filings.toolsItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Statement of Responsibility and Management’s Report on Internal Control over Financial Reporting
Management’s Statement of Responsibility
The management of Martin Marietta Materials, Inc. (the Company or Martin Marietta) is responsible for the consolidated financial statements, the related financial information contained in this Form 10-K and the establishment and maintenance of adequate internal control over financial reporting. The consolidated balance sheets for Martin Marietta, at December 31, 2024 and 2023, and the related consolidated statements of earnings, comprehensive earnings, total equity and cash flows for each of the three years in the period ended December 31, 2024, include amounts based on estimates and judgments and have been prepared in accordance with accounting principles generally accepted in the United States applied on a consistent basis.
A system of internal control over financial reporting is designed to provide reasonable assurance, in a cost-effective manner, that assets are safeguarded, transactions are executed and recorded in accordance with management’s authorization, accountability for assets is maintained and financial statements are prepared and presented fairly in accordance with accounting principles generally accepted in the United States. Internal control systems over financial reporting have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company operates in an environment that establishes an appropriate system of internal control over financial reporting and ensures that the system is maintained, assessed and monitored on a periodic basis. This internal control system includes examinations by internal audit staff and oversight by the Audit Committee of the Board of Directors.
The Company’s management recognizes its responsibility to foster a strong ethical climate. Management has issued written policy statements that document the Company’s business code of ethics. The importance of ethical behavior is regularly communicated to all employees through the distribution of the Code of Ethical Business Conduct and through ongoing education and review programs designed to create a strong commitment to ethical business practices.
| Form 10-K ♦ Page 63 |  |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The Audit Committee of the Board of Directors, which consists of four independent, nonemployee directors, meets periodically and separately with management, the independent auditors and the internal auditors to review the activities of each. The Audit Committee meets standards established by the Securities and Exchange Commission (SEC) and the New York Stock Exchange as they relate to the composition and practices of audit committees.
Management’s Report on Internal Control over Financial Reporting
The management of Martin Marietta is responsible for establishing and maintaining adequate internal control over financial reporting. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on management’s assessment under the 2013 framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024.
The consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report appears on the following pages.
 |  |
| C. Howard Nye, Chair, President and Chief Executive Officer | James A. J. Nickolas, Executive Vice President and Chief Financial Officer |
February 21, 2025
| Form 10-K ♦ Page 64 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Report of Independent Registe****red Public Accounting Firm
To the Board of Directors and Shareholders of Martin Marietta Materials, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Martin Marietta Materials, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of earnings, of comprehensive earnings, of total equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2024 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
| Form 10-K ♦ Page 65 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Acquisition of BWI Southeast – Valuation of Mineral Reserves
As described in Note B to the consolidated financial statements, on April 5, 2024, the Company completed the acquisition of 20 active aggregates operations in Alabama, South Carolina, South Florida, Tennessee, and Virginia from affiliates of Blue Water Industries LLC (BWI Southeast) for $2.05 billion in cash, which resulted in the Company recording mineral reserves of $1.9 billion . As disclosed by management, the fair value of mineral reserves is determined using an excess earnings approach, which requires significant judgment to estimate future cash flows based on available historical information and future expectations, as well as significant assumptions, which include forecasted revenues based on sales price and shipment volumes, EBITDA margin, forecasted expenses inclusive of production costs and capital needs, and the discount rate.
The principal considerations for our determination that performing procedures relating to the valuation of mineral reserves acquired in the acquisition of BWI Southeast is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the mineral reserves acquired; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenues, EBITDA margin and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the mineral reserves acquired. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the mineral reserves acquired; (iii) evaluating the appropriateness of the excess earnings approach; (iv) testing the completeness and accuracy of the underlying data used in the excess earnings approach; and (v) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenues, EBITDA margin and the discount rate. Evaluating management's assumptions related to forecasted revenues and EBITDA margin involved considering (i) the current and past performance of the BWI Southeast business; (ii) the current and past performance of peer companies; (iii) the consistency with external market and industry data; and (iv) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the excess earnings approach and (ii) the reasonableness of the discount rate assumption.
/s/ PricewaterhouseCoopers LLP
Raleigh, North Carolina
February 21, 2025
We have served as the Company’s auditor since 2016.
| Form 10-K ♦ Page 66 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Financial Statements
| Martin Marietta Materials, Inc. and Consolidated SubsidiariesConsolidated Statements of Earnings | |||||||||||||||
| years ended December 31 (in millions, except per share data) | 2024 | 2023 | 2022 | ||||||||||||
| Revenues | $ | 6,536 | $ | 6,777 | $ | 6,161 | |||||||||
| Cost of revenues | 4,658 | 4,754 | 4,738 | ||||||||||||
| Gross Profit | 1,878 | 2,023 | 1,423 | ||||||||||||
| Selling, general and administrative expenses | 447 | 443 | 397 | ||||||||||||
| Acquisition, divestiture and integration expenses | 50 | 12 | 9 | ||||||||||||
| Other operating income, net | **(**1,326 | ) | (28 | ) | (190 | ) | |||||||||
| Earnings from Operations | 2,707 | 1,596 | 1,207 | ||||||||||||
| Interest expense | 169 | 165 | 169 | ||||||||||||
| Other nonoperating income, net | **(**58 | ) | (62 | ) | (53 | ) | |||||||||
| Earnings from continuing operations before income tax expense | 2,596 | 1,493 | 1,091 | ||||||||||||
| Income tax expense | 600 | 293 | 235 | ||||||||||||
| Earnings from continuing operations | 1,996 | 1,200 | 856 | ||||||||||||
| (Loss) Earnings from discontinued operations, net of income tax (benefit) expense | — | (30 | ) | 11 | |||||||||||
| Consolidated net earnings | 1,996 | 1,170 | 867 | ||||||||||||
| Less: Net earnings attributable to noncontrolling interests | 1 | 1 | — | ||||||||||||
| Net Earnings Attributable to Martin Marietta | $ | 1,995 | $ | 1,169 | $ | 867 | |||||||||
| Net Earnings (Loss) Attributable to Martin Marietta Per Common Share (see Note A) | |||||||||||||||
| Basic earnings per share from continuing operations attributable to common shareholders | $ | 32.50 | $ | 19.38 | $ | 13.74 | |||||||||
| Basic (loss) earnings per share from discontinued operations attributable to common shareholders | — | (0.50 | ) | 0.17 | |||||||||||
| $ | 32.50 | $ | 18.88 | $ | 13.91 | ||||||||||
| Diluted earnings per share from continuing operations attributable to common shareholders | $ | 32.41 | $ | 19.32 | $ | 13.70 | |||||||||
| Diluted (loss) earnings per share from discontinued operations attributable to common shareholders | — | (0.50 | ) | 0.17 | |||||||||||
| $ | 32.41 | $ | 18.82 | $ | 13.87 | ||||||||||
| Weighted-Average Common Shares Outstanding | |||||||||||||||
| Basic | 61.4 | 61.9 | 62.3 | ||||||||||||
| Diluted | 61.6 | 62.1 | 62.5 |
The accompanying Notes to the Financial Statements are an integral part of these statements.
| Form 10-K ♦ Page 67 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
| Martin Marietta Materials, Inc. and Consolidated SubsidiariesConsolidated Statements of Comprehensive Earnings | |||||||||||||||
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | ||||||||||||
| Consolidated Net Earnings | $ | 1,996 | $ | 1,170 | $ | 867 | |||||||||
| Other comprehensive earnings (loss), net of tax: | |||||||||||||||
| Defined benefit pension and postretirement plans: | |||||||||||||||
| Net gain (loss) arising during period, net of tax of $11, $(5) and $29, respectively | 33 | (16 | ) | 88 | |||||||||||
| Prior service cost arising during period, net of tax of $0, $0 and $(12), respectively | — | — | (36 | ) | |||||||||||
| Amortization of prior service cost, net of tax of $1, $2 and $1, respectively | 5 | 4 | 3 | ||||||||||||
| Amortization of actuarial loss, net of tax of $0, $0 and $1, respectively | 1 | — | 3 | ||||||||||||
| Amount recognized in net periodic pension cost due to settlement, net of tax of $0, $0 and $1, respectively | — | — | 4 | ||||||||||||
| 39 | (12 | ) | 62 | ||||||||||||
| Foreign currency translation (loss) gain | **(**3 | ) | 1 | (2 | ) | ||||||||||
| 36 | (11 | ) | 60 | ||||||||||||
| Comprehensive Earnings Attributable to Martin Marietta | $ | 2,032 | $ | 1,159 | $ | 927 |
The accompanying Notes to the Financial Statements are an integral part of these statements.
| Form 10-K ♦ Page 68 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
| Martin Marietta Materials, Inc. and Consolidated SubsidiariesConsolidated Balance Sheets | ||||||||||
| December 31 (in millions, except share and par value data) | 2024 | 2023 | ||||||||
| Assets | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 670 | $ | 1,272 | ||||||
| Restricted cash | — | 10 | ||||||||
| Accounts receivable, net | 678 | 753 | ||||||||
| Inventories, net | 1,115 | 989 | ||||||||
| Current assets held for sale | 8 | 807 | ||||||||
| Other current assets | 71 | 88 | ||||||||
| Total Current Assets | 2,542 | 3,919 | ||||||||
| Property, plant and equipment, net | 10,109 | 6,186 | ||||||||
| Goodwill | 3,767 | 3,389 | ||||||||
| Other intangibles, net | 730 | 698 | ||||||||
| Operating lease right-of-use assets, net | 376 | 372 | ||||||||
| Other noncurrent assets | 646 | 561 | ||||||||
| Total Assets | $ | 18,170 | $ | 15,125 | ||||||
| Liabilities and Equity | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 375 | $ | 343 | ||||||
| Accrued salaries, benefits and payroll taxes | 73 | 102 | ||||||||
| Accrued income taxes | 102 | 6 | ||||||||
| Accrued other taxes | 50 | 47 | ||||||||
| Accrued interest | 45 | 41 | ||||||||
| Current maturities of long-term debt | 125 | 400 | ||||||||
| Current operating lease liabilities | 56 | 53 | ||||||||
| Other current liabilities | 190 | 178 | ||||||||
| Total Current Liabilities | 1,016 | 1,170 | ||||||||
| Long-term debt | 5,288 | 3,946 | ||||||||
| Deferred income taxes, net | 1,169 | 874 | ||||||||
| Noncurrent operating lease liabilities | 335 | 327 | ||||||||
| Noncurrent asset retirement obligations | 423 | 383 | ||||||||
| Other noncurrent liabilities | 483 | 389 | ||||||||
| Total Liabilities | 8,714 | 7,089 | ||||||||
| Commitments and Contingent Liabilities - Note N | ||||||||||
| Equity: | ||||||||||
| Common stock ($0.01 par value; 100,000,000 shares authorized; 61,126,646 shares and 61,821,421 shares outstanding at December 31, 2024 and 2023, respectively) | 1 | 1 | ||||||||
| Preferred stock ($0.01 par value; 10,000,000 shares authorized; no shares outstanding) | — | — | ||||||||
| Additional paid-in capital | 3,550 | 3,519 | ||||||||
| Accumulated other comprehensive loss | **(**13 | ) | (49 | ) | ||||||
| Retained earnings | 5,915 | 4,563 | ||||||||
| Total Shareholders’ Equity | 9,453 | 8,034 | ||||||||
| Noncontrolling interests | 3 | 2 | ||||||||
| Total Equity | 9,456 | 8,036 | ||||||||
| Total Liabilities and Equity | $ | 18,170 | $ | 15,125 |
The accompanying Notes to the Financial Statements are an integral part of these statements.
| Form 10-K ♦ Page 69 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
| Martin Marietta Materials, Inc. and Consolidated SubsidiariesConsolidated Statements of Cash Flows | |||||||||||||||
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | ||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||
| Consolidated net earnings | $ | 1,996 | $ | 1,170 | $ | 867 | |||||||||
| Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: | |||||||||||||||
| Depreciation, depletion and amortization | 573 | 513 | 506 | ||||||||||||
| Stock-based compensation expense | 58 | 50 | 43 | ||||||||||||
| Net gains on divestitures, sales of assets and extinguishment of debt | **(**1,369 | ) | (2 | ) | (196 | ) | |||||||||
| Deferred income taxes, net | **(**45 | ) | (36 | ) | (1 | ) | |||||||||
| Noncash portion of asset and portfolio rationalization charge | 50 | — | — | ||||||||||||
| Other items, net | **(**15 | ) | (16 | ) | (12 | ) | |||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||||||
| Accounts receivable, net | 81 | 31 | (12 | ) | |||||||||||
| Inventories, net | **(**52 | ) | (189 | ) | (132 | ) | |||||||||
| Accounts payable | 17 | (17 | ) | (31 | ) | ||||||||||
| Other assets and liabilities, net | 165 | 24 | (41 | ) | |||||||||||
| Net Cash Provided by Operating Activities | 1,459 | 1,528 | 991 | ||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||
| Additions to property, plant and equipment | **(**855 | ) | (650 | ) | (482 | ) | |||||||||
| Acquisitions, net of cash acquired | **(**3,642 | ) | — | 11 | |||||||||||
| Proceeds from divestitures and sales of assets | 2,160 | 427 | 687 | ||||||||||||
| Proceeds from sale of restricted investments to discharge long-term debt | — | 700 | — | ||||||||||||
| Purchase of restricted investments to discharge long-term debt | — | — | (704 | ) | |||||||||||
| Investments in limited liability company | **(**117 | ) | (27 | ) | — | ||||||||||
| Other investing activities, net | 10 | 9 | 4 | ||||||||||||
| Net Cash (Used for) Provided by Investing Activities | **(**2,444 | ) | 459 | (484 | ) | ||||||||||
| Cash Flows from Financing Activities: | |||||||||||||||
| Borrowings of long-term debt | 2,758 | — | — | ||||||||||||
| Repayments of long-term debt | **(**1,690 | ) | (700 | ) | (54 | ) | |||||||||
| Payments on finance lease obligations | **(**20 | ) | (17 | ) | (15 | ) | |||||||||
| Dividends paid | **(**189 | ) | (174 | ) | (160 | ) | |||||||||
| Repurchases of common stock | **(**450 | ) | (150 | ) | (150 | ) | |||||||||
| Shares withheld for employees’ income tax obligations | **(**32 | ) | (22 | ) | (29 | ) | |||||||||
| Other financing activities, net | **(**4 | ) | (1 | ) | 1 | ||||||||||
| Net Cash Provided by (Used for) Financing Activities | 373 | (1,064 | ) | (407 | ) | ||||||||||
| Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | **(**612 | ) | 923 | 100 | |||||||||||
| Cash, Cash Equivalents and Restricted Cash, beginning of year | 1,282 | 359 | 259 | ||||||||||||
| Cash, Cash Equivalents and Restricted Cash, end of year | $ | 670 | $ | 1,282 | $ | 359 |
The accompanying Notes to the Financial Statements are an integral part of these statements.
| Form 10-K ♦ Page 70 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
| Martin Marietta Materials, Inc. and Consolidated SubsidiariesConsolidated Statements of Total Equity | ||||||||||||||||||||||||||||||||
| (in millions, except share and per share data) | Shares of Common Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
| Balance at December 31, 2021 | 62,393,990 | $ | 1 | $ | 3,470 | $ | (98 | ) | $ | 3,162 | $ | 6,535 | $ | 2 | $ | 6,537 | ||||||||||||||||
| Consolidated net earnings | — | — | — | — | 867 | 867 | — | 867 | ||||||||||||||||||||||||
| Other comprehensive earnings | — | — | — | 60 | — | 60 | — | 60 | ||||||||||||||||||||||||
| Dividends declared ($2.54 per common share) | — | — | — | — | (160 | ) | (160 | ) | — | (160 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | 126,699 | — | 5 | — | — | 5 | — | 5 | ||||||||||||||||||||||||
| Shares withheld for employees’ income tax obligations | — | — | (29 | ) | — | — | (29 | ) | — | (29 | ) | |||||||||||||||||||||
| Repurchases of common stock | (418,336 | ) | — | — | — | (150 | ) | (150 | ) | — | (150 | ) | ||||||||||||||||||||
| Stock-based compensation expense | — | — | 43 | — | — | 43 | — | 43 | ||||||||||||||||||||||||
| Balance at December 31, 2022 | 62,102,353 | 1 | 3,489 | (38 | ) | 3,719 | 7,171 | 2 | 7,173 | |||||||||||||||||||||||
| Consolidated net earnings | — | — | — | — | 1,169 | 1,169 | 1 | 1,170 | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (11 | ) | — | (11 | ) | — | (11 | ) | |||||||||||||||||||||
| Dividends declared ($2.80 per common share) | — | — | — | — | (174 | ) | (174 | ) | — | (174 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | 100,588 | — | 2 | — | — | 2 | — | 2 | ||||||||||||||||||||||||
| Shares withheld for employees’ income tax obligations | — | — | (22 | ) | — | — | (22 | ) | — | (22 | ) | |||||||||||||||||||||
| Repurchases of common stock | (381,520 | ) | — | — | — | (151 | ) | (151 | ) | — | (151 | ) | ||||||||||||||||||||
| Stock-based compensation expense | — | — | 50 | — | — | 50 | — | 50 | ||||||||||||||||||||||||
| Distribution to owners of noncontrolling interest | — | — | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||||
| Balance at December 31, 2023 | 61,821,421 | 1 | 3,519 | (49 | ) | 4,563 | 8,034 | 2 | 8,036 | |||||||||||||||||||||||
| Consolidated net earnings | — | — | — | — | 1,995 | 1,995 | 1 | 1,996 | ||||||||||||||||||||||||
| Other comprehensive earnings | — | — | — | 36 | — | 36 | — | 36 | ||||||||||||||||||||||||
| **Dividends declared ($**3.06 per common share) | — | — | — | — | **(**189 | ) | **(**189 | ) | — | **(**189 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | 90,983 | — | 5 | — | — | 5 | — | 5 | ||||||||||||||||||||||||
| Shares withheld for employees’ income tax obligations | — | — | **(**32 | ) | — | — | **(**32 | ) | — | **(**32 | ) | |||||||||||||||||||||
| Repurchases of common stock | **(**785,758 | ) | — | — | — | **(**454 | ) | **(**454 | ) | — | **(**454 | ) | ||||||||||||||||||||
| Stock-based compensation expense | — | — | 58 | — | — | 58 | — | 58 | ||||||||||||||||||||||||
| Balance at December 31, 2024 | 61,126,646 | $ | 1 | $ | 3,550 | $ | **(**13 | ) | $ | 5,915 | $ | 9,453 | $ | 3 | $ | 9,456 |
The accompanying Notes to the Financial Statements are an integral part of these statements.
| Form 10-K ♦ Page 71 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Notes to Financial Statements
Note A: Accou****nting Policies
Organization. Martin Marietta is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 390 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products and services, namely, ready mixed concrete, asphalt and paving, in vertically-integrated structured markets where the Company also has a leading aggregates position. Specifically, the Company has one cement plant and two cement distribution facilities in Texas; ready mixed concrete plants in Arizona and Texas; and asphalt plants in Arizona, California, Colorado and Minnesota. Paving services are located in California and Colorado. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement and ready mixed concrete and asphalt and paving product lines are reported collectively as the Building Materials business.
As of December 31, 2024, the Building Materials business includes two reportable segments: East Group and West Group. The East Group consists of the East and Central divisions and operates in Alabama, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Nova Scotia and The Bahamas. The West Group is comprised of the Southwest and West divisions and operates in Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah, Washington and Wyoming. The following ten states accounted for 81% of the Building Materials business’ 2024 revenues: Texas, North Carolina, Colorado, California, Georgia, Florida, Minnesota, Arizona, South Carolina, and Iowa.
The Company also operates a Magnesia Specialties business, which represents a separate reportable segment. The Magnesia Specialties business produces magnesia-based chemical products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers for steel production and soil stabilization. Magnesia Specialties’ production facilities are located in Ohio and Michigan, and products are shipped to customers domestically and worldwide.
Basis of Presentation and Use of Estimates. The Company’s consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. Such estimates include the valuation of investments, accounts receivable, inventories, goodwill, other intangible assets and other long-lived assets, as well as assumptions used in the calculation of income tax expense, retirement and postemployment benefits, stock-based compensation, the allocation of the purchase price to the fair values of assets acquired and liabilities assumed as part of business combinations and revenue recognition for service contracts. These estimates and assumptions are based on management’s judgment. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts such estimates and assumptions when facts and circumstances dictate. Changes in interest rates, credit, equity and energy markets and changes in construction activity increase the uncertainty inherent in certain estimates and assumptions. Because future events and their effects cannot be determined with precision, actual results could differ significantly from estimates. Changes in estimates, including those resulting from changes in the economic environment, are reflected in the consolidated financial statements for the period in which the change in estimate occurs.
Basis of Consolidation**.** The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Partially-owned affiliates are either consolidated or accounted for using the cost method or the equity method, depending on the level of ownership interest or the Company’s ability to exercise control over the affiliates’ operations. Intercompany balances and transactions between subsidiaries have been eliminated in consolidation.
Revenue Recognition**.** Revenues include sales of products and services provided to customers, net of discounts or allowances, if any, and freight and delivery costs billed to customers. Product revenues are recognized when control of the promised good is transferred to unaffiliated customers, typically when finished products are shipped. Intersegment and interproduct revenues are eliminated in consolidation. Service revenues are derived from the paving business and are recognized using the percentage-of-completion method under the cost-to-cost approach. Under the cost-to-cost approach, recognized contract revenue is determined by multiplying the total estimated contract revenue by the estimated percentage of completion. Contract costs are recognized as incurred. The percentage of completion is determined on a contract-by-contract basis using project costs incurred to date as a percentage of total estimated project costs. The Company believes the cost-to-cost approach is appropriate, as the use of asphalt in a paving contract is relatively consistent with the performance of the related paving services. When the Company arranges
| Form 10-K ♦ Page 72 |  |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
third-party freight to deliver products to customers, the Company has elected the delivery to be a fulfillment activity rather than a separate performance obligation. Further, the Company acts as a principal in the delivery arrangements and, as required by Accounting Standards Codification 606, Revenues from Contracts with Customers (ASC 606), the related revenues and costs are presented gross in the consolidated statements of earnings and are recognized consistently with the timing of the product revenues.
Cash, Cash Equivalents and Restricted Cash**.** Cash equivalents are comprised of highly-liquid instruments with original maturities of three months or less from the date of purchase.
As of December 31, 2023, the Company had $10 million of restricted cash, which was invested in an account designated for the purchase of like-kind exchange replacement assets under Section 1031 of the Internal Revenue Code and related IRS procedures (Section 1031). The Company was restricted from utilizing the cash for purposes other than the purchase of qualified assets for 180 days from receipt of the proceeds from the sale of the exchanged property. Any unused restricted cash at the end of the 180 days was transferred to unrestricted accounts of the Company and used for general corporate purposes. As of December 31, 2024, the Company had no restricted cash.
The statements of cash flows reflect cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis. The following table reconciles cash, cash equivalents and restricted cash as reported on the consolidated balance sheets to the aggregated amounts presented on the consolidated statements of cash flows:
| December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Cash and cash equivalents | $ | 670 | $ | 1,272 | $ | 358 | ||||||
| Restricted cash | — | 10 | 1 | |||||||||
| Total cash, cash equivalents and restricted cash presented in the consolidated statements of cash flows | $ | 670 | $ | 1,282 | $ | 359 |
Accounts Receivable. Accounts receivable are stated at cost. The Company does not typically charge interest on customer accounts receivable. The Company records an allowance for credit losses, which includes a provision for probable losses based on historical write-offs, adjusted for current conditions as deemed necessary, and a specific reserve for accounts deemed at risk. The allowance is the Company’s estimate for receivables as of the balance sheet date that ultimately will not be collected. Any changes in the allowance are reflected in earnings in the period in which the change occurs. The Company writes off accounts receivable when it becomes probable, based upon customer facts and circumstances, that such amounts will not be collected.
Inventories Valuation**.** Finished products and in-process inventories are stated at the lower of cost or net realizable value using standard costs, which approximate the first-in, first-out method. Carrying value for parts and supplies are determined by the weighted-average cost method. The Company records an allowance for finished product inventories based on an analysis of future demand and inventory on hand in excess of one year's sales using an average of the last two years of sales. The Company also establishes an allowance for parts over five years old and supplies over a year old.
Post-production stripping costs, which represent costs of removing overburden and waste materials to access mineral deposits, are a component of inventory production costs and recognized as incurred.
Property, Plant and Equipment**.** Property, plant and equipment are stated at cost.
The estimated service lives for property, plant and equipment are as follows:
| Class of Assets | Range of Service Lives | |
| Buildings | 5 to 30 years | |
| Machinery & Equipment | 2 to 20 years | |
| Land Improvements | 5 to 60 years |
The Company begins capitalizing quarry development costs at a point when reserves are determined to be proven or probable, economically mineable and when demand supports investment in the market. Capitalization of these costs ceases when production commences. Capitalized quarry development costs are classified as land improvements and depreciated over the life of the reserves.
The Company reviews relevant facts and circumstances to determine whether to capitalize or expense pre-production stripping costs when additional pits are developed at an existing quarry. If the additional pit operates in a separate and distinct area of the quarry, these costs are capitalized as quarry development costs and depreciated over the life of the uncovered reserves.
| Form 10-K ♦ Page 73 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Additionally, a separate asset retirement obligation is created for additional pits when the liability is incurred. Once a pit enters the production phase, all post-production stripping costs are charged to inventory production costs as incurred.
Mineral reserves and mineral interests acquired in connection with a business combination are valued using an income approach for the estimated life of the reserves.
Depreciation is computed based on estimated service lives using the straight-line method. Depletion of mineral reserves is calculated based on proven and probable reserves using the units-of-production method on a quarry-by-quarry basis. For the years ended December 31, 2024, 2023, and 2022, depletion expense was $78 million, $53 million, and $60 million, respectively.
Property, plant and equipment are reviewed for impairment whenever facts and circumstances indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recognized if expected future undiscounted cash flows over the estimated remaining service life of the related asset group are less than the asset group’s carrying value.
Repair and Maintenance Costs. Repair and maintenance costs that do not substantially extend the life of the Company’s plant and equipment are expensed as incurred.
Leases. Pursuant to Accounting Standards Codification 842, Leases (ASC 842), if the Company determines a contract is or contains a lease at the inception of an agreement, the Company records a right-of-use (ROU) asset, which represents the Company’s right to use an underlying leased asset, and a lease liability, which represents the Company’s obligation to make lease payments. The ROU asset and lease liability are recorded on the consolidated balance sheets at the present value of the future lease payments over the lease term at commencement date. The Company determines the present value of lease payments based on the implicit interest rate, which may be explicitly stated in the lease, if available, or may be the Company’s estimated collateralized incremental borrowing rate based on the term of the lease. Initial ROU assets also include any lease payments made at or before commencement date and any initial direct costs incurred and are reduced by lease incentives. Certain of the Company’s leases contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will be exercised.
Some leases require the Company to pay non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property and, are primarily, variable costs. The Company accounts for lease and non-lease components as a single amount, except railcar, fleet vehicle and pipeline leases, for which the Company separately accounts for the lease and non-lease components.
Leases are evaluated and determined to be either finance leases or operating leases. The lease is a finance lease if it transfers ownership to the underlying asset by the end of the lease term; includes a purchase option that is reasonably certain to be exercised; has a lease term for the major part of the underlying asset's remaining economic life; has a present value of the sum of the lease payments (including renewal options) that equals or exceeds substantially all of the fair value of the underlying asset; or is for an underlying asset that is of a specialized nature and is expected to have no alternative use to the lessor at the end of the lease term. If none of these terms exist, the lease is an operating lease.
Leases with an initial lease term of one year or less are not recorded on the consolidated balance sheets. Costs for these leases are expensed as incurred.
In the consolidated statements of earnings, operating lease expense, which is recognized on a straight-line basis over the lease term, and the amortization of finance lease ROU assets are included in the Total cost of revenues or Selling, general and administrative expenses line items in the consolidated statements of earnings. Accretion on the liabilities for finance leases is included in interest expense.
Goodwill and Other Intangible Assets. Goodwill represents the excess purchase price paid for acquired businesses over the estimated fair value of identifiable assets and liabilities. Other intangible assets represent amounts assigned principally to contractual agreements and are either amortized ratably over the useful lives to the Company or not amortized if deemed to have an indefinite useful life. The Company intends, and believes it has the ability, to renew royalty agreements and extend permits that support the value of certain intangible assets.
| Form 10-K ♦ Page 74 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The Company’s reporting units, which represent the level at which goodwill is tested for impairment, are based on the operating segments of the Building Materials business. Goodwill is assigned to the respective reporting unit(s) based on the location of acquisitions at the time of consummation. If subsequent organizational changes result in operations being transferred to a different reporting unit, a proportionate amount of goodwill is transferred from the former to the new reporting unit. For divestitures, goodwill is allocated on a proportional basis based on the relative fair values of the portion of the reporting unit being disposed of and the portion of the reporting unit remaining. There is no goodwill related to the Magnesia Specialties business.
Goodwill is tested for impairment by comparing each reporting unit’s fair value to its carrying value, which represents a Step-1 approach. However, prior to Step 1, the Company may perform a qualitative assessment and evaluate macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and other business or reporting unit-specific events that contribute to the fair value of a reporting unit. If the Company concludes, based on its qualitative assessment, it is more-likely-than-not (i.e., a likelihood of more than 50%) that a reporting unit’s fair value is higher than its carrying value, the Company is not required to perform any further goodwill impairment testing for that reporting unit. Otherwise, the Company proceeds to Step 1, and if a reporting unit’s fair value exceeds its carrying value, there is no impairment. A reporting unit with a carrying value in excess of its fair value results in an impairment charge equal to the difference. When the Company validates its conclusion by measuring fair value, it may resume performing a qualitative assessment for a reporting unit in any subsequent period. The Company may bypass the qualitative assessment for any reporting unit in any period and proceed directly with the quantitative calculation in Step 1. The Company performs a Step 1 analysis for all its reporting units every three years.
The Company reviews the carrying values of goodwill and other indefinite-lived intangible assets for impairment as of October 1, which represents the annual evaluation date. An interim review is performed between annual tests if facts and circumstances indicate potential impairment. The carrying value of other amortizable intangible assets is reviewed if facts and circumstances indicate potential impairment. If a review indicates the carrying value is impaired, a charge is recorded equal to the amount by which the carrying value exceeds the fair value.
Retirement Plans and Postretirement Benefits. The Company sponsors defined benefit retirement plans and provides other postretirement benefits. The Company recognizes the funded status, defined as the difference between the fair value of plan assets and the benefit obligation, of its pension plans and other postretirement benefits as an asset or liability on the consolidated balance sheets. The measurement date for the Company’s defined benefit plans and postretirement benefit plans is December 31. Actuarial gains or losses that arise during the year are recognized as a component of accumulated other comprehensive earnings or loss. Those amounts are amortized over the participants’ average remaining service period and recognized as a component of net periodic benefit cost. The amount amortized is determined on a plan-by-plan basis using a corridor approach and represents the excess over 10% of the greater of the projected benefit obligation or pension plan assets.
Insurance Reserves. The Company has insurance coverage with large deductibles for workers’ compensation, automobile liability, marine liability and general liability claims, and is also self-insured for health claims. The Company records insurance reserves based on an actuarially-determined analysis, which calculates development factors that are applied to total case reserves within the insurance programs. While the Company believes the assumptions used to calculate these liabilities are appropriate, significant differences in actual experience and/or significant changes in these assumptions may materially affect insurance costs.
Stock-Based Compensation. The Company has stock-based compensation plans for employees and its Board of Directors. The Company recognizes all forms of stock-based awards that vest as compensation expense. The compensation expense is the fair value of the awards at the measurement date and is recognized over the requisite service period. Forfeitures are recognized as they occur.
The fair value of restricted stock awards, incentive compensation stock awards and Board of Directors’ fees paid in the form of common stock are based on the closing price of the Company’s common stock on the grant dates. The fair value of performance stock awards as of the grant dates is determined using a Monte Carlo simulation methodology.
Environmental Matters. The Company records a liability for an asset retirement obligation at fair value in the period in which it is incurred. The asset retirement obligation is recorded at the acquisition date of a long-lived tangible asset if the fair value can be reasonably estimated. A corresponding amount is capitalized as part of the asset’s carrying amount. The fair value is affected by management’s assumptions regarding the scope of the work, inflation rates and asset retirement dates.
Further, the Company records an accrual for other environmental remediation liabilities in the period in which it is probable that a liability has been incurred and the appropriate amounts can be estimated reasonably. Such accruals are adjusted as further information develops or circumstances change. Generally, these costs are not discounted to their present value or offset for potential insurance or other claims or potential gains from future alternative uses for a site.
| Form 10-K ♦ Page 75 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Income Taxes**.** The Company uses the liability method to determine its current and deferred incomes taxes. Deferred income taxes, net, on the consolidated balance sheets reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The effect of changes in enacted tax rates on deferred income tax assets and liabilities is charged or credited to income tax expense in the period of enactment.
The Company applies the proportional amortization method to equity investments in renewable energy tax credit (RETC) programs that meet the following specified criteria: it is probable that the income tax credits allocable to the Company will be available; the Company does not have the ability to exercise significant influence over the operating and financial policies of the underlying project; substantially all of the projected benefits are from income tax credits and other income tax benefits, as determined on a discounted basis; the Company's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive; and the Company is a limited liability investor in the limited liability entity for both legal and tax purposes and its liability is limited to its capital investment. Under the proportional amortization method, the equity investment is amortized in proportion to the income tax credits and other income tax benefits received, with the amortization expense and the income tax benefits presented on a net basis in the line item Income tax expense in the consolidated statements of earnings. The RETC investments are included in the line item Other noncurrent assets on the consolidated balance sheets and the line item Investments in limited liability company on the consolidated statements of cash flow.
Uncertain Tax Positions. The Company recognizes a tax benefit when it is more-likely-than-not, based on the technical merits, that a tax position would be sustained upon examination by a taxing authority. The amount to be recognized is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The Company’s unrecognized tax benefits are recorded in other liabilities on the consolidated balance sheets or as an offset to the deferred tax asset for tax carryforwards where available.
The Company records interest accrued in relation to unrecognized tax benefits as income tax expense. Penalties, if incurred, are recorded as operating expenses in the consolidated statements of earnings.
Sales Taxes. The Company is deemed to be an agent when collecting sales taxes from customers. Sales taxes collected from customers are recorded as liabilities until remitted to taxing authorities and therefore are not reflected in the consolidated statements of earnings as revenues and expenses.
Start-Up Costs. Noncapital start-up costs for new facilities and products are charged to operations as incurred.
Consolidated Comprehensive Earnings and Accumulated Other Comprehensive Loss. Consolidated comprehensive earnings consist of consolidated net earnings, adjustments for the funded status of pension and postretirement benefit plans and foreign currency translation adjustments and are presented in the Company’s consolidated statements of comprehensive earnings.
Accumulated other comprehensive loss consists of unrecognized gains and losses related to the funded status of the pension and postretirement benefit plans and foreign currency translation and is presented on the Company’s consolidated balance sheets.
| Form 10-K ♦ Page 76 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The components of the changes in accumulated other comprehensive loss and related cumulative noncurrent deferred tax assets are as follows:
| years ended December 31 | Pension and Postretirement Benefit Plans | Foreign Currency | Total | |||||||||
| (in millions) | 2024 | |||||||||||
| Accumulated other comprehensive loss at beginning of period | $ | **(**48 | ) | $ | **(**1 | ) | $ | **(**49 | ) | |||
| Other comprehensive earnings (loss) before reclassifications, net of tax | 33 | **(**3 | ) | 30 | ||||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 6 | — | 6 | |||||||||
| Other comprehensive earnings (loss), net of tax | 39 | **(**3 | ) | 36 | ||||||||
| Accumulated other comprehensive loss at end of period | $ | **(**9 | ) | $ | **(**4 | ) | $ | **(**13 | ) | |||
| Cumulative noncurrent deferred tax assets at end of period | $ | 41 | $ | — | $ | 41 | ||||||
| 2023 | ||||||||||||
| Accumulated other comprehensive loss at beginning of period | $ | (36 | ) | $ | (2 | ) | $ | (38 | ) | |||
| Other comprehensive (loss) earnings before reclassifications, net of tax | (16 | ) | 1 | (15 | ) | |||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 4 | — | 4 | |||||||||
| Other comprehensive (loss) earnings, net of tax | (12 | ) | 1 | (11 | ) | |||||||
| Accumulated other comprehensive loss at end of period | $ | (48 | ) | $ | (1 | ) | $ | (49 | ) | |||
| Cumulative noncurrent deferred tax assets at end of period | $ | 54 | $ | — | $ | 54 | ||||||
| 2022 | ||||||||||||
| Accumulated other comprehensive loss at beginning of period | $ | (98 | ) | $ | — | $ | (98 | ) | ||||
| Other comprehensive earnings (loss) before reclassifications, net of tax | 52 | (2 | ) | 50 | ||||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 10 | — | 10 | |||||||||
| Other comprehensive earnings (loss), net of tax | 62 | (2 | ) | 60 | ||||||||
| Accumulated other comprehensive loss at end of period | $ | (36 | ) | $ | (2 | ) | $ | (38 | ) | |||
| Cumulative noncurrent deferred tax assets at end of period | $ | 50 | $ | — | $ | 50 |
Reclassifications out of accumulated other comprehensive loss are as follows:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | Affected line items in the consolidated statements of earnings | ||||||||||
| Pension and postretirement benefit plans: | ||||||||||||||
| Settlement charge | $ | — | $ | — | $ | 5 | ||||||||
| Amortization of: | ||||||||||||||
| Prior service cost | 6 | 6 | 4 | |||||||||||
| Actuarial loss | 1 | — | 4 | |||||||||||
| 7 | 6 | 13 | Other nonoperating income, net | |||||||||||
| Tax effect | **(**1 | ) | (2 | ) | (3 | ) | Income tax expense | |||||||
| Total | $ | 6 | $ | 4 | $ | 10 |
| Form 10-K ♦ Page 77 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Earnings Per Common Share**.** The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive.
The following table reconciles the denominator for basic and diluted earnings from continuing operations per common share:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Basic weighted-average common shares outstanding | 61.4 | 61.9 | 62.3 | |||||||||
| Effect of dilutive employee and director awards | 0.2 | 0.2 | 0.2 | |||||||||
| Diluted weighted-average common shares outstanding | 61.6 | 62.1 | 62.5 |
Reclassifications. Certain reclassifications have been made in the Company's financial statements of the prior years to conform to the current-year presentation. The reclassifications had no impact on the Company's previously reported results of operations, financial condition or cash flows.
New Accounting Pronouncements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, the ASU requires a public entity to disclose the title and position of the Chief Operating Decision Maker. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The Company adopted ASU 2023-07 as of December 31, 2024 and applied the disclosure requirements retrospectively to all prior periods presented in the financial statements included in the 2024 Annual Report on Form 10-K (see Note O). The adoption had no impact on its results of operations, cash flows or financial condition.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU 2023-09 requires public entities to disclose, on an annual basis, a tabular tax rate reconciliation using both percentages and currency amounts, broken out into specified categories. Certain reconciling items are further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. Additionally, all entities are required to disclose income taxes paid, net of refunds received, disaggregated by federal, state/local, and foreign taxes and by individual jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The ASU also requires additional qualitative disclosures. ASU 2023-09 is effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The ASU will impact the Company's income tax disclosures beginning with the financial statements included in the 2025 Annual Report on Form 10-K, but will have no impact on its results of operations, cash flows or financial condition.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (DISE), which requires public entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. These disclosures must be made in a tabular format in the footnotes to the financial statements. The new standard does not change the requirements for the presentation of expenses on the face of the statement of earnings. The ASU is effective prospectively for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and early adoption and retrospective application are permitted. The ASU will impact the Company's expense disclosures beginning with the financial statements included in the 2027 Annual Report on Form 10-K, but will have no impact on its results of operations, cash flows or financial condition.
| Form 10-K ♦ Page 78 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note B: Business Combinations, Divestitures, Discontinued Operations and Assets and Liabilities Held for Sale
Business Combinations
Revenues and pretax earnings attributable to operations acquired in 2024 (as subsequently described) included in the Company's consolidated statement of earnings were $261 million and $38 million, respectively, for the year ended December 31, 2024. Pretax earnings attributable to acquired operations for 2024 reflect the impact of selling acquired inventory after its markup to fair value as part of acquisition accounting, including $20 million related to the Blue Water Industries LLC transaction.
Blue Water Industries LLC. On April 5, 2024, the Company completed the acquisition of 20 active aggregates operations in Alabama, South Carolina, South Florida, Tennessee, and Virginia from affiliates of Blue Water Industries LLC (BWI Southeast) for $2.05 billion in cash. The BWI Southeast acquisition complements Martin Marietta’s existing geographic footprint in the southeast region by allowing the Company to expand into new growth platforms in target markets, including Tennessee and South Florida. The results from the acquired operations are reported in the Company's East Group.
The Company determined the acquisition-date fair values of assets acquired and liabilities assumed. The Company has recorded preliminary fair values of the assets acquired and liabilities assumed, which are subject to additional reviews that are not yet complete. As such, these amounts are subject to change during the measurement period, which extends no longer than one year from the consummation date, and remains open as of December 31, 2024. Notably, during the measurement period, the Company increased the acquisition-date fair value of property, plant and equipment by $91 million and reduced goodwill by $82 million. Specific accounts subject to ongoing purchase accounting adjustments include, but are not limited to, property, plant and equipment; goodwill; other assets; other liabilities; and deferred income taxes. The goodwill generated by the transaction is not deductible for income tax purposes.
The following is a summary of the preliminary estimated fair values of the assets acquired and liabilities assumed as of April 5, 2024:
| (in millions) | ||||
| Assets: | ||||
| Inventories | $ | 47 | ||
| Property, plant and equipment1 | 2,052 | |||
| Intangible assets, other than goodwill | 19 | |||
| Other assets | 2 | |||
| Total assets | 2,120 | |||
| Liabilities: | ||||
| Deferred income taxes | 234 | |||
| Asset retirement obligations | 3 | |||
| Other liabilities | 96 | |||
| Total liabilities | 333 | |||
| Net identifiable assets acquired | 1,787 | |||
| Goodwill | 263 | |||
| Total consideration | $ | 2,050 |
1 Includes mineral reserves of $1.9 billion.
The following unaudited pro forma financial information summarizes the combined results of operations for the Company and BWI Southeast as though the companies were combined as of January 1, 2023. The unaudited pro forma financial information does not purport to project the future financial position or operating results of the combined company. Consistent with the assumed acquisition date of January 1, 2023, the pro forma financial results include acquisition and integration expenses of $23 million and a $20 million charge for selling inventory after its markup to fair value for the year ended December 31, 2023.
| Form 10-K ♦ Page 79 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The following pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2023:
| years ended December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Revenues | $ | 6,588 | $ | 7,003 | ||||
| Net earnings from continuing operations attributable to Martin Marietta | $ | 2,028 | $ | 1,117 |
Other Business Combinations. On January 12, 2024, the Company acquired Albert Frei & Sons, Inc. (AFS), a leading aggregates producer in Colorado. This acquisition provides more than 60 years (at current production levels) of high-quality, hard rock reserves to better serve new and existing customers and enhances the Company's aggregates platform in the Denver metropolitan area. The Company determined the acquisition-date fair values of the assets acquired and liabilities assumed. As of December 31, 2024, the measurement period is closed. The goodwill generated by the transaction is not deductible for income tax purposes. The acquisition is reported in the Company's West Group and is immaterial for pro-forma financial statement disclosures.
On October 25, 2024, the Company completed the acquisition of Youngquist Brothers Rock, LLC (YBR), a leading aggregates supplier in the Fort Myers, Florida area. This acquisition allows the Company to serve new and existing customers and enhances the Company's aggregates platform in South Florida. The acquisition was financed through short-term borrowings, which were repaid upon a public debt offering completed on November 4, 2024 (see Note G). The Company has recorded preliminary fair values of the assets acquired and liabilities assumed, which are subject to additional reviews that are not yet complete. Thus, these amounts are subject to change during the measurement period, which extends no longer than one year from the consummation date, and remains open as of December 31, 2024. Specific accounts subject to ongoing purchase accounting adjustments, include, but are not limited to, property, plant and equipment; goodwill; other assets; and other liabilities. The goodwill generated by the transaction is deductible for income tax purposes. The acquisition is reported in the Company's East Group and is immaterial for pro-forma financial statement disclosures.
On December 13, 2024, the Company acquired R.E. Janes Gravel Co. (RE Janes), an aggregates bolt-on in Texas. The Company has recorded preliminary fair values of the assets acquired and liabilities assumed, which are subject to additional reviews that are not yet complete. Thus, these amounts are subject to change during the measurement period, which extends no longer than one year from the consummation date, and remains open as of December 31, 2024. Specific accounts subject to ongoing purchase accounting adjustments, include, but are not limited to, property, plant and equipment; goodwill; other assets; and other liabilities. The goodwill generated by the transaction is deductible for income tax purposes. The acquisition is reported in the Company's West Group and is immaterial for pro-forma financial statement disclosures.
In 2024, the Company completed acquisitions for total consideration of $1.6 billion, excluding the BWI Southeast transaction. On a combined preliminary basis, these acquisitions (excluding BWI Southeast) included $1.5 billion of property, plant and equipment (including $1.3 billion in mineral reserves), $115 million of goodwill, $27 million of other intangibles and $92 million of deferred income taxes. Individually and on a combined basis, these acquisitions are immaterial for pro-forma financial statement disclosures.
Divestitures
On February 9, 2024, the Company completed the sale of its South Texas cement business and certain of its related ready mixed concrete operations to CRH Americas Materials, Inc., a subsidiary of CRH plc, for $2.1 billion in cash plus normal customary closing adjustments. Specifically, the divested facilities included the Hunter cement plant in New Braunfels, Texas, related cement distribution terminals and 20 ready mixed concrete plants that served the Austin and San Antonio region, all of which were classified as assets held for sale as of December 31, 2023. The divestiture provided proceeds the Company used to consummate the BWI Southeast acquisition. The transaction resulted in a pretax gain of $1.3 billion, which is included in Other operating income, net, in the Company's consolidated statement of earnings for the year ended December 31, 2024 and is exclusive of transaction expenses incurred due to the divestiture. The divested operations and the gain on divestiture are reported in the West Group.
On October 31, 2023, the Company completed the sale of its Tehachapi, California cement plant to UNACEM Corp S.A.A. for $315 million in cash. In connection with the divestiture, the Company recorded a $26 million pretax loss in discontinued operations.
In May 2023, the Company divested its Stockton cement import terminal in California.
| Form 10-K ♦ Page 80 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Discontinued Operations
The associated financial results for the Company's California cement and ready mixed concrete operations, which were part of the Company's West Group, were reported as discontinued operations on the consolidated statements of earnings through their respective divestiture dates. As of December 31, 2024 and 2023, no operations were classified as discontinued operations.
Financial results for the Company's discontinued operations are as follows:
| years ended December 31 (in millions) | 2023 | 2022 | ||||||
| Revenues | $ | 94 | $ | 309 | ||||
| Pretax (loss) earnings from operations | $ | (16 | ) | $ | 16 | |||
| Pretax loss on divestitures and sales of assets | (24 | ) | — | |||||
| Pretax (loss) earnings | (40 | ) | 16 | |||||
| Income tax (benefit) expense | (10 | ) | 5 | |||||
| (Loss) Earnings from discontinued operations, net of income tax (benefit) expense | $ | (30 | ) | $ | 11 |
Cash flow information for the Company's discontinued operations is as follows:
| years ended December 31 (in millions) | 2023 | 2022 | ||||||
| Net cash provided by (used for) operating activities | $ | 1 | $ | (32 | ) | |||
| Additions to property, plant and equipment | $ | (3 | ) | $ | (16 | ) | ||
| Proceeds from divestitures and sales of assets | 372 | 250 | ||||||
| Net cash provided by investing activities | $ | 369 | $ | 234 |
Assets and Liabilities Held for Sale
Assets and liabilities held for sale at December 31, 2024 included certain nonoperating land. At December 31, 2023, assets and liabilities held for sale also included the South Texas cement plant, related cement distribution terminals, and 20 ready mixed concrete plants which were sold in February 2024.
Assets and liabilities held for sale are as follows:
| December 31 (in millions) | 2024 | 2023 | ||||||
| Inventories, net | $ | — | $ | 61 | ||||
| Investment land | 8 | 18 | ||||||
| Other assets | — | 4 | ||||||
| Property, plant and equipment | — | 327 | ||||||
| Intangible assets, excluding goodwill | — | 122 | ||||||
| Operating lease right-of-use assets | — | 15 | ||||||
| Goodwill | — | 260 | ||||||
| Total current assets held for sale | $ | 8 | $ | 807 | ||||
| Lease obligations | $ | — | $ | (16 | ) | |||
| Asset retirement obligations | — | (2 | ) | |||||
| Total current liabilities held for sale | $ | — | $ | (18 | ) |
| Form 10-K ♦ Page 81 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note C: Goodwill and Other Intangible Assets
The following table shows the changes in goodwill by reportable segment and in total:
| December 31 | East Group | West Group | Total | |||||||||
| (in millions) | 2024 | |||||||||||
| Balance at beginning of period | $ | 764 | $ | 2,625 | $ | 3,389 | ||||||
| Acquisitions | 267 | 111 | 378 | |||||||||
| Balance at end of period | $ | 1,031 | $ | 2,736 | $ | 3,767 | ||||||
| 2023 | ||||||||||||
| Balance at beginning of period | $ | 764 | $ | 2,885 | $ | 3,649 | ||||||
| Goodwill allocated to assets held for sale | — | (260 | ) | (260 | ) | |||||||
| Balance at end of period | $ | 764 | $ | 2,625 | $ | 3,389 |
Intangible assets subject to amortization consist of the following:
| December 31 | Gross Amount | Accumulated Amortization | Net Balance | |||||||||
| (in millions) | 2024 | |||||||||||
| Noncompetition agreements | $ | 4 | $ | **(**4 | ) | $ | — | |||||
| Customer relationships | 462 | **(**101 | ) | 361 | ||||||||
| Operating permits | 370 | **(**62 | ) | 308 | ||||||||
| Use rights and other | 30 | **(**13 | ) | 17 | ||||||||
| Trade names | 23 | **(**17 | ) | 6 | ||||||||
| Total | $ | 889 | $ | **(**197 | ) | $ | 692 | |||||
| 2023 | ||||||||||||
| Noncompetition agreements | $ | 4 | $ | (4 | ) | $ | — | |||||
| Customer relationships | 421 | (80 | ) | 341 | ||||||||
| Operating permits | 369 | (56 | ) | 313 | ||||||||
| Use rights and other | 14 | (12 | ) | 2 | ||||||||
| Trade names | 24 | (16 | ) | 8 | ||||||||
| Total | $ | 832 | $ | (168 | ) | $ | 664 |
Intangible assets deemed to have an indefinite life that are therefore not amortized consist of the following:
| December 31 | Building Materials Business | Magnesia Specialties | Total | |||||||||
| (in millions) | 2024 | |||||||||||
| Operating permits | $ | 7 | $ | — | $ | 7 | ||||||
| Use rights | 29 | — | 29 | |||||||||
| Trade names | — | 2 | 2 | |||||||||
| Total | $ | 36 | $ | 2 | $ | 38 | ||||||
| 2023 | ||||||||||||
| Operating permits | $ | 7 | $ | — | $ | 7 | ||||||
| Use rights | 25 | — | 25 | |||||||||
| Trade names | — | 2 | 2 | |||||||||
| Total | $ | 32 | $ | 2 | $ | 34 |
| Form 10-K ♦ Page 82 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Intangible assets acquired during 2024, of which $46 million were from business combinations, are as follows:
| (in millions, except year data) | Amount | Weighted-average amortization period | ||||
| Subject to amortization: | ||||||
| Customer relationships | $ | 40 | 11 years | |||
| Use rights and other | 16 | 10 years | ||||
| Permits | 1 | 40 years | ||||
| Total subject to amortization | $ | 57 | 11 years | |||
| Not subject to amortization: | ||||||
| Use rights and other | 5 | N/A | ||||
| Total | $ | 62 |
Amortization expense for intangible assets for the years ended December 31, 2024, 2023 and 2022 was $29 million, $28 million and $27 million, respectively.
The estimated amortization expense for intangible assets for each of the next five years and thereafter is as follows:
| (in millions) | ||||
| 2025 | $ | 33 | ||
| 2026 | 31 | |||
| 2027 | 30 | |||
| 2028 | 30 | |||
| 2029 | 29 | |||
| Thereafter | 539 | |||
| Total | $ | 692 |
Note D: Accounts Receivable, Net
| December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Customer receivables | $ | 678 | $ | 747 | ||||
| Other current receivables | 8 | 18 | ||||||
| Total accounts receivable | 686 | 765 | ||||||
| Less: allowance for estimated credit losses | **(**8 | ) | (12 | ) | ||||
| Accounts receivable, net | $ | 678 | $ | 753 |
Note E: Inventories, Net
| December 31 (in millions) | 2024 | 2023 | ||||||
| Finished products | $ | 1,327 | $ | 1,152 | ||||
| Products in process | 24 | 25 | ||||||
| Raw materials | 65 | 60 | ||||||
| Supplies and expendable parts | 162 | 155 | ||||||
| Total inventories | 1,578 | 1,392 | ||||||
| Less: allowances | **(**463 | ) | (403 | ) | ||||
| Inventories, net | $ | 1,115 | $ | 989 |
| Form 10-K ♦ Page 83 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note F: Property, Plant and Equipment, Net
| December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Land and land improvements | $ | 1,858 | $ | 1,599 | ||||
| Mineral reserves and interests | 6,328 | 2,982 | ||||||
| Buildings | 175 | 160 | ||||||
| Machinery and equipment | 6,117 | 5,380 | ||||||
| Construction in progress | 313 | 333 | ||||||
| Finance lease right-of-use assets | 295 | 254 | ||||||
| Total property, plant and equipment | 15,086 | 10,708 | ||||||
| Less: accumulated depreciation, depletion and amortization | **(**4,977 | ) | (4,522 | ) | ||||
| Property, plant and equipment, net | $ | 10,109 | $ | 6,186 |
Depreciation, depletion and amortization expense related to property, plant and equipment was $540 million, $480 million and $473 million for the years ended December 31, 2024, 2023 and 2022, respectively. Depreciation, depletion and amortization expense includes amortization of right-of-use assets from finance leases.
At both December 31, 2024 and 2023, $40 million of the Building Materials business’ property, plant and equipment, net, were located in The Bahamas and Canada.
Note G: Debt
| December 31 (in millions) | 2024 | 2023 | ||||||
| 4.250% Senior Notes, due 2024 | $ | — | $ | 400 | ||||
| 7% Debentures, due 2025 | 125 | 125 | ||||||
| 3.450% Senior Notes, due 2027 | 299 | 299 | ||||||
| 3.500% Senior Notes, due 2027 | 493 | 492 | ||||||
| 2.500% Senior Notes, due 2030 | 472 | 472 | ||||||
| 2.400% Senior Notes, due 2031 | 890 | 890 | ||||||
| 5.150% Senior Notes, due 2034 | 738 | — | ||||||
| 6.25% Senior Notes, due 2037 | 228 | 228 | ||||||
| 4.250% Senior Notes, due 2047 | 591 | 590 | ||||||
| 3.200% Senior Notes, due 2051 | 851 | 850 | ||||||
| 5.500% Senior Notes, due 2054 | 726 | — | ||||||
| Total debt | 5,413 | 4,346 | ||||||
| Less: current maturities | **(**125 | ) | (400 | ) | ||||
| Long-term debt | $ | 5,288 | $ | 3,946 |
On July 2, 2024, the Company used available liquidity to repay the $400 million of 4.250% Senior Notes at maturity.
On November 4, 2024, the Company issued $750 million aggregate principal amount of 5.150% Senior Notes due 2034 (the 5.150% Senior Notes due 2034) and $750 million aggregate principal amount of 5.500% Senior Notes due 2054 (the 5.500% Senior Notes due 2054) pursuant to a base indenture, dated as of May 22, 2017 (the Base Indenture), as amended and supplemented from time to time, including by the Fifth Supplemental Indenture, dated as of November 4, 2024, and, together with the Base Indenture (the Indenture) between the Company and Regions Bank, as trustee, governing these notes. On the consolidated balance sheets, the 5.150% Senior Notes due 2034 and 5.500% Senior Notes due 2054 are carried net of original issue discount, which will be amortized using the effective interest method over the terms of the issues. A portion of the net proceeds of the 5.150% Senior Notes due 2034 and 5.500% Senior Notes due 2054 were used for the repayment of all borrowings outstanding under the Company’s short-term borrowing facilities. The remaining net proceeds were used for general corporate purposes, including acquisitions, land purchases and other capital needs.
| Form 10-K ♦ Page 84 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Prior to September 1, 2034, with respect to the 5.150% Senior Notes due 2034, and prior to June 1, 2054, with respect to the 5.500% Senior Notes due 2054 (each, a Par Call Date), the Company may redeem the notes of a series, at its option, in whole or in part, at any time or from time to time, at a redemption price equal to the greater of: (i) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes of such series are scheduled to mature on the applicable Par Call Date) on a semi-annual basis at the applicable Treasury Rate (as defined in the Indenture) plus 15 basis points, in the case of the 5.150% Senior Notes due 2034, and 20 basis points, in the case of the 5.500% Senior Notes due 2054, less (b) interest accrued to, but excluding, the redemption date, and (ii) 100% of the principal amount of the notes of the applicable series to be redeemed, plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. On or after the applicable Par Call Date and prior to maturity, the Company may redeem the note of a series, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the notes of such series being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.
The Company’s 7% Debentures due 2025, 3.450% Senior Notes due 2027, 3.500% Senior Notes due 2027, 2.500% Senior Notes due 2030, 2.400% Senior Notes due 2031, 5.150% Senior Notes due 2034, 6.25% Senior Notes due 2037, 4.250% Senior Notes due 2047, 3.200% Senior Notes due 2051 and 5.500% Senior Notes due 2054 (collectively, the Senior Notes) are senior unsecured obligations of the Company, ranking equal in right of payment with the Company’s existing and future unsubordinated indebtedness. The Senior Notes, with the exception of the 7% Debentures due 2025 and the 6.25% Senior Notes due 2037, are redeemable prior to their respective par call dates, as defined, at a make-whole redemption price, and at a price equal to 100% of the principal amount after their respective par call dates and prior to their respective maturity dates. The 6.25% Senior Notes due 2037 are redeemable in whole at any time or in part from time to time at a make-whole redemption price. Upon a change-of-control repurchase event and a resulting below-investment-grade credit rating, the Company would be required to make an offer to repurchase all outstanding Senior Notes, with the exception of the 7% Debentures due 2025, at a price in cash equal to 101% of the principal amount of the Senior Notes, plus any accrued and unpaid interest.
The Senior Notes are carried net of original issue discount, which is being amortized by the effective interest method over the life of the issue. The principal amount as of December 31, 2024, effective interest rate and maturity date for the Senior Notes are as follows:
| Principal Amount(in millions) | Effective Interest Rate | Maturity Date | ||||||
| 7% Debentures | $ | 125 | 7.05% | December 1, 2025 | ||||
| 3.450% Senior Notes | $ | 300 | 3.55% | June 1, 2027 | ||||
| 3.500% Senior Notes | $ | 495 | 3.61% | December 15, 2027 | ||||
| 2.500% Senior Notes | $ | 478 | 2.71% | March 15, 2030 | ||||
| 2.400% Senior Notes | $ | 896 | 2.48% | July 15, 2031 | ||||
| 5.150% Senior Notes | $ | 750 | 5.33% | December 1, 2034 | ||||
| 6.25% Senior Notes | $ | 230 | 6.32% | May 1, 2037 | ||||
| 4.250% Senior Notes | $ | 598 | 4.32% | December 15, 2047 | ||||
| 3.200% Senior Notes | $ | 866 | 3.29% | July 15, 2051 | ||||
| 5.500% Senior Notes | $ | 750 | 5.70% | December 1, 2054 |
The Company has a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., PNC Bank, N.A., Truist Bank and Wells Fargo Bank, N.A., as Syndication Agents, and the lenders party thereto (the Credit Agreement), which provides for a $800 million five-year senior unsecured revolving facility (the Revolving Facility) with a maturity date of December 21, 2029. Borrowings under the Revolving Facility bear interest, at the Company’s option, at rates based upon the Secured Overnight Financing Rate (SOFR) or a base rate, plus, for each rate, a margin determined in accordance with a ratings-based pricing grid. Any outstanding principal amounts, together with interest accrued thereon, are due in full on that maturity date. There were no borrowings outstanding under the Revolving Facility as of December 31, 2024 and 2023. Available borrowings under the Revolving Facility are reduced by any outstanding letters of credit issued by the Company under the Revolving Facility. At December 31, 2024 and 2023, the Company had $3 million of outstanding letters of credit issued and $797 million available for borrowing under the Revolving Facility. The Company paid the bank group an upfront loan commitment fee that is being amortized over the life of the Revolving Facility. The Revolving Facility includes an annual facility fee.
The Credit Agreement requires the Company’s ratio of consolidated net debt-to-consolidated earnings before interest, taxes, depreciation, depletion and amortization, as defined, for the trailing-twelve months (the Ratio) to not exceed 3.50x as of the end
| Form 10-K ♦ Page 85 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
of any fiscal quarter, provided that the Company may exclude from the Ratio any debt incurred in connection with certain acquisitions during the quarter or three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 4.00x. Additionally, if no amounts are outstanding under the Revolving Facility or the Company's trade receivable securitization facility (discussed later), consolidated debt, as defined, which includes debt for which the Company is a guarantor, shall be reduced in an amount equal to the lesser of $500 million or the sum of the Company’s unrestricted cash and temporary investments, for purposes of the covenant calculation. The Company was in compliance with the Ratio at December 31, 2024.
The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility). On September 18, 2024, the Company extended the maturity to September 17, 2025. The Trade Receivable Facility, with Truist Bank, Regions Bank, First-Citizens Bank & Trust Company, and certain other lenders that may become a party to the facility from time to time, is backed by eligible trade receivables, as defined. Borrowings are limited to the lesser of the facility limit or the borrowing base, as defined. These receivables are originated by the Company and then sold or contributed to the wholly-owned special-purpose subsidiary. The Company continues to be responsible for the servicing and administration of the receivables purchased by the wholly-owned special-purpose subsidiary. Borrowings under the Trade Receivable Facility bear interest at a rate equal to Adjusted Term Secured Overnight Financing Rate (Adjusted Term SOFR), as defined, plus 0.8%. The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements. Subject to certain conditions, including lenders providing the requisite commitments, the Trade Receivable Facility may be increased to a borrowing base not to exceed $500 million. At December 31, 2024 and 2023, there were no borrowings outstanding under the Trade Receivable Facility.
The Company’s long-term debt maturities for each of the next five years and thereafter are as follows:
| (in millions) | ||||
| 2025 | $ | 125 | ||
| 2026 | — | |||
| 2027 | 792 | |||
| 2028 | — | |||
| 2029 | — | |||
| Thereafter | 4,496 | |||
| Total | $ | 5,413 |
Note H: Financial Instruments
The Company’s financial instruments include temporary cash investments, restricted cash, accounts receivable, accounts payable, publicly-registered long-term notes, debentures and other long-term debt.
Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposit accounts with financial institutions. The Company’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.
Restricted cash at December 31, 2023 was held in a trust account with a third-party intermediary. Due to the short-term nature of this account, the carrying value of restricted cash approximated its fair value.
Accounts receivable are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, accounts receivable are more heavily concentrated in certain states, namely Texas, North Carolina, Colorado, California, Georgia, Florida, Minnesota, Arizona, South Carolina and Iowa. The carrying values of accounts receivable approximate their fair values.
Accounts payable represent amounts owed to suppliers and vendors. The estimated carrying value of accounts payable approximates its fair value due to the short-term nature of the payables.
The carrying value and fair value of the Company’s long-term debt were $5.4 billion and $4.8 billion, respectively, at December 31, 2024 and $4.3 billion and $3.9 billion, respectively, at December 31, 2023. The estimated fair value of the Company’s publicly-registered long-term debt was estimated based on Level 1 of the fair value hierarchy using quoted market prices.
| Form 10-K ♦ Page 86 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note I: Income Taxes
The components of the Company’s income tax expense from continuing operations are as follows:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Federal income taxes: | ||||||||||||
| Current | $ | 565 | $ | 264 | $ | 175 | ||||||
| Deferred | **(**41 | ) | (11 | ) | 18 | |||||||
| Total federal income taxes | 524 | 253 | 193 | |||||||||
| State income taxes: | ||||||||||||
| Current | 80 | 43 | 35 | |||||||||
| Deferred | **(**4 | ) | (3 | ) | 6 | |||||||
| Total state income taxes | 76 | 40 | 41 | |||||||||
| Total current foreign income taxes | — | — | 1 | |||||||||
| Income tax expense | $ | 600 | $ | 293 | $ | 235 |
The Company generated foreign pretax earnings of $13 million, earnings of $8 million and a loss of $2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Deferred foreign income tax expense is not material.
The Company’s effective income tax rate on continuing operations varied from the statutory United States income tax rate due to the following tax differences:
| years ended December 31 | 2024 | 2023 | 2022 | |||||||||
| Statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||
| (Reduction) increase resulting from: | ||||||||||||
| Effect of statutory depletion | **(**1.4 | ) | (2.3 | ) | (2.4 | ) | ||||||
| State income taxes, net of federal tax benefit | 2.3 | 2.1 | 2.9 | |||||||||
| Goodwill write-off for divestiture | 1.8 | — | 0.5 | |||||||||
| Federal tax credits | **(**0.5 | ) | (0.8 | ) | (0.9 | ) | ||||||
| Equity investments in renewable energy tax credits, net | **(**0.3 | ) | (0.2 | ) | — | |||||||
| Other items | 0.2 | (0.2 | ) | 0.4 | ||||||||
| Effective income tax rate | 23.1 | % | 19.6 | % | 21.5 | % |
The higher 2024 effective income tax rate versus 2023 was driven by the impact of the February 2024 divestiture of the South Texas cement business and certain related ready mixed concrete operations, which included the write-off of certain nondeductible goodwill. The higher 2022 effective tax rate versus 2023 was primarily driven by the impact of the divestiture of the Colorado and Central Texas ready mixed concrete businesses.
The statutory depletion deduction for all years is calculated as a percentage of revenues, subject to certain limitations. Due to these limitations, changes in the sales volumes and pretax earnings may not proportionately affect the Company’s statutory depletion deduction and the corresponding impact on the effective income tax rate. However, the impact of the depletion deduction on the estimated effective tax rate is inversely affected by increases or decreases in pretax earnings.
The Company invests in renewable energy investment entities which qualify for tax credits and other tax benefits and are accounted for under the proportional amortization method. For the year ended December 31, 2024, amortization of these investments plus income recapture, which are included in the line item Income tax expense in the consolidated statements of earnings, were $148 million and $16 million, respectively, and offset by $153 million of tax credits and $17 million of other tax benefits. For the year ended December 31, 2023, amortization plus income recapture of similar investments were $26 million and $1 million, respectively, offset by $24 million of tax credits and $2 million of other tax benefits. There was no investment amortization for the year ended December 31, 2022. As of December 31, 2024, the Company has committed to additional equity contributions of $44 million for tax equity investments related to RETC projects. These amounts, which are expected to be paid in 2025, are recorded in the line item Other current liabilities on the consolidated balance sheet.
| Form 10-K ♦ Page 87 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The Internal Revenue Service has provided certain disaster tax relief for North Carolina businesses affected by Hurricanes Debby and Helene, which allows the Company to defer estimated federal and certain state income, payroll and excise tax payments for the period from August 2024 through April 2025. The deferred obligation will be due May 1, 2025. The Company deferred income tax payments of $102 million under this provision as of December 31, 2024.
The principal components of the Company’s deferred tax assets and liabilities are as follows:
| December 31 | Deferred Assets (Liabilities) | |||||||
| (in millions) | 2024 | 2023 | ||||||
| Deferred tax assets related to: | ||||||||
| Inventories | $ | 147 | $ | 121 | ||||
| Valuation and other reserves | 65 | 34 | ||||||
| Net operating loss carryforwards | 2 | 3 | ||||||
| Accumulated other comprehensive loss | 41 | 54 | ||||||
| Lease liabilities | 147 | 142 | ||||||
| Other items, net | 13 | 4 | ||||||
| Gross deferred tax assets | 415 | 358 | ||||||
| Valuation allowance on deferred tax assets | **(**2 | ) | (3 | ) | ||||
| Total net deferred tax assets | 413 | 355 | ||||||
| Deferred tax liabilities related to: | ||||||||
| Property, plant and equipment | **(**1,158 | ) | (828 | ) | ||||
| Goodwill and other intangibles | **(**171 | ) | (168 | ) | ||||
| Right-of-use assets | **(**144 | ) | (142 | ) | ||||
| Partnerships and joint ventures | **(**47 | ) | (34 | ) | ||||
| Employee benefits | **(**62 | ) | (57 | ) | ||||
| Total deferred tax liabilities | **(**1,582 | ) | (1,229 | ) | ||||
| Deferred income taxes, net | $ | **(**1,169 | ) | $ | (874 | ) |
The Company had immaterial gross domestic federal net operating loss (NOL) carryforwards at both December 31, 2024 and 2023. The Company had gross domestic state NOL carryforwards of $24 million and $43 million at December 31, 2024 and 2023, respectively. The domestic federal and state carryforwards have various expiration dates through 2044. The Company also had immaterial domestic state tax credit carryforwards at December 31, 2024 and 2023, which have various expiration dates through 2044.
The Company expects to reinvest the earnings from its wholly-owned Canadian and Bahamian subsidiaries indefinitely, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the foreign earnings was immaterial at December 31, 2024 and 2023.
The Company’s unrecognized tax benefits are immaterial for the years ended December 31, 2024, 2023 and 2022. Unrecognized tax benefits are reversed as a discrete event if an examination of applicable tax returns is not initiated by a federal or state tax authority within the statute of limitations or upon effective settlement with federal or state tax authorities. Management believes its accrual for unrecognized tax benefits is sufficient to cover uncertain tax positions reviewed during audits by taxing authorities. The Company anticipates an immaterial decrease in its unrecognized tax benefits during the twelve months ending December 31, 2025, due to the expiration of the statutes of limitations for the 2021 tax year.
The Company’s tax years subject to federal, state or foreign examinations are 2020 through 2024.
Note J: Retirement and Other Benefit Plans
Defined Benefit Retirement Plans. The Company sponsors defined benefit retirement plans that cover substantially all employees. Defined retirement benefits for salaried employees are based on each employee’s years of service and average compensation for a specified period of time before retirement. Defined retirement benefits for hourly employees are generally stated amounts for specified periods of service.
| Form 10-K ♦ Page 88 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The Company sponsors a Supplemental Excess Retirement Plan (SERP) that generally provides for the payment of retirement benefits in excess of allowable Internal Revenue Code limits. The SERP generally provides for a lump-sum payment of vested benefits. When these benefit payments exceed the sum of the service and interest costs for the SERP during a year, the Company recognizes a pro rata portion of the SERP’s unrecognized actuarial loss as settlement expense.
The net periodic benefit cost of defined benefit plans includes the following components:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Service cost | $ | 38 | $ | 33 | $ | 48 | ||||||
| Interest cost | 55 | 51 | 41 | |||||||||
| Expected return on assets | **(**79 | ) | (71 | ) | (77 | ) | ||||||
| Amortization of: | ||||||||||||
| Prior service cost | 6 | 6 | 4 | |||||||||
| Actuarial loss | 2 | 1 | 4 | |||||||||
| Settlement charge | — | — | 5 | |||||||||
| Net periodic benefit cost | $ | 22 | $ | 20 | $ | 25 |
The components of net periodic benefit cost, other than service cost, are included in the line item Other nonoperating income, net, in the consolidated statements of earnings. Based on the roles of the employees, service cost is included in Cost of revenues or Selling, general and administrative expenses line items in the consolidated statements of earnings.
The expected return on assets is calculated by applying an annually selected expected long-term rate of return assumption to the estimated fair value of the plan assets during the year, giving consideration to contributions and benefits paid.
The Company recognized the following pretax amounts in consolidated comprehensive earnings:
| years ended December 31 | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | |||||||||
| Actuarial (gain) loss | $ | **(**44 | ) | $ | 21 | $ | (115 | ) | ||||
| Prior service cost | — | — | 48 | |||||||||
| Amortization of: | ||||||||||||
| Prior service cost | **(**6 | ) | (6 | ) | (4 | ) | ||||||
| Actuarial loss | **(**2 | ) | (1 | ) | (4 | ) | ||||||
| Settlement charge | — | — | (5 | ) | ||||||||
| Total | $ | **(**52 | ) | $ | 14 | $ | (80 | ) |
During 2022, the Company amended its qualified pension plan to provide an enhanced benefit for eligible hourly active participants who retire subsequent to April 30, 2022, which resulted in a remeasurement of the qualified pension plan as of February 28, 2022. The remeasurement increased the defined benefit plans’ unrecognized prior service cost by $48 million.
Accumulated other comprehensive loss includes the following amounts that have not yet been recognized in net periodic benefit cost:
| December 31 | 2024 | 2023 | ||||||||||||||
| (in millions) | Gross | Net of tax | Gross | Net of tax | ||||||||||||
| Prior service cost | $ | 37 | $ | 7 | $ | 42 | $ | 20 | ||||||||
| Actuarial loss | 17 | 3 | 64 | 30 | ||||||||||||
| Total | $ | 54 | $ | 10 | $ | 106 | $ | 50 |
| Form 10-K ♦ Page 89 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The defined benefit plans’ change in projected benefit obligation is as follows:
| years ended December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Net projected benefit obligation at beginning of year | $ | 970 | $ | 858 | ||||
| Service cost | 38 | 33 | ||||||
| Interest cost | 55 | 51 | ||||||
| Actuarial (gain) loss | **(**46 | ) | 73 | |||||
| Gross benefits paid | **(**50 | ) | (45 | ) | ||||
| Net projected benefit obligation at end of year | $ | 967 | $ | 970 |
The largest component of the actuarial gain in 2024 was the impact of the higher discount rate compared with 2023. The actuarial loss in 2023 was primarily attributable to a lower discount rate compared with 2022.
The Company’s change in plan assets, funded status and amounts recognized on the Company’s consolidated balance sheets are as follows:
| years ended December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Fair value of plan assets at beginning of year | $ | 1,177 | $ | 1,067 | ||||
| Actual return on plan assets, net | 77 | 123 | ||||||
| Employer contributions | 34 | 32 | ||||||
| Gross benefits paid | **(**50 | ) | (45 | ) | ||||
| Fair value of plan assets at end of year | $ | 1,238 | $ | 1,177 |
| December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Funded status of the plan at end of year | $ | 271 | $ | 207 | ||||
| Accrued benefit credit | $ | 271 | $ | 207 |
| December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Amounts recognized on consolidated balance sheets consist of: | ||||||||
| Noncurrent asset | $ | 371 | $ | 308 | ||||
| Current liability | **(**13 | ) | (8 | ) | ||||
| Noncurrent liability | **(**87 | ) | (93 | ) | ||||
| Net amount recognized at end of year | $ | 271 | $ | 207 |
The accumulated benefit obligation for all defined benefit pension plans was $879 million and $882 million at December 31, 2024 and 2023, respectively.
Benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets are as follows:
| December 31 | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Projected benefit obligation | $ | 100 | $ | 101 | ||||
| Accumulated benefit obligation | $ | 90 | $ | 91 | ||||
| Fair value of plan assets | $ | — | $ | 1 |
Weighted-average assumptions used to determine benefit obligations as of December 31 are:
| 2024 | 2023 | |||
| Discount rate | 6.00**%** | 5.58% | ||
| Rate of increase in future compensation levels | 4.50**%** | 4.50% |
| Form 10-K ♦ Page 90 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are:
| 2024 | 2023 | 2022 | ||||
| Discount rate | 5.58**%** | 5.88% | 3.44% | |||
| Rate of increase in future compensation levels | 4.50**%** | 4.50% | 4.50% | |||
| Expected long-term rate of return on assets | 6.75**%** | 6.75% | 6.75% |
The expected long-term rate of return on pension fund assets is based on the current asset class mix of the Company's pension plan assets, current capital market conditions and a stochastic forecast of future conditions.
As of December 31, 2024 and 2023, the Company estimated the remaining lives of participants in the pension plans using the Pri-2012 Base tables. The no-collar table was used for salaried participants and the blue-collar table was used for hourly participants; the tables were adjusted to reflect both the mortality experience of the Company’s participants and a geospatial mortality analysis. The Company used the MP-2020 mortality improvement scale for 2024 and 2023.
Retirement plan assets are invested in listed stocks, bonds, real estate, private infrastructure and cash equivalents. The target allocation for 2024 and the actual pension plan asset allocation by asset class are as follows:
| Percentage of Plan Assets | ||||||
| 2024 | ||||||
| Target | December 31 | |||||
| Asset Class | Allocation | 2024 | 2023 | |||
| Equity securities | 56% | 58**%** | 53% | |||
| Debt securities | 28% | 22**%** | 27% | |||
| Real estate | 10% | 10**%** | 12% | |||
| Private infrastructure | 6% | 8**%** | 8% | |||
| Cash | 0% | 2**%** | 0% | |||
| Total | 100% | 100**%** | 100% |
The Company’s investment strategy is for equity securities to be invested in mid-sized to large capitalization U.S. funds, and small capitalization, international and emerging growth funds. Debt securities, or fixed income investments, are invested in funds benchmarked to the Barclays U.S. Aggregate Bond Index.
| Form 10-K ♦ Page 91 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The fair values of pension plan assets by asset class and fair value hierarchy level are as follows:
| Fair Value Measurements | ||||||||||||||||||||
| December 31 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Net Asset Value | Total Fair Value | |||||||||||||||
| (in millions) | 2024 | |||||||||||||||||||
| Equity securities1: | ||||||||||||||||||||
| Mid-sized to large cap | $ | — | $ | — | $ | — | $ | 359 | $ | 359 | ||||||||||
| Small cap, international and emerging growth funds | — | — | — | 361 | 361 | |||||||||||||||
| Debt securities1: | ||||||||||||||||||||
| Core fixed income | — | — | — | 271 | 271 | |||||||||||||||
| Real estate | — | — | — | 130 | 130 | |||||||||||||||
| Private infrastructure | — | — | — | 96 | 96 | |||||||||||||||
| Cash equivalents | — | — | — | 21 | 21 | |||||||||||||||
| Total | $ | — | $ | — | $ | — | $ | 1,238 | $ | 1,238 | ||||||||||
| 2023 | ||||||||||||||||||||
| Equity securities1: | ||||||||||||||||||||
| Mid-sized to large cap | $ | — | $ | — | $ | — | $ | 307 | $ | 307 | ||||||||||
| Small cap, international and emerging growth funds | — | — | — | 320 | 320 | |||||||||||||||
| Debt securities1: | ||||||||||||||||||||
| Core fixed income | — | — | — | 319 | 319 | |||||||||||||||
| Real estate | — | — | — | 137 | 137 | |||||||||||||||
| Private infrastructure | — | — | — | 90 | 90 | |||||||||||||||
| Cash equivalents | — | — | — | 4 | 4 | |||||||||||||||
| Total | $ | — | $ | — | $ | — | $ | 1,177 | $ | 1,177 |
These investments are common collective investment trusts valued using the net asset value (NAV) unit price provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund.
Real estate investments are stated at estimated fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Real estate investments are valued at NAV based on the plan’s proportionate shares of the real estate funds’ fair value as recorded by the trustees/general partner of the funds. The funds are real estate investment trust based funds that offer participation in an actively managed, primarily core portfolio of equity real estate. The funds allocate gains, losses and expenses to investors based on the ownership percentage to determine the NAV. Private infrastructure assets represent investments in a fund that is stated at fair value. For financial assets in the fund that are actively traded in organized financial markets, fair value is based on exchange-quoted market prices. For investments in the fund for which there is no quoted market price, fair value is determined by the trustees/general partner of the fund based on discounted expected future cash flows prepared by third-party professionals.
In 2024 and 2023, the Company made combined pension plan and SERP contributions of $34 million and $32 million, respectively. The Company currently estimates that it will contribute $40 million to its pension plans in 2025.
The expected benefit payments to be paid from plan assets for each of the next five years and the five-year period thereafter are as follows:
| (in millions) | ||||
| 2025 | $ | 59 | ||
| 2026 | $ | 60 | ||
| 2027 | $ | 63 | ||
| 2028 | $ | 66 | ||
| 2029 | $ | 65 | ||
| Years 2030 - 2034 | $ | 353 |
| Form 10-K ♦ Page 92 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Postretirement and Postemployment Benefits*.* The Company provides other postretirement benefits for certain employees, including medical benefits for retirees and their spouses and retiree life insurance. Employees starting on or after January 1, 2002 are not eligible for postretirement welfare plans. Postretirement medical benefits are paid from the Company's assets. The obligation, if any, for retiree medical payments is subject to the terms of the plan. At December 31, 2024 and 2023, the Company's recorded benefit obligation related to these benefits totaled $7 million and $8 million, respectively. The Company also provides certain benefits, such as disability benefits, to former or inactive employees after employment but before retirement.
Defined Contribution Plan*.* The Company maintains a defined contribution plan that covers substantially all employees. This plan, qualified under Section 401(a) of the Internal Revenue Code, is a retirement savings and investment plan for the Company’s salaried and hourly employees**.** Under certain provisions of the plan, the Company matches employees’ eligible contributions at established rates. The Company’s matching obligations were $22 million in both 2024 and 2023, and $23 million in 2022.
Note K: Stock-Based Compensation
On May 19, 2016, the Company’s shareholders approved the Martin Marietta Amended and Restated Stock-Based Award Plan. The Martin Marietta Materials, Inc. Stock-Based Award Plan, as amended from time to time, along with the Amended Omnibus Securities Award Plan, originally approved in 1994 (collectively, the Plans), are still effective for awards made prior to 2017. The Company has been authorized by the Board of Directors to repurchase shares of the Company’s common stock for issuance under the stock-based award plans (see Note M).
The Company grants restricted stock awards under the Plans to a group of executive officers, key personnel and nonemployee members of the Board of Directors. The vesting of certain restricted stock awards is based on certain performance criteria over a specified period of time. The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of those criteria. In addition, certain awards are granted to individuals to encourage retention and motivate key employees. These awards generally vest if the employee is continuously employed over a specified period of time and require no payment from the employee. Awards granted to nonemployee members of the Board of Directors vest immediately.
The fair value of stock-based award grants is expensed over the vesting period. Awards to employees eligible for retirement prior to the award becoming fully vested are expensed over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award. Awards granted to nonemployee members of the Board of Directors are expensed immediately.
Additionally, an incentive compensation stock plan has been adopted under the Plans whereby certain participants may elect to use up to 50% of their annual incentive compensation to acquire units representing shares of the Company’s common stock at a 20% discount to the market value on the date of the incentive compensation award. Participants receive unrestricted shares of common stock in an amount equal to their respective units generally at the end of a 34-month period of additional employment from the date of award or at retirement beginning at age 62. All rights of ownership of the common stock convey to the participants upon the issuance of their respective shares at the end of the ownership-vesting period.
The following table summarizes information for restricted stock awards and incentive compensation stock awards for 2024:
| Restricted Stock - Service Based | Restricted Stock - Performance Based | Incentive Compensation Stock | ||||||||||||||||||||||
| Number of Awards | Weighted- Average Grant-Date Fair Value | Number of Awards | Weighted- Average Grant-Date Fair Value | Number of Awards | Weighted- Average Grant-Date Fair Value | |||||||||||||||||||
| January 1, 2024 | 210,643 | $ | 289.26 | 98,150 | $ | 384.02 | 17,326 | $ | 364.09 | |||||||||||||||
| Awarded | 46,323 | $ | 553.17 | 29,746 | $ | 595.00 | 11,543 | $ | 548.68 | |||||||||||||||
| Distributed | (60,143 | ) | $ | 307.63 | (81,439 | ) | $ | 352.52 | (12,760 | ) | $ | 389.15 | ||||||||||||
| Forfeited | (5,289 | ) | $ | 389.70 | (5,490 | ) | $ | 443.71 | (566 | ) | $ | 400.15 | ||||||||||||
| Adjustment for performance | — | $ | — | 47,537 | $ | 362.60 | — | $ | — | |||||||||||||||
| December 31, 2024 | 191,534 | $ | 370.27 | 88,504 | $ | 468.71 | 15,543 | $ | 497.76 |
| Form 10-K ♦ Page 93 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The weighted-average grant-date fair value per share of service-based restricted stock awards granted during 2024, 2023 and 2022 was $553.17, $369.18 and $362.77, respectively. The weighted-average grant-date fair value per share of performance-based restricted stock awards granted during 2024, 2023 and 2022 was $595.00, $392.73 and $406.99, respectively. The weighted-average grant-date fair value per share of incentive compensation stock awards granted during 2024, 2023 and 2022 was $548.68, $362.08 and $369.05, respectively.
The aggregate intrinsic values for unvested service-based and performance-based restricted stock awards of $145 million and unvested incentive compensation stock awards of $2 million at December 31, 2024 were based on the closing price of the Company’s common stock at December 31, 2024, which was $516.50. The aggregate intrinsic values of service-based and performance-based restricted stock awards distributed during the years ended December 31, 2024, 2023 and 2022 were $76 million, $48 million and $65 million, respectively. The aggregate intrinsic values of incentive compensation stock awards distributed during the years ended December 31, 2024, 2023 and 2022 were $4 million, $4 million and $3 million, respectively. The aggregate intrinsic values for distributed awards were based on the closing prices of the Company’s common stock on the dates of distribution.
Prior to 2016, under the Plans, the Company granted options to employees to purchase its common stock at a price equal to the closing market value at the date of grant. Options become exercisable in four annual installments beginning one year after date of grant. Outstanding options expire ten years after the grant date.
The following table includes summary information for stock options as of December 31, 2024:
| Number of Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | ||||||||||
| Outstanding at January 1, 2024 | 6,103 | $ | 144.14 | |||||||||
| Exercised | (2,480 | ) | $ | 128.89 | ||||||||
| Outstanding at December 31, 2024 | 3,623 | $ | 154.58 | 0.4 | ||||||||
| Exercisable at December 31, 2024 | 3,623 | $ | 154.58 | 0.4 |
The aggregate intrinsic values of options exercised during each of the three years ended December 31, 2024, 2023 and 2022 were immaterial. The aggregate intrinsic values for options outstanding and exercisable at December 31, 2024 were immaterial and were based on the closing price of the Company’s common stock at December 31, 2024, which was $516.50.
At December 31, 2024, there were approximately 0.3 million awards available for grant under the Plans. In 2016, the Company’s shareholders approved the issuance of an additional 0.8 million shares of common stock under the Plans.
In 1996, the Company adopted the Shareholder Value Achievement Plan to award shares of the Company’s common stock to key senior employees based on certain common stock performance criteria over a long-term period. As of December 31, 2024, 0.2 million shares of common stock remain reserved for issuance. No awards have been granted under this plan since 2000.
The Company adopted and the shareholders approved the Common Stock Purchase Plan for Directors in 1996, which provides nonemployee members of the Board of Directors the election to receive all or a portion of their total fees in the form of the Company’s common stock. Beginning in 2016, members of the Board of Directors were not required to defer any of their fees in the form of the Company’s common stock. Under the terms of this plan, 0.3 million shares of common stock were reserved for issuance. Nonemployee members of the Board of Directors elected to defer portions of their fees representing 834, 1,333 and 1,767 shares of the Company’s common stock under this plan during 2024, 2023 and 2022, respectively.
| Form 10-K ♦ Page 94 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The following table summarizes stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, unrecognized compensation cost for nonvested awards at December 31, 2024 and the weighted-average period over which unrecognized compensation cost will be recognized:
| (in millions, except year data) | Restricted Stock (Service- and Performance-Based) | Incentive Compensation Stock | Directors’ Fees Paid in Stock | Total | ||||||||||||
| Stock-based compensation expense recognized for years ended December 31: | ||||||||||||||||
| 2024 | $ | 56 | $ | 1 | $ | 1 | $ | 58 | ||||||||
| 2023 | $ | 49 | $ | 1 | $ | — | $ | 50 | ||||||||
| 2022 | $ | 41 | $ | 1 | $ | 1 | $ | 43 | ||||||||
| Unrecognized compensation cost at December 31, 2024 | $ | 28 | $ | 1 | $ | — | $ | 29 | ||||||||
| Weighted-average period over which unrecognized compensation cost will be recognized | 1.9 years | 1.8 years |
Total tax benefits related to stock-based compensation expense were $9 million, $9 million and $8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The following presents expected stock-based compensation expense in future periods for outstanding awards as of December 31, 2024:
| (in millions) | ||||
| 2025 | $ | 19 | ||
| 2026 | $ | 8 | ||
| 2027 | $ | 1 | ||
| 2028 | $ | 1 | ||
| Total | $ | 29 |
Stock-based compensation expense is primarily included in Selling, general and administrative expenses in the Company’s consolidated statements of earnings.
Note L: Leases
The Company has leases, primarily for equipment, railcars, fleet vehicles, office space, land, information technology equipment and software. The Company’s leases have remaining lease terms, inclusive of options to renew that the Company is reasonably certain to exercise, ranging from less than one year to 46 years. Some of the Company's leases include options to terminate the leases within one year.
Certain of the Company’s lease agreements include payments based upon variable rates, including, but not limited to, hours used, tonnage processed and factors related to indices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of lease cost are as follows:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Operating lease cost | $ | 76 | $ | 77 | $ | 73 | ||||||
| Finance lease cost: | ||||||||||||
| Amortization of right-of-use assets | 26 | 21 | 18 | |||||||||
| Interest on lease liabilities | 6 | 5 | 4 | |||||||||
| Variable lease cost | 14 | 18 | 17 | |||||||||
| Short-term lease cost | 46 | 46 | 45 | |||||||||
| Total lease cost | $ | 168 | $ | 167 | $ | 157 |
| Form 10-K ♦ Page 95 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The Company has royalty agreements that are prescriptively excluded from the scope of ASC 842 and generally require royalty payments based on tons produced, tons sold or total sales dollars and also contain minimum payments. Royalty expense was $92 million, $86 million and $78 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The balance sheet classifications of operating and finance leases are as follows:
| December 31 (in millions) | 2024 | 2023 | ||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | 376 | $ | 372 | ||||
| Current operating lease liabilities | $ | 56 | $ | 53 | ||||
| Noncurrent operating lease liabilities | 335 | 327 | ||||||
| Total operating lease liabilities | $ | 391 | $ | 380 | ||||
| Finance leases: | ||||||||
| Property, plant and equipment | $ | 295 | $ | 254 | ||||
| Accumulated depreciation | **(**83 | ) | (59 | ) | ||||
| Property, plant and equipment, net | $ | 212 | $ | 195 | ||||
| Other current liabilities | $ | 19 | $ | 20 | ||||
| Other noncurrent liabilities | 202 | 180 | ||||||
| Total finance lease liabilities | $ | 221 | $ | 200 |
The incremental borrowing rate ranged from 0.4% to 6.0% for the years ended December 31, 2024 and 2023. Weighted-average remaining lease terms and discount rates are as follows:
| December 31 | 2024 | 2023 | ||
| Weighted-average remaining lease terms (years): | ||||
| Operating leases | 11.0 | 11.7 | ||
| Finance leases | 18.1 | 18.3 | ||
| Weighted-average discount rates: | ||||
| Operating leases | 4.6**%** | 4.3% | ||
| Finance leases | 3.3**%** | 2.6% |
Future lease payments as of December 31, 2024 are as follows:
| Operating | Finance | |||||||
| (in millions) | Leases | Leases | ||||||
| 2025 | $ | 72 | $ | 26 | ||||
| 2026 | 65 | 19 | ||||||
| 2027 | 53 | 18 | ||||||
| 2028 | 43 | 16 | ||||||
| 2029 | 38 | 15 | ||||||
| Thereafter | 234 | 202 | ||||||
| Total lease payments | 505 | 296 | ||||||
| Less: imputed interest | (114 | ) | (75 | ) | ||||
| Present value of lease payments | 391 | 221 | ||||||
| Less: current lease obligations | (56 | ) | (19 | ) | ||||
| Total long-term lease obligations | $ | 335 | $ | 202 |
| Form 10-K ♦ Page 96 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note M: Shareholders’ Equity
The authorized capital structure of the Company includes 100 million shares of common stock, with a par value of $0.01 per share. At December 31, 2024, approximately 1.0 million common shares were reserved for issuance under stock-based award plans.
Pursuant to authority granted by its Board of Directors, the Company can repurchase up to 20 million shares of common stock. During 2024, the Company repurchased 0.8 million shares of common stock. During each of 2023 and 2022, the Company repurchased 0.4 million shares of common stock. Future share repurchases are at the discretion of management. At December 31, 2024, 11.9 million shares of common stock were remaining under the Company’s repurchase authorization.
Note N: Commitments and Contingencies
Legal and Administrative Proceedings. The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities. In the opinion of management and counsel, based upon currently available facts, the likelihood is remote that the ultimate outcome of any litigation and other proceedings, including those pertaining to environmental matters (see Note A), relating to the Company and its subsidiaries, will have a material adverse effect on the overall results of the Company’s operations, its cash flows or its financial position.
Asset Retirement Obligations. The Company incurs reclamation and teardown costs as part of its mining and production processes. Estimated future obligations are discounted to their present value and accreted to their projected future obligations via charges to operating expenses. Additionally, the fixed assets recorded concurrently with the liabilities are depreciated over the period until retirement activities are expected to occur. Total accretion and depreciation expenses for 2024, 2023 and 2022 were $28 million, $17 million and $16 million, respectively, and are included in Other operating income, net, in the consolidated statements of earnings.
The following shows the changes in asset retirement obligations:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Balance at beginning of year | $ | 400 | $ | 380 | $ | 307 | ||||||
| Accretion expense | 11 | 11 | 10 | |||||||||
| Liabilities incurred and liabilities assumed in business combinations | 12 | 34 | 79 | |||||||||
| Liabilities settled | **(**2 | ) | (28 | ) | (14 | ) | ||||||
| Revisions in estimated cash flows | 9 | (13 | ) | (3 | ) | |||||||
| Liabilities reclassified from assets held for sale | 2 | 16 | 1 | |||||||||
| Balance at end of year | $ | 432 | $ | 400 | $ | 380 |
Other Environmental Matters. The Company’s operations are subject to and affected by federal, state and local laws and regulations relating to the environment, health and safety, and other regulatory matters. Certain of the Company’s operations may, from time to time, involve the use of substances that are classified as toxic or hazardous within the meaning of these laws and regulations. Environmental operating permits are, or may be, required for certain of the Company’s operations, and such permits are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental remediation liability is inherent in the operation of the Company’s businesses, as it is with other companies engaged in similar businesses. The Company has no material provisions for environmental remediation liabilities and does not believe such liabilities will have a material adverse effect on the Company in the future.
Insurance Reserves. At December 31, 2024 and 2023, reserves of $53 million and $47 million, respectively, were recorded for insurance claims.
Letters of Credit. In the normal course of business, the Company provides certain third parties with standby letter of credit agreements guaranteeing its payment for certain insurance claims, contract performance and permit requirements. At December 31, 2024, the Company was contingently liable for $37 million in letters of credit.
| Form 10-K ♦ Page 97 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Surety Bonds. At December 31, 2024, the Company was contingently liable for $818 million in surety bonds required by certain states and municipalities and their related agencies. The bonds are provided in the normal course of business and are principally for certain insurance claims, construction contracts, reclamation obligations and mining permits guaranteeing the Company’s own performance. The Company has indemnified the underwriting insurance company against any exposure under the surety bonds. In the Company’s past experience, no material claims have been made against these financial instruments.
Purchase Commitments. The Company had purchase commitments for property, plant and equipment of $162 million as of December 31, 2024. The Company also had other purchase obligations related to energy and service contracts of $158 million as of December 31, 2024. The Company’s contractual purchase commitments as of December 31, 2024 are as follows:
| (in millions) | ||||
| 2025 | $ | 215 | ||
| 2026 | 21 | |||
| 2027 | 15 | |||
| 2028 | 12 | |||
| 2029 | 12 | |||
| Thereafter | 45 | |||
| Total | $ | 320 |
Capital expenditures in 2024, 2023 and 2022 that were purchase commitments as of the prior year end were $139 million, $111 million and $90 million, respectively.
Contracts of Affreightment and Royalty Commitments. Future minimum contracts of affreightment and royalty commitments for all noncancelable agreements that are not accounted for as leases on the Company’s consolidated balance sheet as of December 31, 2024 are as follows:
| (in millions) | Contracts of Affreightment | Royalty Commitments | ||||||
| 2025 | $ | 17 | $ | 27 | ||||
| 2026 | 17 | 15 | ||||||
| 2027 | 18 | 14 | ||||||
| 2028 | — | 13 | ||||||
| 2029 | — | 10 | ||||||
| Thereafter | — | 86 | ||||||
| Total | $ | 52 | $ | 165 |
Employees. Approximately 13% of the Company’s employees are represented by a labor union. All such employees are hourly employees. The Company maintains collective bargaining agreements relating to the union employees within the Building Materials business and Magnesia Specialties segment. All of the hourly employees of the Magnesia Specialties segment, located in Manistee, Michigan, and Woodville, Ohio, are represented by labor unions. The Woodville collective bargaining agreement expires in June 2026. The Manistee collective bargaining agreement expires in August 2027.
Note O: Segments
As of December 31, 2024, the Building Materials business is comprised of four divisions that represent individual operating segments. These operating segments are consolidated into two reportable segments, the East Group and the West Group, for financial reporting purposes, as they meet the aggregation criteria. The Magnesia Specialties business represents an individual operating and reportable segment. The accounting policies used for segment reporting are the same as those described in Note A.
The Company’s Chief Operating Decision Maker (CODM) is the Chair, President and Chief Executive Officer. The CODM reviews results by reportable segment on a quarterly basis and allocates resources to achieve the Company’s strategic objectives based on an evaluation of each reportable segment’s performance. This evaluation is largely based on segment earnings from operations, as management believes this is the best metric of segment profitability and operating performance. Segment earnings from operations is also a measure in the determination of incentive compensation targets and awards. Segment earnings from operations include revenues less cost of revenues; selling, general and administrative expenses; other operating income and expenses, net; and exclude interest income and expense; other nonoperating income and expenses, net; and income tax expense.
| Form 10-K ♦ Page 98 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
The significant expense categories shown below align with the segment-level information regularly provided to the CODM. Other costs of revenues for each reportable segment include mainly repairs and maintenance, contract services, supplies and royalties.
Corporate loss from operations primarily includes depreciation and amortization; expenses for corporate administrative functions; acquisition, divestiture and integration expenses; and other nonrecurring income and expenses not attributable to operations of the Company's other operating segments.
The following tables display selected financial data for the Company’s reportable segments. Revenues, as presented on the consolidated statements of earnings, reflect the elimination of intersegment revenues, which represent sales from one segment to another segment and are immaterial. Revenues and earnings (loss) from operations reflect continuing operations only. Income tax expense is not allocated to the Company's reportable segments.
Earnings from operations for the West Group included a $1.3 billion gain and $16 million of transaction expenses in 2024 and $6 million of transaction expenses in 2023 on the divestiture of the South Texas cement business and certain of its related ready mixed concrete operations (see Note B); a noncash asset and portfolio rationalization charge of $50 million (see Note R) in 2024; and a nonrecurring gain on divestiture of $152 million in 2022.
| year ended December 31, 2024 (in millions) | East Group | West Group | Magnesia Specialties | Total Reportable Segments | Corporate | Total | ||||||||||||||||||
| Segment Revenues | $ | 2,941 | $ | 3,275 | $ | 320 | $ | 6,536 | $ | — | $ | 6,536 | ||||||||||||
| Less: | ||||||||||||||||||||||||
| Labor and benefits expense | 391 | 402 | 39 | 832 | 1 | 833 | ||||||||||||||||||
| Raw materials expense | 96 | 466 | 18 | 580 | — | 580 | ||||||||||||||||||
| Depreciation, depletion and amortization expense | 259 | 254 | 15 | 528 | 3 | 531 | ||||||||||||||||||
| Energy expense | 145 | 147 | 31 | 323 | — | 323 | ||||||||||||||||||
| External freight expense | 108 | 220 | 31 | 359 | — | 359 | ||||||||||||||||||
| Other costs of revenues | 905 | 1,013 | 79 | 1,997 | 35 | 2,032 | ||||||||||||||||||
| Selling, general and administrative expenses | 139 | 187 | 20 | 346 | 101 | 447 | ||||||||||||||||||
| Acquisition, divestiture and integration expenses | — | 16 | — | 16 | 34 | 50 | ||||||||||||||||||
| Other operating expense (income), net | 7 | **(**1,307 | ) | **(**3 | ) | **(**1,303 | ) | **(**23 | ) | **(**1,326 | ) | |||||||||||||
| Segment Earnings (Loss) from Operations | $ | 891 | $ | 1,877 | $ | 90 | $ | 2,858 | $ | **(**151 | ) | $ | 2,707 | |||||||||||
| Interest expense | 169 | |||||||||||||||||||||||
| Other nonoperating income, net | **(**58 | ) | ||||||||||||||||||||||
| Consolidated earnings from continuing operations before income tax expense | $ | 2,596 |
| year ended December 31, 2023 (in millions) | East Group | West Group | Magnesia Specialties | Total Reportable Segments | Corporate | Total | ||||||||||||||||||
| Segment Revenues | $ | 2,763 | $ | 3,699 | $ | 315 | $ | 6,777 | $ | — | $ | 6,777 | ||||||||||||
| Less: | ||||||||||||||||||||||||
| Labor and benefits expense | 362 | 433 | 36 | 831 | (7 | ) | 824 | |||||||||||||||||
| Raw materials expense | 104 | 556 | 22 | 682 | — | 682 | ||||||||||||||||||
| Depreciation, depletion and amortization expense | 205 | 261 | 13 | 479 | 3 | 482 | ||||||||||||||||||
| Energy expense | 152 | 216 | 37 | 405 | — | 405 | ||||||||||||||||||
| External freight expense | 113 | 233 | 30 | 376 | — | 376 | ||||||||||||||||||
| Other costs of revenues | 854 | 1,050 | 80 | 1,984 | 1 | 1,985 | ||||||||||||||||||
| Selling, general and administrative expenses | 124 | 177 | 18 | 319 | 124 | 443 | ||||||||||||||||||
| Acquisition, divestiture and integration expenses | — | 6 | — | 6 | 6 | 12 | ||||||||||||||||||
| Other operating (income) expense, net | (8 | ) | (10 | ) | 3 | (15 | ) | (13 | ) | (28 | ) | |||||||||||||
| Segment Earnings (Loss) from Operations | $ | 857 | $ | 777 | $ | 76 | $ | 1,710 | $ | (114 | ) | $ | 1,596 | |||||||||||
| Interest expense | 165 | |||||||||||||||||||||||
| Other nonoperating income, net | (62 | ) | ||||||||||||||||||||||
| Consolidated earnings from continuing operations before income tax expense | $ | 1,493 |
| Form 10-K ♦ Page 99 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
| year ended December 31, 2022 (in millions) | East Group | West Group | Magnesia Specialties | Total Reportable Segments | Corporate | Total | ||||||||||||||||||
| Segment Revenues | $ | 2,468 | $ | 3,389 | $ | 304 | $ | 6,161 | $ | — | $ | 6,161 | ||||||||||||
| Less: | ||||||||||||||||||||||||
| Labor and benefits expense | 340 | 428 | 35 | 803 | — | 803 | ||||||||||||||||||
| Raw materials expense | 118 | 568 | 27 | 713 | — | 713 | ||||||||||||||||||
| Depreciation, depletion and amortization expense | 205 | 255 | 12 | 472 | 3 | 475 | ||||||||||||||||||
| Energy expense | 175 | 280 | 45 | 500 | — | 500 | ||||||||||||||||||
| External freight expense | 143 | 259 | 31 | 433 | — | 433 | ||||||||||||||||||
| Other costs of revenues | 740 | 1,008 | 63 | 1,811 | 3 | 1,814 | ||||||||||||||||||
| Selling, general and administrative expenses | 115 | 166 | 16 | 297 | 100 | 397 | ||||||||||||||||||
| Acquisition, divestiture and integration expenses | — | — | — | — | 9 | 9 | ||||||||||||||||||
| Other operating income, net | (8 | ) | (164 | ) | (1 | ) | (173 | ) | (17 | ) | (190 | ) | ||||||||||||
| Segment Earnings (Loss) from Operations | $ | 640 | $ | 589 | $ | 76 | $ | 1,305 | $ | (98 | ) | $ | 1,207 | |||||||||||
| Interest expense | 169 | |||||||||||||||||||||||
| Other nonoperating income, net | (53 | ) | ||||||||||||||||||||||
| Consolidated earnings from continuing operations before income tax expense | $ | 1,091 |
Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, cash equivalents and restricted cash; property, plant and equipment for corporate operations; and other assets not directly identifiable with a reportable segment.
| December 31 (in millions) Assets employed | 2024 | 2023 | ||||||
| East Group | $ | 8,452 | $ | 5,131 | ||||
| West Group | 7,941 | 7,697 | ||||||
| Magnesia Specialties | 269 | 250 | ||||||
| Total reportable segments | 16,662 | 13,078 | ||||||
| Corporate | 1,508 | 2,047 | ||||||
| Total | $ | 18,170 | $ | 15,125 |
| years ended December 31(in millions)Total property additions, including the impact of acquisitions | 2024 | 2023 | 2022 | |||||||||
| East Group | $ | 3,185 | $ | 231 | $ | 189 | ||||||
| West Group | 1,216 | 342 | 302 | |||||||||
| Magnesia Specialties | 32 | 39 | 32 | |||||||||
| Total reportable segments | 4,433 | 612 | 523 | |||||||||
| Corporate | 22 | 14 | 21 | |||||||||
| Total | $ | 4,455 | $ | 626 | $ | 544 |
| years ended December 31(in millions)Property additions through acquisitions | 2024 | 2023 | 2022 | |||||||||
| East Group | $ | 2,853 | $ | — | $ | — | ||||||
| West Group | 732 | — | 3 | |||||||||
| Total | $ | 3,585 | $ | — | $ | 3 |
| Form 10-K ♦ Page 100 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Note P: Revenues and Gross Profit
The following tables, which are reconciled to consolidated amounts, provide revenues and gross profit (loss) by line of business: Building Materials (further divided by product line) and Magnesia Specialties. Interproduct revenues represent sales from the aggregates product line to the cement and ready mixed concrete and asphalt and paving product lines and sales from the cement product line to the ready mixed concrete product line. Effective January 1, 2024, the Company combined the cement and ready mixed concrete product lines. This change was driven by the reduced significance of each of these product lines relative to the Building Materials business and consolidated operating results from recent divestitures. Additionally, there is a significant relationship between these product lines, as the ready mixed concrete product line is a significant customer of the cement product line. Revenues and gross profit (loss) reflect continuing operations only.
| years ended December 31 (in millions)Revenues | 2024 | 2023 | 2022 | |||||||||
| Building Materials business: | ||||||||||||
| Aggregates | $ | 4,514 | $ | 4,302 | $ | 3,879 | ||||||
| Cement and ready mixed concrete | 1,083 | 1,518 | 1,395 | |||||||||
| Asphalt and paving | 869 | 887 | 788 | |||||||||
| Less: interproduct revenues | **(**250 | ) | (245 | ) | (205 | ) | ||||||
| Total Building Materials business | 6,216 | 6,462 | 5,857 | |||||||||
| Magnesia Specialties | 320 | 315 | 304 | |||||||||
| Total | $ | 6,536 | $ | 6,777 | $ | 6,161 | ||||||
| years ended December 31(in millions)Gross profit (loss) | 2024 | 2023 | 2022 | |||||||||
| Building Materials business: | ||||||||||||
| Aggregates | $ | 1,449 | $ | 1,378 | $ | 984 | ||||||
| Cement and ready mixed concrete | 260 | 436 | 273 | |||||||||
| Asphalt and paving | 101 | 109 | 81 | |||||||||
| Total Building Materials business | 1,810 | 1,923 | 1,338 | |||||||||
| Magnesia Specialties: | 107 | 97 | 91 | |||||||||
| Corporate | **(**39 | ) | 3 | (6 | ) | |||||||
| Total | $ | 1,878 | $ | 2,023 | $ | 1,423 |
The above information for 2023 and 2022 has been reclassified to conform to current-year presentation. For the year ended December 31, 2023, the cement product line reported revenues of $726 million, inclusive of $217 million to the ready mixed concrete product line, and gross profit of $334 million. For the year ended December 31, 2023, the ready mixed concrete product line reported revenues of $1.0 billion and gross profit of $102 million. For the year ended December 31, 2022, the cement product line reported revenues of $620 million, inclusive of $178 million to the ready mixed concrete product line, and gross profit of $203 million. For the year ended December 31, 2022, the ready mixed concrete product line reported revenues of $953 million and gross profit of $70 million. Revenues from sales of cement to the ready mixed concrete product line were previously eliminated in the interproduct revenues line.
Domestic and foreign revenues are as follows:
| years ended December 31 (in millions) | 2024 | 2023 | 2022 | |||||||||
| Domestic | $ | 6,487 | $ | 6,707 | $ | 6,078 | ||||||
| Foreign | 49 | 70 | 83 | |||||||||
| Total | $ | 6,536 | $ | 6,777 | $ | 6,161 |
| Form 10-K ♦ Page 101 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service for a stated price. The Company’s product sales agreements are single-performance obligations that are satisfied at a point in time. Performance obligations within paving service agreements are satisfied over time, primarily ranging from one day to two years. Customer payment terms are generally 30 days from invoice date. Customer payments for the paving operations are based on a contractual billing schedule and are typically "paid-when-paid", meaning the Company is paid once the customer is paid.
Future revenues from unsatisfied performance obligations at December 31, 2024, 2023 and 2022 were $255 million, $251 million and $239 million, respectively, where the remaining periods to complete these obligations ranged from one month to 36 months at December 31, 2024, one month to 22 months at December 31, 2023 and two months to 34 months at December 31, 2022.
Service Revenues. Service revenues, which include paving operations located in California and Colorado, were $411 million, $411 million and $354 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Note Q: Supplemental Cash Flow Information
Noncash investing and financing activities are as follows:
| years ended December 31 | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | |||||||||
| Accrued liabilities for purchases of property, plant and equipment | $ | 143 | $ | 128 | $ | 152 | ||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 68 | $ | 63 | $ | 27 | ||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 17 | $ | 22 | $ | 12 | ||||||
| Remeasurement of operating lease right-of-use assets | $ | 7 | $ | 10 | $ | (3 | ) | |||||
| Remeasurement of finance lease right-of-use assets | $ | 27 | $ | — | $ | (13 | ) | |||||
| Acquisition of assets through asset exchange | $ | — | $ | 5 | $ | — |
Supplemental disclosures of cash flow information are as follows:
| years ended December 31 | ||||||||||||
| (in millions) | 2024 | 2023 | 2022 | |||||||||
| Cash paid for interest, net of amount capitalized | $ | 158 | $ | 159 | $ | 165 | ||||||
| Cash paid for income taxes | $ | 382 | $ | 292 | $ | 201 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||
| Operating cash flows used for operating leases | $ | 77 | $ | 77 | $ | 79 | ||||||
| Operating cash flows used for finance leases | $ | 6 | $ | 5 | $ | 5 | ||||||
| Financing cash flows used for finance leases | $ | 20 | $ | 17 | $ | 15 |
Note R: Other Operating Income, Net
Other operating income, net, is comprised generally of gains and losses on divestitures and the sale of assets; asset and portfolio rationalization charges; recoveries and losses related to certain customer accounts receivable; recoveries and losses on the resolution of contingency accruals; rental, royalty and services income; and accretion expense, depreciation expense, and gains and losses related to asset retirement obligations. These net amounts represented income of $1.3 billion, $28 million and $190 million in 2024, 2023 and 2022, respectively.
In 2024, other operating income, net, included a $1.3 billion pretax gain on the divestiture of the South Texas cement business and certain of its related ready mixed concrete operations and $28 million of gains on land sales, which were partially offset by a $50 million pretax, noncash asset and portfolio rationalization charge. The 2024 noncash asset and portfolio rationalization charge relates to the Company's decision to discontinue usage of certain long-haul distribution facilities to transport aggregates products into Colorado because the AFS acquisition completed in January 2024 provides more economical, local aggregates supply. This charge, which is reported in the West Group, reflects the Company's evaluation of the recoverability of certain long-lived assets, including property, plant and equipment and operating lease right-of-use assets, for the cessation of these railroad operations.
In 2023, other operating income, net, included $20 million of gains on land sales.
| