% as compared to the U.S. aggregates industry's 37% decline. By 2025, Woodville lime shipments exceeded 2006 levels by 2%, while U.S. aggregates production remained 25% below its peak.

Speaker #2: Allowing reported results to more closely align with the true underlying economics of the business. Our specialties business delivered record quarterly revenues of 152 million dollars and gross profit of 50 million dollars, reflecting contributions from the July 2025 Premier Magnesia acquisition and organic pricing gains across all products.

Speaker #2: As illustrated on slides 7 and 8 of our supplemental information, our single heritage lime plant in Woodville, Ohio, has demonstrated the ability to compound profitability through macroeconomic cycles.

Speaker #2: Of note, during the financial crisis, Woodville volumes declined only 7% as compared to the US aggregates industry's 37% decline. By exceeded 2006 levels by 2%, while US aggregates production remained 25% below its peak.

Speaker #2: This consistent demand profile, combined with average selling prices compounding at mid-single digits, resulted in gross profit compounding at a high single-digit rate for 19 years.

Michael Petro: This consistent demand profile, combined with average selling prices compounding at mid-single digits, resulted in gross profit compounding at a high single-digit rate for 19 years. This favorable algorithm is continuing in 2026. In the Q2, Woodville's average selling prices increased 4%, or 5% on a mix-adjusted basis, while shipments increased 1%, resulting in 7% growth in gross profit to a new record as compared with the prior year quarter's previous record, notwithstanding energy-related inflationary cost impacts. These results demonstrate lime's mission-critical nature and its value proposition to customers across a broad range of essential applications. We increased our full-year revenue guidance and reaffirmed our full-year adjusted EBITDA from continuing operations guidance, reflecting our strong H1 performance and contributions from the NFM acquisition, partially offset by continued energy cost headwinds.

Speaker #2: This favorable algorithm is continuing in 2026, specifically in the second quarter, Woodville's average selling prices increased 4% or 5% on a mixed adjusted basis, while shipments increased 1%.

Speaker #2: Resulting in 7% growth in gross profit to a new record as compared with the prior year quarters' previous record, notwithstanding energy-related inflationary cost impacts.

Speaker #2: These results demonstrate lime's mission-critical nature and its value proposition to customers across a broad range of essential applications. Looking ahead, we increased our full-year revenue guidance and reaffirmed our full-year adjusted EBITDA from continuing operations guidance, reflecting our strong first half performance and contributions from the NFM acquisition.

Speaker #2: Partially offset by continued energy cost headwinds, as Ward mentioned, we plan to update our 2026 guidance following the closing of the LNA transaction. Turning to capital allocation, as indicated on slide 9, since 2022, we have fundamentally reshaped MART MARIETTA's portfolio.

Michael Petro: As Ward mentioned, we plan to update our 2026 guidance following the closing of the LNA transaction. Turning to capital allocation. As indicated on slide nine, since 2022, we have fundamentally reshaped Martin Marietta's portfolio. We divested more than $525 million of EBITDA from our cement and ready-mix concrete assets at attractive valuations near cyclical peaks and redeployed those proceeds into aggregates and specialties businesses with more durable and higher margin earnings profiles, all in a largely balance sheet neutral manner. What makes this transformation particularly compelling is that despite divesting businesses that contributed more than half a billion dollars of EBITDA, we still expect adjusted EBITDA to compound at approximately 10% annually over the five-year period ending in 2026. This performance highlights both the success of our portfolio optimization strategy and the exceptional underlying earnings power embedded within our core business.

Speaker #2: We divested more than $525 million of EBITDA from our cement and ready-mix concrete assets at attractive valuations near cyclical peaks, and redeployed those proceeds into aggregates and specialties businesses with more durable and higher-margin earnings profiles, all in a largely balance sheet-neutral manner.

Speaker #2: What makes this transformation particularly compelling is that despite divesting businesses that contributed more than half a billion dollars of EBITDA, we still expect adjusted EBITDA to compound at approximately 10% annually over the five-year period ending in 2026.

Speaker #2: This performance highlights both the success of our portfolio optimization strategy and the exceptional underlying earnings power embedded within our core business. That momentum is continued through the first half of 2026 as organic growth and the acquired QuickReach assets outperformance relative to our initial expectations have more than offset the EBITDA associated with the divested assets and the exchange transaction.

Michael Petro: That momentum has continued through the H1 of 2026 as organic growth and the acquired QUIKRETE assets outperformance relative to our initial expectations have more than offset the EBITDA associated with the divested assets and the exchange transaction. As a result, we delivered a new H1 record of more than $1 billion of adjusted EBITDA. The announced combination with LNA represents the next step in a natural extension of the portfolio strategy we have executed for years, further strengthening Martin Marietta through a broader mix of differentiated mission-critical upstream materials businesses with compelling long-term growth prospects. This transaction enhances the quality, scale, and resilience of our earnings base, which expands our participation in attractive secular growth markets. Importantly, our approach remains unchanged.

Speaker #2: As a result, we delivered a new first half record of more than 1 billion dollars of adjusted EBITDA. The announced combination with LNA represents the next step in a natural extension of the portfolio strategy we have executed for years.

Speaker #2: Further strengthening MART MARIETTA through a broader mix of differentiated, mission-critical, upstream materials businesses with compelling long-term growth prospects. This transaction enhances the quality, scale, and resilience of our earnings base which expands our participation in attractive, secular growth markets.

Speaker #2: Importantly, our approach remains unchanged, as we have consistently demonstrated through prior portfolio actions, we will pursue value creation with the same disciplined capital allocation framework that has guided our company for decades.

Michael Petro: As we have consistently demonstrated through prior portfolio actions, we will pursue value creation with the same disciplined capital allocation framework that has guided our company for decades. Accordingly, we remain firmly committed to maintaining a strong investment-grade balance sheet and expect to de-lever back to our targeted range within 24 months post-closing of the LNA transaction. With that, I will now turn the call back over to Ward.

Speaker #2: Accordingly, we remain firmly committed to maintaining a strong investment-grade balance sheet and expect to de-lever back to our targeted range within 24 months post-closing of the LNA transaction.

Speaker #2: With that, I will now turn the call back over to Ward.

Speaker #3: Thank you, Michael. The strategic actions we've taken over the past several years have strengthened Martin Marietta's portfolio, expanded our growth opportunities, and enhanced our ability to serve customers across attractive end markets and geographies.

Ward Nye: Thank you, Michael. The strategic actions we've taken over the past several years have strengthened Martin Marietta's portfolio, expanded our growth opportunities, and enhanced our ability to serve customers across attractive end markets and geographies. As we continue advancing toward 2030, our priorities remain clear: operating safely and efficiently, successfully integrating acquired businesses, allocating capital with discipline, and delivering superior returns over the long term. Supported by a high-quality asset base, resilient market fundamentals, and the dedication of our talented teams, we remain confident in our ability to execute our strategy and create sustainable long-term value for our shareholders. If the operator will now provide the required instructions, we'll turn our attention to addressing your questions.

Speaker #3: As we continue advancing SOAR 2030, our priorities remain clear: operating safely and efficiently, successfully integrating acquired businesses, allocating capital, with discipline, and delivering superior returns over the long term.

Speaker #3: Supported by a high-quality asset base, resilient market fundamentals, and the dedication of our talented teams, we remain confident in our ability to execute our strategy and create sustainable, long-term value for our shareholders.

Speaker #3: If the operator will now provide the required instructions, we'll turn our attention to addressing your questions.

Speaker #1: Thank you, and we will now begin the question and answer session. If you've dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. We will now begin the question-and-answer session. If you've dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one to join the queue. Our first question comes from the line of Adam Thalhimer with Thompson Davis. Your line is open.

Speaker #1: If you would like to withdraw your question, simply press star 1 a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker #1: To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star 1 to join the queue.

Speaker #1: And our first question comes from the line of Adam Fauheimer with Thomson Davis. Your line is open.

Speaker #4: Hey, good morning, guys, and congrats on the solid Q2 print. Hey, Ward, I wanted to focus on your organic aggregates business. If you strip out deals how is the underlying aggregates business performing versus your expectations?

Adam Thalhimer: Hey, good morning, guys. Congrats on the solid Q2 print. Hey, Ward, I wanted to focus on your organic aggregates business. If you strip out deals, how is the underlying aggregates business performing versus your expectations?

Ward Nye: Good morning, Adam. Hey, I really appreciate the question because you're right, there are a lot of moving parts in today's release. Let me try to take you through that. Number one, I would say it was very strong. Here are the reasons why. Organic volume was up 2.3%. Let's put that in context. That's the fourth consecutive quarter of good, solid organic volume growth. Mixed adjusted pricing was up 3.7%. That's more in keeping with what we would have expected. Keep in mind, part of what we've seen this year is portions of the United States, such as the Central and the West, growing at faster rates from a volume perspective than the East and the Southwest have seen.

Speaker #3: Good morning, Adam. Hey, I really appreciate the question because you're right, there are a lot of moving parts in today's release, so let me try to take you through that.

Speaker #3: So number one, I would say it was very strong, and here are the reasons why. Organic volume was up 2.3%, so let's put that in context.

Speaker #3: That's the fourth consecutive quarter of good, solid organic volume growth. Mixed adjusted pricing was up 3.7%, so that's more in keeping with what we would have expected, and keep in mind part of what we've seen this year is portions of the United States, such as the Central and the West, growing at faster rates from a volume perspective than the East and the Southwest have seen.

Speaker #3: And so that's going to automatically give us a little bit of an optical headwind as we go through it. So again, mixed adjusted pricing up 3.7.

Ward Nye: That's going to automatically give us a little bit of an optical headwind as we go through it. Again, mixed adjusted pricing up 3.7. Here's what I'm really proud of. If I look at the cost of goods sold, they're up just 2.1% if we exclude the pass-through external freight component of it. That tells me our teams are doing a great job in managing costs. Here's the fact to it. If we want to go out and say, Okay, what would have happened if energy had been even and we hadn't seen the spike in energy? We actually would have seen cost of goods sold flat for the quarter. To see that type of performance, I think in an inflationary environment, broadly speaking, is really impressive.

Speaker #3: Here's what I'm really proud of. If I look at the cost of goods sold, they're up just 2.1%. If we exclude the pass-through external freight component of it, so that tells me our teams are doing a great job in managing costs.

Speaker #3: But here's a fact to it. If we want to go out and say, "Okay, what would have happened if energy had been even and we hadn't seen the spike in energy?" We actually would have seen cost of goods sold flat for the quarter.

Speaker #3: I mean, to see that type of performance, I think in an inflationary environment, broadly speaking, is really impressive. So what that means at the bottom line is organic gross profit was up about 4.3%, but if we think about what this is going to look like going forward, Adam, and I think that's really important, much of the non-cash inventory charges are now pretty much behind us, and that's obviously we're going to see some modest impacts from NFM as we go into half two, but that's going to make the reported numbers much more easy to see.

Ward Nye: What that means to the bottom line is organic gross profit was up about 4.3%. If we think about what this is going to look like going forward, Adam, I think that is really important, much of the non-cash inventory charges are now pretty much behind us. That is obviously we are going to see some modest impacts from NFM as we go into H2, that is going to make the reported numbers much more easy to see. As we go through it, I think as we are just talking about adjustments to make sure we get our heads around it. If we are looking at reported aggregates cash gross profit, we think about a bridge. I mean, here is the way I rack it up in my mind. $418 million reported.

Speaker #3: But as we go through it—and I think, as we're just talking about adjustments to make sure we get our heads around it—if we're looking at reported aggregates cash gross profit and we think about a bridge, I mean, here's the way I rack it up in my mind.

Speaker #3: 418 million reported, if we come back and adjust for the fair market value inventory adjustment, that's 52 million dollars. Then if we come back and look at the adjusted gross profit at that number, you're at 470.

Ward Nye: We come back and adjust for the fair market value inventory adjustment, that is $52 million. We come back and look at the adjusted gross profit at that number, you are at $470. That is 9% over prior year. We come back and take a look at the non-cash DD&A of $166 million, that gets us to adjusted cash gross profit of $636 million. That is up 15% year-over-year. Adam, to your point, I think it is so easy for that to get lost when you are going through GAAP, you are going through reported, and you are going through adjusted and all the rest of it. I really appreciate your question on what was happening in the organic aggregates business. I know that was a long answer, I hope it answered your question.

Speaker #3: That's 9% over the prior year. And then, equally, if we come back and take a look at the non-cash DD&A of $166 million, that gets us to adjusted cash gross profit of $636 million—and that's up 15% year over year.

Speaker #3: And Adam, to your point, I think it's so easy for that to get lost when you're going through GAAP, and you're going through reported, and you're going through adjusted, and all the rest of it.

Speaker #3: I really appreciate your question about what was happening in the organic aggregates business, and I know that was a long answer, but I hope it addressed your question.

Speaker #4: Great color. Thank you, Ward.

Adam Thalhimer: Great color. Thank you, Ward.

Speaker #3: Okay, you bet.

Ward Nye: Okay, you bet.

Speaker #1: And our next question comes from the line of Catherine Thompson with Thompson Research Group. Your line is open.

Operator: Our next question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open.

Kathryn Thompson: Hi. Thank you for taking my question today. Next up in Q&Focus is acquisitions, and more specifically with Lhoist. You've made the announcement, you've already had a call that gave some details, at the time of the closing of the announcement of the acquisition. Where we sit today, what are you seeing as the risk and opportunities for this acquisition? Thank you.

Speaker #5: Hi, thank you for taking my question today. Next up in queue and focus is acquisitions and more specifically with the lost you've now are in the midst of you've made the announcement, you've already had a call that gave some details.

Speaker #5: It's time of the closing of the announcement of the acquisition. But where we sit today, what are you seeing as the risk and opportunities for this acquisition?

Speaker #5: Thank you.

Speaker #2: Thank you.

Speaker #3: Hey, thank you, Catherine. I appreciate the question. I would say several things. If we just look at the opportunities, I'll come back and address the risks, too.

Ward Nye: Hey. Thank you, Kathryn. I appreciate the question. I would say several things. If we just look at the opportunities, I'll come back and address the risks, too. The opportunities is, this is the leading producer of dolomitic lime and high calcium lime in the United States. Look, there's a reason that we put some slides in today talking about what our heritage performances look like at Woodville. I think when you look at Woodville, number one, you think, you know what? That's an impressive business. It's done really well. It's done really well in the central and northern tier of the United States. This business that we're picking up, one, is the market leader, and it's in the southern half of the United States.

Speaker #3: I mean, the opportunities is this is the leading producer of dolomitic lime and high calcium lime in the United States. Look, there's a reason that we put some slides in today, talking about what our heritage performances look like at Woodville.

Speaker #3: I think when you look at Woodville, number one, you think, "Well, that's an impressive business. It's done really well." And it's done really well in the Central and Northern tier of the United States.

Speaker #3: This business that we're picking up, one, is the market leader, and it's in the southern half of the United States. So when we think about that geography, and think about their network of 20 quarries and production facilities, and then 45 distribution terminals, and how that's going to click into what we've had historically, we think that's a great opportunity.

Ward Nye: When we think about that geography and think about their network of 20 quarries and production facilities, and then 45 distribution terminals, and how that's going to click into what we've had historically, we think that's a great opportunity. We think the leading market positions that they have across really attractive markets, including the Sun Belt, as I said in my prepared remarks, is pretty important to us. We equally think the fact that it's mission-critical products, meaning you're not making steel without it. Water treatment is critical. Flue gas treatment is important. Non-ferrous metals are vital. Highways and mega construction projects are going to be very much in this business's wheelhouse now and after we close on the transaction. The other opportunities, I mentioned it briefly, is it's going to change our end market exposure because it makes it even more well-diversified.

Speaker #3: We think the leading market positions that they have across really attractive markets and including the Sun Belt, as I said in my prepared remarks, is pretty important to us.

Speaker #3: We equally think the fact that it's mission-critical products—meaning, you're not making steel without it. Water treatment is critical. Flue gas treatment is important.

Speaker #3: Non-ferrous metals are vital. But highways and mega-construction projects are going to be very much in this business's wheelhouse now and after we close on the transaction.

Speaker #3: The other opportunities I mentioned it briefly is it's going to change our end-market exposure because it makes it even more well-diversified. So part of what we try to build, Catherine, is an upstream business that's differentiated, that has the capacity and up-markets to outperform, and in down-markets to outperform.

Ward Nye: Part of what we try to build, Kathryn, is an upstream business that's differentiated, that has the capacity in up markets to outperform and in down markets to outperform. I think that's what we're doing. Now, keep in mind, part of what I love about this business is it represents about 1% to 4% of our customers' production costs. When we're looking at something that they have to buy, that's not a big part of their overall cost, that looks, feels, and sounds, to me, a lot like aggregates. Again, if we take a look at how this is trending, we continue to have really strong confidence in the synergies that we've talked about already. We hope to come back at some point and say that we will do better than those. Keep in mind, that's precisely what we did with TXI.

Speaker #3: And I think that's what we're doing. Now, keep in mind part of what I love about this business is it represents about 1 to 4 percent of our customers' production costs.

Speaker #3: So, when we're looking at something that they have to buy that's not a big part of their overall costs, that looks, feels, and sounds to me a lot like aggregates.

Speaker #3: So again, if we take a look at how this is trending, we continue to have really strong confidence in the synergies that we've talked about already.

Speaker #3: We hope to come back at some point and say that we will do better than those. Keep in mind that's precisely what we did with TXI.

Speaker #3: The other part of your question—I'm not trying to ignore it at all—is, what about risk mitigation? And what I would say is, number one, we've got a proven track record of doing these types of deals and doing them well at scale.

Ward Nye: The other part of your question, I'm not trying to ignore it at all, is what about risk mitigation? What I would say is, number 1, we've got a proven track record of doing these types of deals and doing them well of scale. I'm not worried about that. We also have shown our ability to rapidly de-lever following transactions of scale. We've talked about the fact in 24 months, we think we'll be back there. Then several things that we look at that we think mitigates the risk as well. The businesses are hugely complementary. Again, that's one of the reasons that we put in there what you've seen from Woodville today.

