mlm-ex991

2020 Outlook Reflects Continuing Steady Growth in Aggregates Shipments and Pricing

RALEIGH, N.C. (February 11, 2020) – Martin Marietta Materials, Inc. (NYSE:MLM) today reported results for the fourth quarter and year ended December 31, 2019.

	Quarter Ended December 31,				Year Ended December 31,
($ in thousands, except per share)	2019		2018		2019		2018
Total revenues ¹	$	1,100,430	$	1,020,218	$	4,739,098	$	4,244,265
Products and services revenues ²	$	1,024,719	$	956,051	$	4,422,318	$	3,980,351
Building Materials business	$	973,711	$	888,805	$	4,172,424	$	3,711,715
Magnesia Specialties business	$	51,008	$	67,246	$	249,894	$	268,636
Gross profit	$	258,589	$	227,284	$	1,179,007	$	966,577
Adjusted gross profit ³	$	258,589	$	227,506	$	1,179,007	$	985,315
Earnings from operations	$	184,569	$	147,041	$	884,934	$	690,737
Adjusted earnings from operations ⁴	$	184,569	$	159,542	$	884,934	$	741,792
Net earnings attributable to Martin Marietta	$	131,014	$	94,378	$	611,915	$	469,998
Adjusted EBITDA ⁵	$	278,780	$	250,150	$	1,254,549	$	1,092,149
Earnings per diluted share ⁶	$	2.09	$	1.50	$	9.74	$	7.43

Ward Nye, Chairman, President and CEO of Martin Marietta, stated, “We are pleased to have concluded 2019 as the most profitable year in our Company’s history. Driven by improved shipments, pricing and profitability across the vast majority of our Building Materials business, we achieved our eighth consecutive year of growth for revenues, gross profit, adjusted EBITDA and earnings per diluted share (after adjusting for the one-time earnings per diluted share benefit in 2017 from the Tax Cuts and Jobs Act of 2017). This year’s record-setting results, combined with our team’s shared commitment to safety and operational excellence, yielded a 64 percent total shareholder return. Building on this momentum and our more than 25-year history as a public company, Martin Marietta is well-positioned for responsible long-term growth and further shareholder value creation in 2020 and beyond.

“Looking ahead, our 2020 outlook remains positive across our three primary construction end-use markets. We believe construction growth in Martin Marietta’s top ten states will continue to outpace national averages and serves to reinforce our positive pricing outlook. Further supported by attractive market fundamentals and demand trends across our geographic footprint, as well as region-specific third-party forecasts, we expect the current construction cycle to expand at a steady and sustainable pace. Specifically, we anticipate infrastructure shipments, particularly for aggregates-intensive highways and streets, to meaningfully benefit from lettings and contract awards in our key states, strong federal and state funding levels and proposed regulatory reform. We are confident that states have the necessary visibility and resources to advance planned and future construction projects, regardless of a successor infrastructure bill passing prior to the September 2020 expiration of the Fixing America’s Surface Transportation Act (FAST Act). Furthermore, the Council on Environmental Quality recently proposed recommendations that, if approved, will reduce the regulatory burden of permitting large highway and bridge projects.”

Mr. Nye concluded, “With enhanced levels of needed infrastructure activity on the horizon and a healthy private sector, we expect 2020 to be another record year for Martin Marietta. Our ability to repeatedly deliver industry-leading safety, financial and operational performance demonstrates the successful execution of our proven strategy and our steadfast dedication to the world-class attributes of our business – including, safety, ethics, cost discipline and operational excellence. Importantly, we continue to strengthen this foundation for long-term success through strategic geographic positioning, cost management, price discipline, sustainable practices and prudent capital allocation. We will continue adhering to our strategic priorities and look forward to extending our long track record of consistently delivering profitability growth and enhanced shareholder value.”

Mr. Nye’s CEO Commentary and Market Perspective can be found on the Investor Relations section of the Company’s website.

	Quarter ended December 31, 2019
($ in thousands)	Revenues			Gross profit (loss)			Gross margin
Building Materials business:
Products and services:
Aggregates	$	635,295		$	171,377			27.0	%
Cement		108,136			38,895			36.0	%
Ready mixed concrete		223,873			16,324			7.3	%
Asphalt and paving		68,366			12,168			17.8	%
Less: interproduct revenues		(61,959	)		—			—
Products and services		973,711			238,764			24.5	%
Freight		70,593			(557	)	NM
Total Building Materials business		1,044,304			238,207			22.8	%
Magnesia Specialties business:
Products and services		51,008			19,644			38.5	%
Freight		5,118			(841	)	NM
Total Magnesia Specialties business		56,126			18,803			33.5	%
Corporate		—			1,579		NM
Total	$	1,100,430		$	258,589			23.5	%

	Quarter ended December 31, 2018
($ in thousands)	Revenues			Gross profit (loss)			Gross margin
Building Materials business:
Products and services:
Aggregates	$	579,846		$	146,471			25.3	%
Cement		87,277			28,631			32.8	%
Ready mixed concrete		213,346			7,950			3.7	%
Asphalt and paving		66,893			16,100			24.1	%
Less: interproduct revenues		(58,557	)		—			—
Products and services		888,805			199,152			22.4	%
Freight		59,438			(173	)	NM
Total Building Materials business		948,243			198,979			21.0	%
Magnesia Specialties business:
Products and services		67,246			26,151			38.9	%
Freight		4,729			(944	)	NM
Total Magnesia Specialties business		71,975			25,207			35.0	%
Corporate		—			3,098		NM
Total	$	1,020,218		$	227,284			22.3	%

Fourth-quarter operating results reflect the continuation of strong underlying product demand, partially offset by the timing of infrastructure projects. The aggregates and downstream operations in Colorado, the Company’s second-largest state by revenues, experienced project delays resulting from significant precipitation and extreme temperatures along the Front Range of the Rocky Mountains and unplanned maintenance and repair activities.

Fourth-quarter aggregates shipments and pricing improved 4.0 percent and 5.3 percent, respectively.

Martin Marietta’s fourth-quarter aggregates shipments by end use are as follows (all comparisons are versus the prior-year quarter):

Aggregates product gross margin expanded 170 basis points to 27.0 percent, driven by pricing gains and improved operating leverage from increased shipment and production levels and was partially offset by higher costs for contract services, repairs and supplies to prepare for future production needs.

Fourth-quarter cement shipments increased 22.3 percent, driven by strong underlying Texas demand. Unfavorable product mix muted pricing gains to 2.2 percent. Revenue growth, coupled with production efficiencies from increased shipment and production levels, more than offset higher maintenance costs, as product gross margin improved 320 basis points to 36.0 percent.

Ready mixed concrete shipments increased 5.3 percent, reflecting the healthy Texas demand environment, partially offset by weather-impacted projects in Colorado. Ready mixed concrete selling prices declined slightly, as unfavorable product mix and a shift in customer segmentation affected Texas pricing and offset solid pricing gains in Colorado. Colorado asphalt shipments decreased 4.1 percent while pricing improved 1.8 percent.

Magnesia Specialties product revenues decreased 24.1 percent to $51.0 million as international chemicals and domestic lime customers continued to rationalize inventory levels. The business reported product gross margin of 38.5 percent, as effective cost containment measures limited the decline to 40 basis points.

Selling, general and administrative expenses as a percentage of total revenues declined 30 basis points.

Other operating expense, net, for the prior-year quarter included an $11.7 million asset and portfolio rationalization charge related to the Company’s Southwest ready mixed concrete business.

Cash provided by operating activities was $966.1 million in 2019 compared with $705.1 million in 2018, driven by growth in earnings and lower contributions to the Company’s pension plan, partially offset by higher working capital related to increased revenues.

Cash paid for property, plant and equipment additions was $393.5 million in 2019.

Martin Marietta is dedicated to disciplined capital allocation that preserves the Company’s financial flexibility and further enhances shareholder value. The Company’s capital allocation priorities remain unchanged and include value-enhancing acquisitions that promote the successful execution of the Company’s strategic growth plan, organic capital investment, and the return of cash to shareholders through meaningful and sustainable dividends and share repurchases.

The Company has returned $1.6 billion to shareholders in the form of dividend payments and share repurchases since announcing a 20 million share repurchase authorization in February 2015. During fourth quarter 2019, the Company repurchased 154,500 shares of common stock pursuant to its share repurchase authorization. As of December 31, 2019, 13.7 million shares remained under the current repurchase authorization and 62.4 million shares of Martin Marietta common stock were outstanding.

Martin Marietta is confident in its 2020 outlook and in its key supporting factors. The Company’s geographic footprint has attractive underlying market fundamentals, including notable employment gains, population growth and superior state fiscal health, that should promote steady and sustainable construction growth over the near- and medium-terms. Supported by region-specific third-party forecasts and underlying demand trends, Martin Marietta believes the current construction cycle will continue for the foreseeable future and expand at a steady pace in 2020 for each of its three primary construction end-use markets. Notably:

2020 GUIDANCE
($ and tons in thousands, except per ton)	Low *			High *
Consolidated
Total revenues ¹	$	4,875,000		$	5,075,000
Products and services revenues	$	4,580,000		$	4,730,000
Freight revenues	$	295,000		$	345,000
Gross profit	$	1,295,000		$	1,390,000

Selling, general and administrative expenses (SG&A)	$	312,500		$	322,500
Interest expense	$	120,000		$	125,000
Estimated tax rate (excluding discrete events)		20	%		22	%
Net earnings attributable to Martin Marietta	$	662,500		$	762,500
Adjusted EBITDA ²	$	1,347,500		$	1,452,500
Capital expenditures	$	425,000		$	475,000

Building Materials Business
Aggregates
Volume (total tons) ³		195,000			199,000
% growth ³		2.0	%		4.0	%
Average selling price per ton (ASP)	$	14.90		$	15.20
% growth ⁴		4.0	%		6.0	%
Total revenues	$	3,185,000		$	3,295,000
Products and services revenues	$	2,935,000		$	2,995,000
Freight revenues	$	250,000		$	300,000
Gross profit	$	915,000		$	965,000

Cement
Total revenues	$	470,000		$	500,000
Products and services revenues	$	450,000		$	480,000
Freight revenues	$	20,000		$	20,000
Gross profit	$	160,000		$	180,000

Ready Mixed Concrete and Asphalt and Paving
Products and services revenues	$	1,255,000		$	1,325,000
Gross profit	$	130,000		$	150,000

Magnesia Specialties Business
Total revenues	$	265,000		$	275,000
Products and services revenues	$	240,000		$	250,000
Freight revenues	$	25,000		$	25,000
Gross profit	$	90,000		$	95,000

* Guidance range represents the low end and high end of the respective line items provided above.

This earnings release contains financial measures that have not been prepared in accordance with GAAP. Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the accompanying Appendix to this earnings release. Management believes these non-GAAP measures are commonly used financial measures for investors to evaluate the Company’s operating performance, and when read in conjunction with the Company’s consolidated financial statements, present a useful tool to evaluate the Company’s ongoing operations, performance from period to period and anticipated performance. In addition, these are some of the factors the Company uses in internal evaluations of the overall performance of its businesses. Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.

The Company will discuss its fourth-quarter and full-year 2019 earnings results on a conference call and an online web simulcast today (February 11, 2020). The live broadcast of the Martin Marietta conference call will begin at 11:00 a.m. Eastern Time today. An online replay will be available approximately two hours following the conclusion of the live broadcast. A link to these events will be available at the Company’s website. Additionally, the Company has posted supplemental information related to its fourth-quarter and full-year performance on its website. For those investors without online web access, the conference call may also be accessed by calling (970) 315-0423, confirmation number 2083269.

Martin Marietta, a member of the S&P 500 Index, is an American-based company and a leading supplier of building materials, including aggregates, cement, ready mixed concrete and asphalt. Through a network of operations spanning 27 states, Canada and The Bahamas, dedicated Martin Marietta teams supply the resources necessary for building the solid foundations on which our communities thrive. Martin Marietta’s Magnesia Specialties business provides a full range of magnesium oxide, magnesium hydroxide and dolomitic lime products. For more information, visit www.martinmarietta.com or www.magnesiaspecialties.com

If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a minimum, you read the Company’s current annual report and Forms 10-K, 10-Q and 8-K reports to the Securities and Exchange Commission (SEC) over the past year. The Company’s recent proxy statement for the annual meeting of shareholders also contains important information. These and other materials that have been filed with the SEC are accessible through the Company’s website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov. You may also write or call the Company’s Corporate Secretary, who will provide copies of such reports.

Investors are cautioned that all statements in this release that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. These statements, which are forward-looking statements under the Private Securities Litigation Reform Act of 1995, give the investor the Company’s expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as “guidance”, “anticipate”, “expect”, “should”, “believe”, “will”, and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of our forward-looking statements here and in other publications may turn out to be wrong.

The Company’s outlook is subject to various risks and uncertainties, and is based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this release (including the outlook) include, but are not limited to: the performance of the United States economy; shipment declines resulting from economic events beyond the Company’s control; a widespread decline in aggregates pricing, including a decline in aggregates shipment volume negatively affecting aggregates price; the history of both cement and ready mixed concrete being subject to significant changes in supply, demand and price fluctuations; the termination, capping and/or reduction or suspension of the federal and/or state gasoline tax(es) or other revenue related to public construction; the level and timing of federal, state or local transportation or infrastructure or public projects funding, most particularly in Texas, Colorado, North Carolina, Georgia, Iowa and Maryland; the United States Congress’ inability to reach agreement among themselves or with the Administration on policy issues that impact the federal budget; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Company serves; a reduction in defense spending and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space; a decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns in response to this decline, particularly in Texas; increasing residential mortgage rates and other factors that could result in a slowdown in residential construction; unfavorable weather conditions, particularly Atlantic Ocean and Gulf of Mexico hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas; continued increases in the cost of other repair and supply parts; construction labor shortages and/or supply‐chain challenges; unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to production facilities; increasing governmental regulation, including environmental laws; the failure of relevant government agencies to implement expected regulatory reductions; transportation availability or a sustained reduction in capital investment by the railroads, notably the availability of railcars, locomotive power and the condition of rail infrastructure to move trains to supply the Company’s Texas, Colorado, Florida, Carolinas and the Gulf Coast markets, including the movement of essential dolomitic lime for magnesia chemicals to the Company’s plant in Manistee, Michigan and its customers; increased transportation costs, including increases from higher or fluctuating passed-through energy costs or fuel surcharges, and other costs to comply with tightening regulations, as well as higher volumes of rail and water shipments; availability of trucks and licensed drivers for transport of the Company’s materials; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Company’s dolomitic lime products; trade disputes with one or more nations impacting the U.S. economy, including the impact of tariffs on the steel industry; unplanned changes in costs or realignment of customers that introduce volatility to earnings, including that of the Magnesia Specialties business that is running at capacity; proper functioning of information technology and automated operating systems to manage or support operations; inflation and its effect on both production and interest costs; the concentration of customers in construction markets and the increased risk of potential losses on customer receivables; the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company; the possibility that the expected synergies from acquisitions will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Company’s tax rate; violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability; downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations; the possibility of a reduction of the Company’s credit rating to non-investment grade; and other risk factors listed from time to time found in the Company’s filings with the SEC.

You should consider these forward-looking statements in light of risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2018 and other periodic filings made with the SEC. All of our forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements, or adversely affect or be material to the Company. The Company assumes no obligation to update any such forward-looking statements.

MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Earnings
(In thousands, except per share amounts)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2019			2018			2019			2018
Products and services revenues	$	1,024,719		$	956,051		$	4,422,318		$	3,980,351
Freight revenues		75,711			64,167			316,780			263,914
Total revenues		1,100,430			1,020,218			4,739,098			4,244,265

Cost of revenues - products and services		764,732			727,650			3,239,065			3,009,810
Cost of revenues - freight		77,109			65,284			321,026			267,878
Total cost of revenues		841,841			792,934			3,560,091			3,277,688
Gross profit		258,589			227,284			1,179,007			966,577

Selling general & administrative expenses		73,702			70,922			302,657			280,554
Acquisition-related expenses, net		277			554			467			13,479
Other operating expenses and (income), net		41			8,767			(9,051	)		(18,193	)
Earnings from operations		184,569			147,041			884,934			690,737

Interest expense		30,665			33,542			129,345			137,069
Other nonoperating (income) and expenses, net		(2,437	)		(2,539	)		7,253			(22,413	)
Earnings before income tax expense		156,341			116,038			748,336			576,081
Income tax expense		25,272			21,557			136,349			105,705
Consolidated net earnings		131,069			94,481			611,987			470,376
Less: Net earnings attributable to noncontrolling interests		55			103			72			378
Net Earnings Attributable to Martin Marietta Materials, Inc.	$	131,014		$	94,378		$	611,915		$	469,998

Net earnings per common share attributable to common shareholders:
Basic	$	2.10		$	1.50		$	9.77		$	7.46
Diluted	$	2.09		$	1.50		$	9.74		$	7.43

Dividends per common share	$	0.55		$	0.48		$	2.06		$	1.84

Average number of common shares outstanding:
Basic		62,456			62,672			62,528			62,895
Diluted		62,667			62,918			62,710			63,147

MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights
(In thousands)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2019			2018			2019			2018
Total revenues:
Building Materials Business:
Mid-America Group	$	333,132		$	316,857		$	1,446,029		$	1,223,236
Southeast Group		116,018			104,633			506,417			423,382
West Group		595,154			526,753			2,515,336			2,309,924
Total Building Materials Business		1,044,304			948,243			4,467,782			3,956,542
Magnesia Specialties		56,126			71,975			271,316			287,723
Total	$	1,100,430		$	1,020,218		$	4,739,098		$	4,244,265

Gross profit:
Building Materials Business:
Mid-America Group	$	107,536		$	96,458		$	482,912		$	366,918
Southeast Group		23,291			20,262			124,065			77,193
West Group		107,380			82,259			473,613			416,212
Total Building Materials Business		238,207			198,979			1,080,590			860,323
Magnesia Specialties		18,803			25,207			95,393			98,682
Corporate		1,579			3,098			3,024			7,572
Total	$	258,589		$	227,284		$	1,179,007		$	966,577

Selling, general and administrative expenses:
Building Materials Business:
Mid-America Group	$	15,889		$	14,516		$	63,048		$	55,775
Southeast Group		5,566			5,037			21,606			18,727
West Group		30,022			27,721			116,302			107,613
Total Building Materials Business		51,477			47,274			200,956			182,115
Magnesia Specialties		2,821			2,487			11,338			9,999
Corporate		19,404			21,161			90,363			88,440
Total	$	73,702		$	70,922		$	302,657		$	280,554

Earnings (Loss) from operations:
Building Materials Business:
Mid-America Group	$	93,567		$	83,918		$	425,911		$	319,139
Southeast Group		17,778			15,377			103,063			75,840
West Group		78,704			45,915			365,244			295,801
Total Building Materials Business		190,049			145,210			894,218			690,780
Magnesia Specialties		15,598			22,196			83,557			88,063
Corporate		(21,078	)		(20,365	)		(92,841	)		(88,106	)
Total	$	184,569		$	147,041		$	884,934		$	690,737

MARTIN MARIETTA MATERIALS, INC.
Unaudited Financial Highlights (Continued)
(In thousands)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2019			2018			2019			2018
Total revenues:
Building Materials business products and services:
Aggregates	$	635,295		$	579,846		$	2,756,738		$	2,365,806
Cement		108,136			87,277			439,112			387,830
Ready mixed concrete		223,873			213,346			948,052			963,770
Asphalt and paving		68,366			66,893			294,036			258,546
Less: Interproduct sales		(61,959	)		(58,557	)		(265,514	)		(264,237	)
Subtotal		973,711			888,805			4,172,424			3,711,715
Freight		70,593			59,438			295,358			244,827
Total Building Materials Business		1,044,304			948,243			4,467,782			3,956,542
Magnesia Specialties business:
Products and services		51,008			67,246			249,894			268,636
Freight		5,118			4,729			21,422			19,087
Total Magnesia Specialties Business		56,126			71,975			271,316			287,723
Consolidated total revenues	$	1,100,430		$	1,020,218		$	4,739,098		$	4,244,265

Gross profit (loss):
Building Materials business products and services:
Aggregates	$	171,377		$	146,471		$	807,884		$	608,384
Cement		38,895			28,631			143,421			126,213
Ready mixed concrete		16,324			7,950			78,778			74,175
Asphalt and paving		12,168			16,100			50,687			51,292
Subtotal		238,764			199,152			1,080,770			860,064
Freight		(557	)		(173	)		(180	)		259
Total Building Materials Business		238,207			198,979			1,080,590			860,323
Magnesia Specialties business:
Products and services		19,644			26,151			99,459			102,905
Freight		(841	)		(944	)		(4,066	)		(4,223	)
Total Magnesia Specialties Business		18,803			25,207			95,393			98,682
Corporate		1,579			3,098			3,024			7,572
Consolidated gross profit	$	258,589		$	227,284		$	1,179,007		$	966,577

MARTIN MARIETTA MATERIALS, INC.
Balance Sheet Data
(In thousands)

	December 31,		December 31,
	2019		2018
	(Unaudited)		(Audited)
ASSETS
Cash and cash equivalents	$	20,978	$	44,892
Accounts receivable, net		573,686		523,276
Inventories, net		690,810		663,035
Other current assets		141,226		134,613
Property, plant and equipment, net		5,206,031		5,157,229
Intangible assets, net		2,883,618		2,900,400
Operating lease right-of-use assets, net		481,884		—
Other noncurrent assets		133,414		127,974
Total assets	$	10,131,647	$	9,551,419

LIABILITIES AND EQUITY
Current maturities of long-term debt and short-term facilities	$	340,045	$	390,042
Other current liabilities		498,473		396,708
Long-term debt (excluding current maturities)		2,433,632		2,730,439
Other noncurrent liabilities		1,506,207		1,084,818
Total equity		5,353,290		4,949,412
Total liabilities and equity	$	10,131,647	$	9,551,419

MARTIN MARIETTA MATERIALS, INC.
Unaudited Statements of Cash Flows
(In thousands)
	Twelve Months Ended
	December 31,
	2019			2018
Operating activities:
Consolidated net earnings	$	611,987		$	470,376
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization		371,537			344,033
Stock-based compensation expense		34,109			29,253
Gains on divestitures and sales of assets		(3,061	)		(39,260	)
Deferred income taxes, net		29,444			85,063
Noncash portion of asset and portfolio rationalization charge		—			16,970
Other items, net		8,539			(8,891	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net		(50,410	)		(10,617	)
Inventories, net		(27,698	)		(21,984	)
Accounts payable		25,855			20,148
Other assets and liabilities, net		(34,205	)		(179,943	)
Net cash provided by operating activities		966,097			705,148

Investing activities:
Additions to property, plant and equipment		(393,501	)		(375,954	)
Acquisitions, net of cash acquired		—			(1,642,137	)
Proceeds from divestitures and sales of assets		8,408			69,114
Investments in life insurance contracts, net		621			771
Payment of railcar construction advances		—			(79,351	)
Reimbursement of railcar construction advances		—			79,351
Other investing activities, net		(1,423	)		—
Net cash used for investing activities		(385,895	)		(1,948,206	)

Financing activities:
Borrowings of long-term debt		625,000			1,000,000
Repayments of long-term debt		(975,056	)		(910,052	)
Payments on finance lease obligations		(10,983	)		—
Payments on capital lease obligations		—			(3,486	)
Debt issuance costs		—			(3,892	)
Payments of deferred acquisition consideration		—			(6,707	)
Purchase of the noncontrolling interest in existing joint venture		—			(12,800	)
Dividends paid		(129,796	)		(116,436	)
Repurchases of common stock		(98,237	)		(100,377	)
Proceeds from exercise of stock options		13,695			7,201
Shares withheld for employees' income tax obligations		(28,139	)		(11,865	)
Distributions to owners of noncontrolling interest		(600	)		—
Net cash used for financing activities		(604,116	)		(158,414	)

Net decrease in cash and cash equivalents		(23,914	)		(1,401,472	)
Cash and cash equivalents, beginning of period		44,892			1,446,364
Cash and cash equivalents, end of period	$	20,978		$	44,892

	Three Months Ended				Year Ended
	December 31, 2019				December 31, 2019
	Volume		Pricing		Volume		Pricing
Volume/Pricing Variance ⁽¹⁾
Mid-America Group	3.5%		1.0%		15.2%		1.7%
Southeast Group	7.5%		3.0%		13.9%		4.8%
West Group	3.4%		12.9%		6.5%		7.1%
Total Aggregates Product Line ⁽²⁾	4.0%		5.3%		11.7%		4.2%

	Three Months Ended				Year Ended
	December 31,				December 31,
Shipments (tons in thousands)	2019		2018		2019		2018
Mid-America Group		22,268		21,517		95,611		83,027
Southeast Group		6,177		5,744		26,996		23,710
West Group		15,478		14,967		68,519		64,356
Total Aggregates Product Line ⁽²⁾		43,923		42,228		191,126		171,093

(1) Volume/pricing variances reflect the percentage increase from the comparable period in the prior year.
(2) Aggregates Product Line includes acquisitions from the date of acquisition and divestitures through the date of disposal.

	Three Months Ended				Year Ended
	December 31,				December 31,
	2019		2018		2019		2018
Shipments (in thousands)
Aggregates tons - external customers		41,732		39,805		181,155		160,516
Internal aggregates tons used in other product lines		2,191		2,423		9,971		10,577
Total aggregates tons		43,923		42,228		191,126		171,093

Cement tons - external customers		655		519		2,666		2,286
Internal cement tons used in other product lines		293		256		1,205		1,222
Total cement tons		948		775		3,871		3,508

Ready mixed concrete - cubic yards		1,986		1,886		8,516		8,685

Asphalt tons - external customers		191		218		856		818
Internal asphalt tons used in road paving business		437		437		2,020		1,857
Total asphalt tons		628		655		2,876		2,675

Average unit sales price by product line (including internal sales):
Aggregates (per ton)	$	14.38	$	13.65	$	14.33	$	13.75
Cement (per ton)	$	113.43	$	111.00	$	112.75	$	109.38
Ready mixed concrete (per cubic yard)	$	110.12	$	110.55	$	109.07	$	108.83
Asphalt (per ton)	$	46.43	$	45.62	$	46.75	$	45.14

Earnings before interest; income taxes; depreciation, depletion and amortization and the noncash earnings/loss from nonconsolidated equity affiliates; the impact of selling acquired inventory after the markup to fair value as part of acquisition accounting; the impact of Bluegrass Materials Company (Bluegrass) acquisition-related expenses, net; and the asset and portfolio rationalization charge (Adjusted EBITDA) is an indicator used by the Company and investors to evaluate the Company's operating performance from period to period. Adjusted EBITDA is not defined by generally accepted accounting principles and, as such, should not be construed as an alternative to earnings from operations, net earnings or operating cash flow. For further information on Adjusted EBITDA, refer to the Company's website at www.martinmarietta.com.

A Reconciliation of Net Earnings Attributable to Martin Marietta to Consolidated Adjusted EBITDA is as follows:

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018⁽¹⁾		2019		2018⁽¹⁾
Net earnings attributable to Martin Marietta	$	131,014	$	94,378	$	611,915	$	469,998
Add back:
Interest expense		30,584		33,542		128,950		137,069
Income tax expense for controlling interests		25,256		21,567		136,275		105,637
Depreciation, depletion and amortization and noncash earnings/loss from nonconsolidated equity affiliates		91,926		88,162		377,409		328,390
Impact of selling acquired inventory after markup to fair value as part of acquisition accounting		—		222		—		18,738
Bluegrass acquisition-related expenses, net		—		554		—		13,479
Asset and portfolio rationalization charge		—		11,725		—		18,838
Consolidated adjusted EBITDA	$	278,780	$	250,150	$	1,254,549	$	1,092,149

⁽¹⁾ Calculation of Adjusted EBITDA was modified in 2019. 2018 amounts have been calculated consistently with the 2019 presentation.

Adjusted gross profit and adjusted earnings from operations for the three months ended and year ended December 31, 2018, exclude the impact of selling acquired inventory after the markup to fair value as part of acquisition accounting. Adjusted earnings from operations also exclude Bluegrass acquisition-related expenses, net, and the asset and portfolio rationalization charge. Adjusted gross profit and adjusted earnings from operations are non-GAAP financial measures. Management presents these measures for investors and analysts to evaluate and forecast the Company's financial results, as the impact of selling acquired inventory after the markup to fair value as part of acquisition accounting, Bluegrass acquisition-related expenses, net, and the asset and portfolio rationalization charge are nonrecurring.

The following is a reconciliation of the GAAP measure to adjusted gross profit and adjusted earnings from operations:

	Three Months Ended		Year Ended
	December 31, 2018		December 31, 2018
Gross profit as reported	$	227,284	$	966,577
Impact of selling acquired inventory after the markup to fair value as part of acquisition accounting		222		18,738
Adjusted gross profit	$	227,506	$	985,315

Earnings from operations as reported	$	147,041	$	690,737
Impact of selling acquired inventory after the markup to fair value as part of acquisition accounting		222		18,738
Bluegrass acquisition-related expenses, net		554		13,479
Asset and portfolio rationalization charge		11,725		18,838
Adjusted earnings from operations	$	159,542	$	741,792

The following is a reconciliation of the GAAP measure to the 2020 Adjusted EBITDA guidance:
	Low Point of Range		High Point of Range
Net earnings attributable to Martin Marietta	$	662,500	$	762,500
Add back:
Interest expense		125,000		120,000
Taxes on income		185,000		195,000
Depreciation, depletion and amortization and noncash earnings/loss from nonconsolidated equity affiliates		375,000		375,000
Adjusted EBITDA	$	1,347,500	$	1,452,500