Speaker #3: I'm not worried about that. We also have shown our ability to rapidly delever following transactions of scale. We've talked about the fact in 24 months, we think we'll be back there.

Speaker #3: And then, several things that we look at we think mitigate the risk as well. I mean, the businesses are hugely complementary. Again, that's one of the reasons that we put in there what you've seen from Woodville today.

Ward Nye: Lhoist is really operated almost as an independent business here in the US, which means clipping it into what we're doing is not going to have a lot of the high degree of integration risks that you might see in other businesses. We've seen the team there. At the end of the day, seeing the team, seeing the talent, seeing how well they performed, that they have a set of values and a culture that I think, again, joins ours very seamlessly. I see the opportunities. I'm never blind to the risks. I think the risks are very manageable, and the primary thing we want to do is get this deal closed. Again, Kathryn, I hope that helped.

Speaker #3: The loss is really operated almost as an independent business here, in the United States, which means clipping it into what we're doing is not going to have a lot of the high degree of integration risks that you might see in other businesses.

Speaker #3: And we've seen the team there. And at the end of the day, seeing the team, seeing the talent, seeing how well they performed, that they have a set of values and a culture that I think, again, joins ours very, very seamlessly.

Speaker #3: I see the opportunities. I'm never blind to the risks. I think the risks are very manageable. And the primary thing we want to do is get this deal closed.

Speaker #3: So again, Catherine, I hope that helped.

Speaker #5: It does. And in summary, maybe it could be said it's a little bit different, but not a whole lot different from Martin's core strategy.

Kathryn Thompson: It does. In summary, maybe it could be said it's a little bit different, but not a whole lot different from Martin's core strategy. Is that a fair statement?

Speaker #3: Well, it's yeah, that's a totally fair statement. I think what people forget we have 200 limestone quarries today. I mean, what we're talking about doing is a set of my prepared remarks.

Ward Nye: Yeah, that's a totally fair statement. I think what people forget, we have 200 limestone quarries today. What we're talking about doing, as I said in my prepared remarks, are core fundamental things that Martin Marietta has long done and long done well. Again, if we're looking at a business that has even better margins than we've had, a business that's had wonderful pricing power, a business that has come through downturns with remarkable resilience, it's all very much what we do. I think it makes us better, and I think we can make them better.

Speaker #3: Our core fundamental things are what Martin Marietta has long done, and long done well. And again, if we're looking at a business that has even better margins than we've had, a business that's had wonderful pricing power, a business that has come through downturns with remarkable resilience, it's all very much what we do.

Speaker #3: I think it makes us better. And I think we can make them better.

Speaker #5: Thanks so much.

Kathryn Thompson: Thanks so much.

Speaker #3: Thank you, Catherine.

Ward Nye: Thank you, Kathryn.

Speaker #1: And our next question comes from the line of Trey Grooms with Stevens. Your line is open.

Operator: Our next question comes from the line of Trey Grooms with Stephens. Your line is open.

Speaker #6: Hey, good morning, everyone. Thanks for taking the question. So my question is on the updated guidance for the year. You're taking the revenue guide up 140 million at the midpoint.

Trey Grooms: Hey, good morning, everyone. Thanks for taking the question. My question is on the updated guidance for the year. You're taking the revenue guide up $140 million at the midpoint, reiterating the EBITDA range. Maybe if you could discuss some of the puts and takes here. You mentioned you're layering in NFM, any other details you could give us here around the guidance would be super helpful.

Speaker #6: You reiterated the EBITDA range, so maybe if you could discuss some of the puts and takes here. You mentioned you're layering in NFM, but any other details you could give us around the guidance would be super helpful.

Ward Nye: Trey. No, got it. Trey, thank you very much. I'm going to give you some Early comments on that last month. We'll come back and address in more detail. If you think about what's happening, are we seeing shipments trending toward the high end of our range? Yeah, we are. Are we seeing pricing going more toward the lower end of the range? Yeah, we are, a lot of that's explained by what we've discussed before on geographic mix, product mix, et cetera. I think the primary thing that we're doing is we're simply looking at the energy markets, and we're saying, "Let's not bet on that getting better in the H2 of the year." I think we're taking a very conservative view of the way that we're going to approach costs for the rest of the year.

Speaker #3: Great. No, I got it, Trey. Thank you very much. I'm going to give you some early comments on that. I'll ask Mark to come back and address in more detail.

Speaker #3: So if you think about what's happening, are we seeing shipments trending toward the high end of our range? Yeah, we are. Are we seeing pricing going more toward the lower end of the range?

Speaker #3: Yeah, we are. And a lot of that's explained by what we've discussed before, on geographic mix product mix, etc. I think the primary thing that we're doing is we're simply looking at the energy markets, and we're saying, "Well, let's not bet on that getting better in the second half of the year." And so I think we're taking a very conservative view of the way that we're going to approach costs for the rest of the year.

Speaker #3: But I'll ask Michael to take you through the guide and give you a bit more granularity. So, Michael.

Ward Nye: I'll ask Michael to take you through the guide and give you a bit more granularity. Michael?

Speaker #2: Yeah, no. Thank you, Ward, and Trey, thanks for the question. Ward hit it, but in a nutshell, what we're saying is the contributions to EBITDA from new frontier should largely offset continued elevated diesel costs.

Michael Petro: Yeah, no. Thank you, Ward. Trey, thanks for the question. Ward hit it, in a nutshell, what we're saying is the contributions to EBITDA from New Frontier should largely offset continued elevated diesel costs. A bit of conservatism on the cost side. Shipments certainly trending towards the high end. In fact, year to date, organic volumes are up 4.3%. You should assume organic volumes certainly trending towards the high end of the original guide. On the ASP front, that's towards the low end organically. We got to the mix adjust at 4% in the quarter, where we started the year, just mathematically, it's going to be difficult to get to the higher end, even with mid-years. As we're talking about mid-years, what I would say is realization of those is going to be strong in both the New Frontier and QUIKRETE markets.

Speaker #2: So a bit of conservatism on the cost side, shipments certainly trending towards the high end. In fact, year to date, organic volumes are up 4.3%.

Speaker #2: So you should assume organic volumes certainly trending towards the high end of the original guide. On the ASP front, that's towards the low end organically.

Speaker #2: We got to the mix-adjusted 4% in the quarter, but where we started the year, just mathematically, it's going to be difficult to get to the higher end, even with mid-years.

Speaker #2: As we're talking about mid-years, what I would say is realization of those is going to be strong in both the new frontier and quick creep markets.

Speaker #2: So we ought to get good momentum there. A, July 1 for quick creep. B, August 1 for new frontier. And that really is going to set up coming back January 1 in both of those markets.

Michael Petro: We ought to get good momentum there. A, 1 July for QUIKRETE; B, 1 August for New Frontier. That really is going to set up coming back 1 January in both of those markets. On the heritage business, we're also quoting work at higher rates. As Ward mentioned in his prepared remarks, we did complete the rollout of Precise IQ. We have the quoting tool and the algorithm in all of our sales reps' hands. That targeted price in the algorithm accounts for elevated inflation. We ought to see nice new quoted work coming through at higher ASPs. The only segment that was relatively challenged relative to mid-years, and this probably doesn't come as a surprise, is given what's going on in single-family residential, price increases to the ready-mix concrete segment was probably not as strong as you would see on the quoted work.

Speaker #2: On the heritage business, we're also quoting work at higher rates. So as Ward mentioned in his prepared remarks, we did complete the rollout of Precise IQ.

Speaker #2: So we have the quoting tool. And the algorithm and all of our sales reps' hands that targeted price in the algorithm accounts for elevated inflation.

Speaker #2: So we ought to see nice new quoted work coming through at higher ASPs. The only segment that was relatively challenged relative to mid-years and has probably done come as a surprise is given what's going on in single-family residential.

Speaker #2: Price increases to the ready-mix concrete segment were probably not as strong as you would see on the quoted work. From a COGS per ton perspective, what we think—and it does get lost in a lot of the noise—is just how strong we've performed year to date.

Michael Petro: From a COGS per ton perspective, what we think, and it does get lost in a lot of the noise, is just how strong we've performed year to date. If you just strip out external pass-through freight alone, year to date, organic COGS is up 3%. What we said after Q1 was, hey, look, we understand diesel's elevated, but we're not changing our guide on COGS because we're pulling certain levers relative to network optimization that we think we can maintain that 3% COGS per ton guide. You certainly saw that flow through in Q2. We feel pretty good about where we sit going into Q3 and Q4, because we're starting to lap those comps on a COGS per ton basis of last year that were relatively elevated in the H2. The last piece I would say is just the Specialties business.

Speaker #2: If you just strip out external pass-through freight alone, year to date organic COGS is up 3%. What we said after Q1 was, "Hey, look, we understand diesel's elevated, but we're not changing our guide on COGS because we're pulling certain levers relative to network optimization that we think we can maintain that 3% COGS per ton guide." You certainly saw that flow through in Q2.

Speaker #2: We feel pretty good about where we sit. Going into Q3 and Q4, because we're starting to lap those comps on a COGS per ton basis of last year that were relatively elevated in the second half.

Speaker #2: And the last piece, I would say, is just the specialties business. So you saw the outperformance in Q2. The beauty of that business is it's not highly seasonal.

Michael Petro: You saw the outperformance in Q2. The beauty of that business is it's not highly seasonal. Modeling it is very straightforward. You can almost apply that $50 million of gross profit pro rata across Q3 and Q4.

Speaker #2: So modeling it is very straightforward. So you can almost apply that 50 million of gross profit pro rata across Q3 and Q4.

Speaker #3: Hey, Trey, the one thing I'd come back on the guide and say, it's not so much a granular portion of the guide for the rest of the year, but I think it's really important to look at the guide and try to put that in context too.

Ward Nye: Hey, Trey, the one thing I'd come back on the guide and say it's not so much a granular portion of the guide for the rest of the year, but I think it's really important to look at the guide and try to put that in context, too. Again, what we're going to deliver, and we said it in the prepared remarks, this is a CAGR of 10%, notwithstanding over half a billion dollars of divestitures with EBITDA neutral at 2.5x exiting 2021, and 2.5x today. I'm really very pleased and proud of the way that guide has shaped up and the way that the shaping of the portfolio has gone to put us in this type of a position.

Speaker #3: Because, again, what we're going to deliver—and we said it in the prepared remarks—this is a CAGR of 10%, notwithstanding over half a billion dollars of divestitures, with EBITDA neutral at 2.5 times exiting 2021 and 2.5 times today.

Speaker #3: So I'm really very pleased and proud of the way that guide has shaped up and the way that the shaping of the portfolio has gone to put us in this type of position.

Speaker #3: So again, Trey, a lot of data, but I hope that's helpful because we said coming into this year, with the M&A that we've seen, it is confusing.

Ward Nye: Again, Trey, a lot of data, but I hope that's helpful because we said coming into this year with the M&A that we've seen, it is confusing. You do have to go through and make sure you're teasing out what's most relevant so you can truly see how the business is performing, and the business is performing very well.

Speaker #3: You do have to go through and make sure you're teasing out what's most relevant. So you can truly see how the business is performing.

Speaker #3: And the business is performing very well.

Speaker #4: Yeah, excellent. Thank you, guys. Thank you both for all the detail—super helpful. I'll pass it on. Thanks again.

Trey Grooms: Yeah. Excellent. Thank you guys. Thank you both for all the details. Super helpful. I'll pass it on. Thanks again.

Ward Nye: You bet. Thank you, Trey.

Speaker #3: You bet. Thank you. Thank you, Trey.

Speaker #1: And our next question comes from the line of Tyler Brown with Raymond James. Your line is open.

Operator: Our next question comes from the line of Tyler Brown with Raymond James. Your line is open.

Speaker #5: Hey, good morning.

Tyler Brown: Hey, good morning.

Speaker #3: Hey, Tyler.

Ward Nye: Hey, Tyler.

Speaker #5: Hey. Ward, so there has been quite a bit of noise in aggregates pricing. And I know that 27 is still a bit away, but I was hoping that you could maybe help me out conceptually.

Tyler Brown: Hey. Ward, there has been quite a bit of noise in aggregates pricing, and I know that 2027 is still a bit away, but I was hoping that you could maybe help me out conceptually. It feels that 2026 has been impacted by geo mix, product mix, M&A dilution. As we look to next year, shouldn't those pricing optics improve because geo and product kind of comp out, the mid-years should have a bigger outsized impact. You've got, let's call it, commercial harmonization in the acquired operations, and you've got this new Precise IQ tool that's going to be fully utilized. I guess why wouldn't we see reported pricing well in excess of, call it, that 4% longer term average as we think about next year?

Speaker #5: So it feels that 26 has been impacted by geo mix, product mix, M&A dilution, but as we look to next year, shouldn't those pricing optics improve because geo and product kind of comp out?

Speaker #5: The mid-year should have a bigger, outsized impact. You've got, let's call it, commercial harmonization in the acquired operations, and you've got this new Precise IQ tool that's going to be fully utilized.

Speaker #5: So I guess why wouldn't we see reported pricing well and excessive, call it that 4% longer-term average as we think about next year?

Speaker #3: Tyler, thanks for the question. And look, as you were going through your bullet points and your question mark, I kept thinking, yes, yes, yes, yes.

Ward Nye: Tyler, thanks for the question. Look, as you were going through your bullet points and your question mark, I kept thinking, "Yes, yes, yes." I think you've got it. It's fascinating to me to look at it because, for example, if we're looking at New Frontier, which we're so happy to own, their average selling price You know, $12 and some change. If we're looking at the QUIKRETE assets, again, which we are so happy to own, their ASP is dollars per ton below our average. To your point, if we think about the fact that really in Q1, what you saw was a snowless period of time in the West and the Central division coming out really strongly.

Speaker #3: I think you've got it. I mean, it's fascinating to me to look at it because, for example, if we're looking at New Frontier, which we're so happy to own, I mean, their average selling price is $12 and some change.

Speaker #3: If we're looking at the QuickCrete assets—again, which we are so happy to own—their ASP is dollars per ton below our average.

Speaker #3: And then, to your point, if we think about the fact that, really, in Q1 what you saw was a snowless period of time in the West, and the Central Division coming out really strongly, I mean, what's really happening this year is because of the timing of a really good Q1 for portions of our business that typically are sleepy.

Ward Nye: I mean, what's really happening this year is because of the timing of a really good Q1 for portions of our business that typically are sleepy, and they weren't sleepy because of weather. To your point, new acquisitions that are also coming in and the ASPs that come with those, that creates what you rightly said is an optical headwind. When we're looking reported down two, frankly, that doesn't mean anything. What means something is really what's happening relative to mix-adjusted pricing, and that's why seeing that trending toward four is more important than that. Now to your other point, as we think about the setup for 2027, here's what I'm excited about. When we go into 2027, we're going to be through all the inventory issues on purchase price accounting with QUIKRETE. We're going to be through all the inventory issues relative to New Frontier.

Speaker #3: And they weren't sleepy because of weather. And then to your point, new acquisitions that are also coming in, and the ASPs that come with those, that creates what you rightly said is an optical headwind.

Speaker #3: So when we're looking at reported down too, frankly, that doesn't mean anything. What means something is really what's happening relative to mix adjusted pricing.

Speaker #3: And that's why seeing that trending toward 4 is more important than that. Now, to your other point, as we think about the setup for 2027, here's what I'm excited about.

Speaker #3: When we go into 2027, we're going to be through all the inventory issues on purchase price accounting with quick creed. We're going to be through all the inventory issues relative to new frontier.

Speaker #3: And part of what happens with LAWAST is keep in mind, they don't keep a big host of inventory. So they'll actually work through that relatively quickly, which means to your point on pricing in 2027, should it be a pretty compelling story?

Ward Nye: Part of what happens with Lhoist is, keep in mind, they don't keep a big host of inventory, so they'll actually work through that relatively quickly, which means to your point on pricing in 2027, should it be a pretty compelling story? I think it should. Equally, when you think about 2027, what I'm excited about is we get to come out and just give you nice, clean, unadjusted numbers, and you get to see exactly what this business is doing. Back to your original question. Yes, yes, yes, and yes as you went through your bullet points, but again, I wanted to make sure that we talked about too what I think the balance of the setup is going into 2027. I hope that answered your question.

Speaker #3: I think it should. But equally, when you think about 2027, what I'm excited about is we get to come out and just give you nice, clean, unadjusted numbers, and you get to see exactly what this business is doing.

Speaker #3: So back to your original question, yes, yes, yes, yes. And yes, as you went through your bullet points, but again, I wanted to make sure that we talked about too, what I think the balance of the setup is going into 2027.

Speaker #3: I hope that answered your question.

Speaker #5: No, that's perfect. Thanks, Ward.

Tyler Brown: No, that's perfect. Thanks, Ward.

Speaker #3: Thank you, Tyler.

Ward Nye: Thank you, Tyler.

Speaker #1: And our next question comes from the line of Philip Ng with Jefferies. Your line is open.

Operator: Our next question comes from the line of Philip Ng with Jefferies. Your line is open.

Speaker #6: Hey, guys, it's Jesse on for Phil. Just for Q2 pricing, could you kind of just contextualize what the different mix headwinds were and kind of which of those you think will abate in the second half and which of those will kind of continue?

[Analyst] (Jefferies): Hey, guys, it's Jesse on for Phil. Just for Q2 pricing, could you kind of just contextualize what the different mix headwinds were and kind of which of those you think will abate in H2 and which of those will kind of continue? Obviously, the M&A ones will continue, but any of the product and geo mix that will kind of abate in H2?

Jesse Barone: Hey, guys, it's Jesse on for Phil. Just for Q2 pricing, could you kind of just contextualize what the different mix headwinds were and kind of which of those you think will abate in H2 and which of those will kind of continue? Obviously, the M&A ones will continue, but any of the product and geo mix that will kind of abate in H2?

Speaker #6: Obviously, the M&A ones will continue, but any of the product and geo mix that will kind of abate in the second half.

Speaker #2: Yeah, no, happy to do that. So if you think headline was down to 400 basis points of that was acquisition mix. So the reason in the prepared remarks, we said that headline ASP impact would become more pronounced in the second half, keep in mind we only had 45 days of new frontier in Q2.

Ward Nye: Yeah. No, happy to do that. If you think headline was down 2, 400 basis points of that was acquisition mix. The reason in the prepared remarks we said that headline ASP impact would become more pronounced in H2, keep in mind, we only had 45 days of New Frontier in Q2. As Ward just mentioned on the last question, that product is selling for $12 a ton. We're going to see that continue and become more pronounced of a mix headwind in H2. Also understanding that that's where we're going to get very strong realization of mid-years as well. That brings you to organic ASP on a headline basis of 2.1%, of which about 160 basis points was geo mix related.

Michael Petro: Yeah. No, happy to do that. If you think headline was down 2, 400 basis points of that was acquisition mix. The reason in the prepared remarks we said that headline ASP impact would become more pronounced in H2, keep in mind, we only had 45 days of New Frontier in Q2. As Ward just mentioned on the last question, that product is selling for $12 a ton. We're going to see that continue and become more pronounced of a mix headwind in H2. Also understanding that that's where we're going to get very strong realization of mid-years as well. That brings you to organic ASP on a headline basis of 2.1%, of which about 160 basis points was geo mix related.

Speaker #2: And as Ward just mentioned on the last question, those—that product is selling for $12 a ton. So, we're going to see that continue and become more pronounced as a mix headwind in the back half, but also understanding that that's where we're going to get very strong realization at mid-year as well.

Speaker #2: So that brings you to organic ASP on a headline basis of 2.1%, of which about 160 basis points was geo mix related. And so as we look at it, if we looked same on same geo mix, from this quarter to last quarter, adjusted is 3.7%.

Ward Nye: As we look at it, if we looked same on same geo mix from this quarter to last quarter, adjusted is 3.7%, getting close to 4% geo mix adjusted. That's due to the fact that our central division, and actually the takeaway is quite compelling. We're seeing a broadening out of demand, in particular with data centers, energy, and infrastructure, and what we often refer to as our differentiated central division, and that's what we mean. Not only was it the fastest growing volume division organically in the quarter, it was also the fastest growing ASP division in the quarter. We actually think that's a tailwind, not a headwind. That's obviously a headwind to reported metrics.

Michael Petro: As we look at it, if we looked same on same geo mix from this quarter to last quarter, adjusted is 3.7%, getting close to 4% geo mix adjusted. That's due to the fact that our central division, and actually the takeaway is quite compelling. We're seeing a broadening out of demand, in particular with data centers, energy, and infrastructure, and what we often refer to as our differentiated central division, and that's what we mean. Not only was it the fastest growing volume division organically in the quarter, it was also the fastest-growing ASP division in the quarter. We actually think that's a tailwind, not a headwind. That's obviously a headwind to reported metrics.

Speaker #2: So getting close to 4% geo mix adjusted. And that's due to the fact that our central division, and actually what we the takeaway is quite compelling.

Speaker #2: We're seeing a broadening out of demand in particular with data centers energy and infrastructure. And what we often refer to as our differentiated central division.

Speaker #2: And that's what we mean, not only was it the fastest growing volume division organically in the quarter, it was also the fastest growing ASP division in the quarter.

Speaker #2: So we actually think that's a tailwind, not a headwind. It's obviously a headwind to reported metrics. But that volume growing at that rate, our west division volume growing at that rate, both of which have ASPs lower than the company average, but growing at a faster rate, really sets up 2027 to be quite compelling from an ASP standpoint.

Ward Nye: That volume growing at that rate, our West Division volume growing at that rate, both of which have ASPs lower than the company average, but growing at a faster rate really sets up 2027 to be quite compelling from an ASP standpoint. Keep in mind, Texas, as some others have reported, that was in a pretty bad spot with weather. That just gives you a sense of how strong the Central Division and the West Division were if we were still putting up 2.3% when our largest state by revenue had the type of weather impacts that it had.

Michael Petro: That volume growing at that rate, our West Division volume growing at that rate, both of which have ASPs lower than the company average, but growing at a faster rate really sets up 2027 to be quite compelling from an ASP standpoint. Keep in mind, Texas, as some others have reported, that was in a pretty bad spot with weather. That just gives you a sense of how strong the Central Division and the West Division were if we were still putting up 2.3% when our largest state by revenue had the type of weather impacts that it had.

Speaker #2: But keep in mind, I mean, Texas and some others have reported, I mean, that was in a pretty bad spot with weather. So that just gives you a sense of how strong the Central Division and the West Division were, if we were still putting up 2.3% when our largest state by revenue had the type of weather impacts that it had.

Speaker #6: That's good detail. And then just a quick follow-up. The 350 million number that you're kind of calling out for cash cost saves, any way to kind of contextualize that for actual kind of drop down to either earnings or saves on like a cost per ton basis?

[Analyst] (Jefferies): That's good detail. Just a quick follow-up. The $350 million number that you're kind of calling out for cash cost saves, any way to kind of contextualize that for actual kind of drop down to either earnings or saves on like a cost per ton basis? Thanks.

Jesse Barone: That's good detail. Just a quick follow-up. The $350 million number that you're kind of calling out for cash cost saves, any way to kind of contextualize that for actual kind of drop down to either earnings or saves on like a cost per ton basis? Thanks.

Speaker #6: Thanks.

Speaker #2: Yep. So, we put it into three buckets. Think about it as opex, working capital—particularly inventory—and capex. Sustaining capex is the third bucket of cash opportunity.

Ward Nye: We put it into 3 buckets. Think about it as OpEx, working capital, in particular inventory, and CapEx, sustaining CapEx, as the 3 buckets of cash opportunity. We quantified what we've already delivered year-to-date, just on inventory and CapEx alone, you can get to that pretty quickly in the cash flow statement. If you think about our CapEx guide for the year, it's nearly or a little over $200 million down from where it was exiting 2025. That gives you a sense where CapEx will be of that $350 number. We did not quantify the OpEx P&L direct piece just yet except to say, Hey, look, we just delivered 2.1% organic COGS per ton growth in the quarter with nearly a $20 million energy headwind. That gives you a sense.

Michael Petro: We put it into 3 buckets. Think about it as OpEx, working capital, in particular inventory, and CapEx, sustaining CapEx, as the 3 buckets of cash opportunity. We quantified what we've already delivered year-to-date, just on inventory and CapEx alone, you can get to that pretty quickly in the cash flow statement. If you think about our CapEx guide for the year, it's nearly or a little over $200 million down from where it was exiting 2025. That gives you a sense where CapEx will be of that $350 number. We did not quantify the OpEx P&L direct piece just yet except to say, Hey, look, we just delivered 2.1% organic COGS per ton growth in the quarter with nearly a $20 million energy headwind. That gives you a sense.

Speaker #2: We quantified what we've already delivered year to date, just on inventory and capex alone. So you can get to that pretty quickly. And the cash flow statement, if you think about our capex guide for the year, it's nearly or a little over 200 million down from where it was exiting 2025.

Speaker #2: So that gives you a sense of where capex will be—of that $350 million number. We did not quantify the opex P&L direct piece just yet, except to say, hey, look, we just delivered 2.1% organic COGS.

Speaker #2: Per ton growth in the quarter with nearly a $20 million energy headwind. So, that gives you a sense—without that energy headwind, we're starting to talk about organic COGS per ton being flat.

Ward Nye: Without that energy headwind, we're starting to talk about organic COGS per ton as flat

Michael Petro: Without that energy headwind, we're starting to talk about organic COGS per ton as flat

Speaker #2: And the current inflationary environment. So the best way to back into a number there would just assume an inflation rate subtract what we're printing and multiply it by the tons.

Michael Petro: In the current inflationary environment. The best way to back into a number there would just assume an inflation rate, subtract what we're printing and multiply it by the tons.

Ward Nye: Jesse, I would add a bit more color to that. I would say, number one, we're anticipating that 350, at least in our minds today, as an exiting 2027 number, just to contextualize it for you. Look, I think before then we're going to come back and probably adjust that for you and not adjust it down. I think we'll likely be adjusting that up. The other thing, as we think about CapEx, and of course, Michael was talking about the Heritage business or the going forward business in those numbers. Something that we're really pleased with as we've gotten to see even more of LNA, is how well that business has been invested in. We are not anticipating that's going to be a business that's going to be a significant outsized consumer of CapEx.

Speaker #3: So Jesse, I would add a bit more color to that. I would say number one, we're anticipating that 350, at least in our minds today, as an exiting 27 number, just to contextualize it for you.

Speaker #3: Look, I think before then, we're going to come back and probably adjust that for you—and not adjust it down. I think we'll likely be adjusting that up.

Speaker #3: The other thing, as we think about capex, and of course, Michael's talking about the heritage business or the going forward business in those numbers.

Speaker #3: Something that we're really pleased with as we've gotten to see even more of L&A is how well that business has been invested in. We are not anticipating that's going to be a business that's going to be a significant outsized consumer of capex.

Speaker #3: And candidly, that's different than you would find in most circumstances, because it's more typical when you buy a business that an owner might have gone relatively light on CapEx for a period of time leading up to the sale.

Ward Nye: Candidly, that's different than you would find in most circumstances because it's more typical when you buy a business that an owner might have gone relatively light on CapEx for a period of time leading up to the sale. That's not what we found in that business. Again, some building blocks for you to put some context to the 350 number please.

Speaker #3: That's not what we found in that business. So again, some building blocks for you to put some context to the 350 number, please.

Speaker #6: Thanks, guys. Appreciate the color. I'll turn it over.

Michael Petro: Thanks, guys. I appreciate the color. I'll turn it over.

Jesse Barone: Thanks, guys. I appreciate the color. I'll turn it over.

Speaker #3: Thank you.

Ward Nye: Thank you.

Speaker #1: And our next question comes from the line of Tim Nattanners with Wells Fargo. Your line is open.

Operator: Our next question comes from the line of Timna Tanners with Wells Fargo. Your line is open.

Speaker #7: Yeah, hey, good morning. I wanted to ask, first off, a clarification question on the magnesia guidance, magnesia specialty segment guidance, because of the comment from Michael on the run rate that implies the full year number could be closer to that 200 million to annualize the 50 million performance in Q2.

Timna Tanners: Hey, good morning. I wanted to ask, first off, a clarification question on the Magnesia Specialties guidance, the Magnesia Specialties segment guidance, because of the comment from Michael on the run rate, that implies the full year number could be closer to that $200 million to annualize the $50 million performance in Q2. I know we made it this far without talking about the weather, but I thought I might bring it up and ask if you can quantify the hit to Q2. Any guidance on the weather impact potential for Q3, because so far, I guess continuing to see pretty high rains in Texas. Thanks.

Speaker #7: And then I know we made it this far without talking about the weather, but I thought I might bring it up and ask if you can quantify the hit to Q2.

Speaker #7: And any guidance on the weather impact potential for Q3, because so far I guess continuing to see pretty heavy rains in Texas. Thanks.

Speaker #2: Yeah, thank you, Tim. Yeah, on the specialties, business, of course, we have year to date already. You saw the 50. And thereabouts, you can probably plug in 50 for Q3 and Q4.

Michael Petro: Thank you, Timna. On the Specialties business, of course, we have year to date already. You saw the $50 and thereabout, you can probably plug in $50 for Q3 and Q4. That's not a bad modeling assumption. On the weather, the Southeast, I wouldn't say on a comp basis to prior year, it was notably impacted. In fact, in certain portions of North Carolina, we were in a drought until we got to July. Texas was the most impacted by weather in Q2. What's good about that is a couple of things. One, all of those projects were pushed out, so they're starting to pick up, certainly the mega projects into the H2. Those mega projects have certain escalators in them, so they reprice as you start to ship. That's actually a nice tailwind, moving into the H2.

Speaker #2: So that's not a bad modeling assumption. On the weather—yeah, the Southeast—I wouldn't say, on a comp basis to the prior year, it was notably impacted.

Speaker #2: In fact, in certain portions of North Carolina, we were in a drought until we got to July. Texas was the most impacted by weather in Q2.

Speaker #2: What's good about that is a couple of things. One, all of those projects were pushed out, so they're starting to pick up—certainly the mega projects.

Speaker #2: And to the second half, and those mega projects have certain escalators in them. So they reprice, as you start to ship. So that's actually a nice tailwind moving into the second half.

Speaker #2: What I would say is July shipment trends, notwithstanding, it's probably rained every single day in North Carolina in the month of July. Daily shipment trends in July are very supportive of our guy.

Michael Petro: What I would say is July shipment trends notwithstanding, it is probably rained every single day in North Carolina in the month of July. Daily shipment trends in July are very supportive of our guide.

Speaker #3: So Tim, coming back to it, look, I think the bigger issue relative to winter is we really didn't have major hurricane activity last year.

Ward Nye: Timna, coming back to it. Look, I think the bigger issue relative to winter is we really didn't have major hurricane activity last year. The fact is, we try not to talk about weather as much as possible because it is outside, and we just have to manage through it. What we've seen is we manage through it really quite well. To your point, was the Southwest pretty wet in Q2? Yeah, it was. Is Texas our single largest revenue profit state, et cetera? Yeah, it is. Here's something I'll say, too. You know what is going to be great in helping stabilize some of those wet soils? A whole lot of lime. We're actually seeing some nice upsides in what we think will allow us even to manage weather differently going forward, Timna. I hope that helps you.

Speaker #3: And the fact is, we try not to talk about weather as much as possible, because it's outside. And we just have to manage through it.

Speaker #3: And what we've seen is we managed through it really quite well. And to your point, was the southwest pretty wet in Q2? Yeah, it was.

Speaker #3: And is Texas our single largest revenue profit state, etc.? Yeah, it is. But here's something I'll say too. You know what's going to be great in helping stabilize some of those wet soils?

Speaker #3: A whole lot of lime. And so we're actually seeing some nice upsides in what we think will allow us, even to manage weather differently going forward, Tim.

Speaker #3: So I hope that helps you.

Speaker #7: Definitely. Thanks again.

Timna Tanners: Definitely. Thanks again.

Speaker #2: You bet.

Michael Petro: You bet.

Speaker #1: And our next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open.

Operator: Our next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open.

[Analyst] (Morgan Stanley): Hi, this is Esther on for Angel. I guess maybe I wanted to hear more about how backlog and quoting activity has been converting to actual awards that you guys have been working on right now, particularly on the private and commercial side. On top of that, are you seeing any pull forward or any push out behavior from any of the private customers just to assess the current private demand market right now this year?

Esther Osinaiya: Hi, this is Esther on for Angel. I guess maybe I wanted to hear more about how backlog and quoting activity has been converting to actual awards that you guys have been working on right now, particularly on the private and commercial side. On top of that, are you seeing any pull forward or any push out behavior from any of the private customers just to assess the current private demand market right now this year?

Speaker #8: Hi, this is Esther on for Angel. I guess maybe I wanted to hear more about how backlog and quoting activity has been converting to actual words that you guys have been working on right now.

Speaker #8: Particularly on the private and commercial side. And on top of that, are you seeing any pull forward or any push-out behavior from any of the private customers just to assess the current private demand market right now this year?

Speaker #2: Hey, thank you very much for the question, Esther. No, we're not seeing anything pushed off right now. We're seeing work just continue to flow through very nicely.

Ward Nye: Hey, thank you very much for the question, Esther. No, we're not seeing anything pushed off right now. We're seeing work just continue to flow through very nicely. If we're looking particularly on the private side and what's happening, of course, there's not that much happening on res right now. If we think about what the show really looks like, it's twofold, right? It's what's going on relative to infrastructure that's very constructive, and we don't see that changing. It's what's going on relative to heavy non-res. We continue to see the bidding, we can see the work, we see the backlog there, very attractive. If we're looking at data centers in our world, they're up 90%. If we're looking at power in our world, it's up 23%. Keep in mind, that's going to continue to chase the data centers for a while.

Speaker #2: I mean, if we're looking particularly on the private side and what's happening, of course, there's not that much happening on RAS right now. So if we think about what the show really looks like, it's twofold, right?

Speaker #2: It's what's going on relative to infrastructure that's very constructive and we don't see that changing. And it's what's going on relative to heavy non-RAS.

Speaker #2: And we continue to see the bidding. We can see the work; we see the backlog there—very attractive. I mean, if we're looking at data centers in our world, they're up 90%.

Speaker #2: If we're looking at power in our world, it's up 23%. And keep in mind, that's going to continue to chase the data centers for a while.

Speaker #2: So you would expect the data centers to be up more on a percentage basis and power to be somewhere behind that, but growing. And we mentioned in the last couple of quarters that we continue to see good activity and increasing activity in warehousing.

Ward Nye: You would expect the data centers to be up more on a percentage basis and power to be somewhere behind that, but growing. We mentioned in the last couple of quarters that we continue to see good activity and increasing activity in warehousing. We're seeing that year to date up 53%. Again, that's not on any base that feels overbuilt at all. Part of what I outlined in my prepared remarks is the percentage of that type of activity that's within a very close geographic proximity of a Martin Marietta location. Again, Esther, I hope that answered your question specifically.

Speaker #2: And we're seeing that year to date, up 53%. And again, that's not on any base that feels overbuilt at all. Part of what I outlined in my prepared remarks is the percentage of that type of activity that's within a very close geographic proximity to a Martin Marietta location.

Speaker #2: So again, Esther, I hope that answered your question specifically.

Speaker #8: Thank you.

[Analyst] (Morgan Stanley): Thank you.

Esther Osinaiya: Thank you.

Speaker #3: You bet.

Michael Petro: You bet.

Speaker #1: And our next question comes from the line of Stephen Fisher with UBS. Your line is open.

Operator: Our next question comes from the line of Steven Fisher with UBS. Your line is open.

Speaker #9: Thanks. Good morning. I just wanted to level set the pricing expectation for Q3 compared to that 3.7% mix-adjusted pricing in Q2. Are we thinking that it’s a little bit lower than that, or—just to kind of frame that, if you could?

Steven Fisher: Thanks. Good morning. I just wanted to level set the pricing expectation for Q3 compared to that 3.7% mix adjusted price in Q2. Are we thinking that it's a little bit lower than that? Just to kind of frame that, if you could, really interesting to hear you're able to deliver those flat COGS after adjusting for the fuel and energy. I know Michael Lea says there was some comps that were a factor, you had some network optimization. Can you just give us a sense of what some of the key actions that you took to get to that flat in this broader inflationary environment, is that sustainable in H2?

Speaker #9: And then really interesting to hear you're able to deliver those flat cogs after adjusting for the fuel and energy. I know Michael, you said there's some comps that were a factor and you had some network optimization.

Speaker #9: Can you just give us a sense of what some of the key actions that you took to get to that flat in this broader inflationary environment?

Speaker #9: And is that sustainable in the second half?

Michael Petro: Yeah. Let me start with COGS, because I think some of these data points by COGS category on the organic business are quite compelling. If you look at labor per ton, that was down year-over-year. You look at repairs, contract services, and other plant cost production, overhead, et cetera, all down. Really, if you look at line items, the only line items that were up year-over-year on a per ton basis were either energy directly or energy derived, call it internal rail freight to terminals. That's the type of cost performance that we saw. Some of it is network optimization, certainly flowing through from some of those early markets that we put that into place. Other is just really good cost control and starting to lap some of those comps.

Speaker #2: Yeah, let me start with cogs because I think some of these data points by cogs category on the organic business are quite compelling. So if you look at labor per ton, that was down year over year.

Speaker #2: If you look at repairs, contract services, and other plant costs, production overhead, etc., all down. Really, if you look at line items, the only line items that were up year over year on a per-ton basis were either energy directly or energy derived call it internal rail freight to terminals.

Speaker #2: So that's the type of cost performance that we saw. Some of it is network optimization, certainly flowing through from some of those early markets where we put that into place.

Speaker #2: The other factor is just really good cost control, and starting to lap some of those comps. Exactly as we said when we came into the year, we said Q1 was going to be a difficult cost comp.

Michael Petro: Exactly as we said when we came into the year, we said Q1 was going to be a difficult cost comp, and then they got notably easier as we rolled through the balance of the year. You started to see that really in Q2. On the ASP, organic ASP, yeah, look, we feel confident in the remaining quarters of our organic ASP guide starting to be in that mid-single zip code. That being said, on a headline basis, given that we have New Frontier rolling through for the full H2, the reported and headline number is going to be notably lower than where it was for Q2, since we only had 45 days in that. We'll continue to break out the acquisition mix to ASP. We'll be transparent about that so that you can see the true underlying performance of the business.

Speaker #2: And then they got notably easier as we rolled through the balance of the year. You started to see that really in Q2. On the ASP, organic ASP—yeah, look, we feel confident in the remaining quarters of our organic ASP guide starting to be in that mid-single-digit zip code.

Speaker #2: That being said, on a headline basis, given that we have new frontier rolling through for the full back half, the reported and headline number is going to be notably lower than where it was for Q2 since we only had 45 days in that.

Speaker #2: But we'll continue to break out the acquisition mix to ASP. We'll be transparent about that so that you can see the true underlying performance of the business.

Speaker #2: But as Ward mentioned, just aggregates gross profit itself is going to be much cleaner in the back half, notwithstanding New Frontier impacts. Because all of the fair market value step-up is largely behind us, both for Quickrete and most of it for New Frontier.

Michael Petro: As Ward mentioned, just aggregates gross profit itself is going to be much cleaner in the H2, notwithstanding New Frontier impacts, because all of the fair market value step-up is largely behind us, both for Quikrete and most of it for New Frontier. We have some residual impacts here in July and maybe a little into August. The rest of the year is just clean, reported aggregates gross profit.

Speaker #2: We have some residual impacts here in July, and maybe a little into August. Then the rest of the year is just clean, reported aggregates gross profit.

Ward Nye: Steven, the other thing that I think is just so important to say again, because I can't underscore it enough, there's opportunity in the fact that the ASPs and those acquired businesses are where they are. If you're looking at reported, again, it's an optimal headwind. If you're looking at what the opportunity set is, it's pretty significant.

Speaker #3: And, Stephen, the other thing that I think is just so important to say again—because I can't underscore it enough—is there's opportunity in the fact that the ASPs and those acquired businesses are where they are.

Speaker #3: So, if you're looking at reported, again, it's an optimal headwind. If you're looking at what the opportunity set is, it's pretty significant.

Speaker #2: Yeah, I mean, it is 50% below the company average, to put it in perspective.

Michael Petro: Yeah. It is 50% below the company average, to put it in perspective.

Speaker #9: Yeah, meaningful. Thank you so much.

Steven Fisher: Yeah. Meaningful. Thank you so much.

Speaker #3: Thank you, Stephen.

Ward Nye: Thank you, Steven.

Speaker #1: And our next question comes from the line of Michael Budas with Vertical Research Partners. Your line is open.

Operator: Our next question comes from the line of Michael Dudas with Vertical Research Partners. Your line is open.

Michael Dudas: Good morning, everyone.

Speaker #10: Good morning, everyone.

Speaker #2: Good morning.

Michael Petro: Good morning.

Michael Dudas: Ward, wouldn't want to have a call end without you maybe sharing a little bit more insight on what might happen in Washington. Senate has been pretty quiet. They've been very busy on other things, though it seems like consensus is a CR is upon us. Your sense that something gets done before 31 December?

Speaker #10: Ward, we want to have a call in without you maybe sharing a little bit more insight on what might happen in Washington. Then it was been pretty quiet, but they've been very busy on other things.

Speaker #10: Though it seems like consensus is a CR is upon us. Your sense that something gets done before December 31st?

Speaker #2: Well, you're right. It would just be wrong not to have this conversation. On an earnings call. So I appreciate the question so much. Look, just a level.

Ward Nye: Well, you're right. It would just be wrong not to have this conversation on an earnings call. I appreciate the question so much. Look,

Michael Dudas: You're welcome.

Speaker #2: You always got my back. I'm grateful. So look, I mean, just to level set on where we are. Obviously, the house committee has come out with bill 250, approximately 580 billion over five years, right?

Ward Nye: You always got my back. I'm grateful. Look, I mean, just to level set on where we are, obviously, the House committee has come out with Bill 250, approximately $580 billion over five years, right? That's going to be roughly $380 billion of guaranteed funding. To your point, the Senate continues to develop its legislation. We haven't seen any text come out of that yet. I think simply given that, I think it's just pragmatic to view that we're going to get a short-term extension. I think what's important is I haven't found a policymaker in either the House or the Senate who's not focused on maintaining the program continuity while preserving whatever time they need to negotiate a more broad multi-year arrangement. Do I think we'll end up with something before year-end?

Speaker #2: So that's going to be roughly $300—let's call it $80 billion of guaranteed funding. To your point, the Senate continues to develop its legislation.

Speaker #2: We haven't seen any text come out of that yet. I think simply given that, I think it's just pragmatic to view that we're going to get a short-term extension.

Speaker #2: I think what's important is I haven't found a policymaker in either the House or the Senate who is not focused on maintaining program continuity while preserving whatever time they need to negotiate a more broad, multi-year arrangement.

Speaker #2: Do I think we'll end up with something before year-end? The short answer is, yeah, I think we probably will. Do I think it's likely to be something that, from a structure perspective, is more geared toward highways, bridges, roads, and streets?

Ward Nye: The short answer is yeah, I think we probably will. Do I think it's likely to be something that from a structure perspective, is more geared toward highways, bridges, roads, and streets? Yeah, I think it is. If we look at what Senator Capito has said, who's clearly leading EPW, and that is she doesn't want to take anything that feels like a step backward on what we've seen from IIJA. I think she's really committed to that. Do I think they'll have something in place by 30 September? No, I don't. Do I think there'll be a pretty significant push to get something in place by 31 December? The answer is yeah, I think they probably will. Do I think that causes any degree of disruptions this year or heading into next year? No, I don't think it does.

Speaker #2: Yeah, I think it is. If we look at what Senator Capito has said, who's clearly leading EPW, and that is she doesn't want to take anything that feels like a step backward on what we've seen from IIJA.

Speaker #2: I think she's really committed to that. So do I think they'll have something in place by September? September 30th? No, I don't. Do I think there'll be a pretty significant push to get something in place by December 31?

Speaker #2: The answer is yeah. I think they probably will. And do I think that causes any degree of disruptions this year or heading into next year?

Speaker #2: No, I don't think it does. If we go back over time and just look at the way this process, that's highly imperfect by nature, typically works, this is pretty standard fare.

Ward Nye: If we go back over time and just look at the way this process that's highly imperfect by nature typically works

Ward Nye: This is pretty standard fare. I think we're going to end up in a perfectly good spot and have that most aggregates intensive portion of our business that tends to be, you've heard me describe it before, is the ballast in the boat. It's never something that pops aggregates way up or takes them down. It just makes it good and steady for the biggest piece of our business. I think that works very nicely going into 2027. Thank you for the question. I hope that answered it.

Speaker #2: So I think we're going to end up in a perfectly good spot and have that most aggregates intensive portion of our business that tends to be you've heard me describe it before is the ballast and the boat.

Speaker #2: It's never something that pops aggregates way up or takes them down. It just makes it good and steady for the biggest piece of our business.

Speaker #2: I think that works very nicely going into 2027. So thank you for the question. I hope that answered it.

Speaker #10: Well done, Ward. Thank you.

Michael Dudas: Well done, Ward. Thank you.

Speaker #2: Thank you.

Ward Nye: Thank you.

Speaker #1: And our next question comes from the line of Ivan Yee with Wolf Research. Your line is open.

Operator: Our next question comes from the line of Ivan Yi with Wolfe Research. Your line is open.

Speaker #11: Hey, good morning. Thanks for the time. I wanted to go back to M&A. We've heard some potential concerns about the Velocity deal. While you're digesting such a large acquisition, does this mean Martin is perhaps out of the running for any future core aggregates acquisitions in the near to medium term?

Ivan Yi: Hey, good morning. Thanks for the time. Wanted to go back to M&A, and we've heard some potential concerns about the Lhoist deal. While you're digesting such a large acquisition, does this mean Martin is perhaps out of the running for any future core aggregates acquisitions in sort of the near to medium term? I just want to see how does this acquisition change your future M&A strategy at all? Thank you.

Speaker #11: And I just want to see, does this acquisition change your future M&A strategy at all? Thank you.

Ward Nye: Ivan, thanks for the question. I really appreciate it. The short answer is it really doesn't. The fact is, with the coast-to-coast footprint that we have now, in many respects, the aggregate transactions that we anticipate seeing the most of are nice, steady, consistent bolt-on aggregate transactions. If you think about the way that we structured LNA relative to cash and relative to equity, we did that very purposefully, and we did that in large measure so we could continue to underscore to the aggregate businesses with whom we're engaged, we're very interested in your business. We're focused on that, and we're in a position that we can move thoughtfully forward with you. The other thing that Michael and our team have done very well is communicate with great clarity to the rating agencies as well. We do not see losing our investment-grade credit rating.

Speaker #2: Ivan, I appreciate Ivan, thanks for the question. I really appreciate it. The short answer is it really doesn't. The fact is, with the coast to coast footprint that we have now in many respects, the aggregate transactions that we anticipate seeing the most of are nice, steady, consistent, bolt-on aggregate transactions.

Speaker #2: And if you think about the way that we structured L&A relative to cash and relative to equity, we did that very purposefully. And we did that in large measures so we could continue to underscore to the aggregate businesses with whom we're engaged.

Speaker #2: We're very interested in your business. We're focused on that. And we're in a position that we can move thoughtfully forward with you. And the other thing that Michael and our team have done very well is communicate clear with great clarity to the rating agencies as well.

Speaker #2: So, we do not see losing our investment-grade credit rating. We will continue to be an aggregates-led business. So, keep in mind what we've done.

Ward Nye: We will continue to be an aggregates-led business. Keep in mind what we've done. We've taken the Specialty side of the house, the two different arms of the business. One was the Magnesia arm, the other was the Lime arm, and we've made both of those leaders in the United States. We will see nice deleveraging over the next 24 months that will not get in the way materially towards us sticking to our knitting that's on the aggregate side. What we'll see over time is the Specialties business will simply serve to further what we're doing on the aggregate side, I think in a pretty significant, material, and attractive way. Ivan, I hope that helped.

Speaker #2: We've taken the specialty side of the house the two different arms of the business. One was the magnesia arm. The other was the lime arm.

Speaker #2: And we've made both of those leaders in the United States. And we will see nicely leveraging over the next 24 months that will not get in the way materially towards us sticking to our knitting that's on the aggregate side and what we'll see over time is the specialties business will simply serve to further what we're doing on the aggregate side I think in a pretty significant material and attractive way.

Speaker #2: So Ivan, I hope that helped.

Speaker #11: Thank you so much.

Ivan Yi: Thank you so much.

Speaker #2: You're most welcome.

Ward Nye: You're most welcome.

Speaker #1: And our final question comes from the line of Garrett Greenplat with J.P. Morgan. Your line is open.

Operator: Our final question comes from the line of Garrett Greenblatt with JPMorgan. Your line is open.

Speaker #12: All right. Thank you for taking my question. This may be part of the $350 million of additional cash generation you called out earlier, but can you give an update on the pilot program you started in Denver at the end of last year?

Garrett Greenblatt: Hi, thanks for taking my question. This may be part of the $350 million of additional cash generation you called out earlier. Can you give an update on the pilot program you started in Denver at the end of last year, the progress you've seen year to date within that particular market, and any additional markets you plan on rolling that out to?

Speaker #12: The progress you've seen here to date within that particular market and any additional markets you plan on rolling that out to? Yeah. No, what you're

Ward Nye: Yeah, no, what you're saying is exactly right. We basically took what happened in Denver. We've used that as the prototype and pilot for what we're doing on the $350 million. Keep in mind, based on what we've seen so far, really the $200 million that we've already put really to bed on that has been twofold, right? It's been relative to what's happened on inventory, what's happened on CapEx. What it hasn't fully taken into account yet is what this network optimization can look like. That's going to clearly be a primary focus of our division presidents who are being led very capably by Chris W. Samborski. Keep in mind, Chris was in large measure the architect of what we did in Colorado. We will take what we did in Colorado, implement that same playbook, do it on a larger basis.

Speaker #2: What you're saying is exactly right. So, we basically took what happened in Denver, and we've used that as the prototype and pilot for what we're doing on the $350 million.

Speaker #2: Keep in mind, based on what we've seen so far, really the $200 million that we've already put to bed on that has been twofold, right?

Speaker #2: It's been relative to what's happened on inventory, what's happened on capex. What it hasn't fully taken into account yet is what this network optimization can look like.

Speaker #2: And that's going to clearly be a primary focus of our division presence. We're being led very capably by Chris Samborski. And keep in mind, Chris was in large measure the architect of what we did in Colorado.

Speaker #2: So, we will take what we did in Colorado and implement that same playbook, do it on a larger basis. And that was, in part, what I was referencing before.

Ward Nye: That was in part what I was referencing before. Look, do I feel like we're probably going to come back to you in the fullness of time and say, Look, that 350 that we talked about exiting 2027, we can probably refine that and most likely take that number up. I'd be surprised if we didn't. Again, I hope that gives you a sense of where we are in Colorado, how we've parlayed that into the balance of the organization, and even as we've done that so far, where we've taken some ground and where we have more to go.

Speaker #2: Look, do I feel like we're probably going to come back to you in the fullness of time and say, look, that 350 that we talked about exiting 2027—we can probably refine that, and most likely take that number up.

Speaker #2: I'd be surprised if we didn't. But again, I hope that gives you a sense of where we are in Colorado, how we've parlayed that into the balance of the organization, and even as we've done that so far—where we've made, we're taking some ground, and where we have more to go.

Garrett Greenblatt: Very helpful. Thank you.

Speaker #12: Very helpful. Thank you.

Speaker #2: Thank you.

Ward Nye: Thank you.

Speaker #1: And that concludes our question and answer session. I will now turn the conference back over to Mr. Ward Nye for closing remarks.

Operator: That concludes our question and answer session. I will now turn the conference back over to Mr. Ward Nye for closing remarks.

Speaker #2: Abby, thank you. And thank you all for joining today's earnings conference call. As we look ahead, we're confident in Martin Marietta's long-term growth prospects.

Ward Nye: Abby, thank you, and thank you all for joining today's Earnings Conference Call. As we look ahead, we're confident in Martin Marietta's long-term growth prospects. Through the continued evolution of our portfolio and disciplined allocation of capital, we're expanding our participation in attractive growth markets while further enhancing the resilience of our business. At the same time, our teams are strengthening Martin Marietta every day, building an increasingly differentiated company with a broader set of opportunities and a stronger foundation for the future. Guided by a culture of safety, stewardship, and disciplined execution, we believe Martin Marietta is well-positioned for its next phase of growth and to continue creating enduring value for our shareholders. We look forward to sharing our Q3 2026 results in the fall. As always, we're available for any follow-up questions. Thank you again for your time and continued support of Martin Marietta.

Speaker #2: Through the continued evolution of our portfolio and disciplined allocation of capital, we’re expanding our participation in attractive growth markets while further enhancing the resilience of our business.

Speaker #2: At the same time, our teams are strengthening Martin Marietta every day, building an increasingly differentiated company with a broader set of opportunities and a stronger foundation for the future.

Speaker #2: Guided by a culture of safety, stewardship, and disciplined execution, we believe Martin Marietta is well positioned for its next phase of growth and to continue creating enduring value for our shareholders.

Speaker #2: We look forward to sharing our third quarter 2026 results in the fall. As always, we're available for any follow-up questions. Thank you again for your time.

Speaker #2: And continued support of Martin Marietta.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

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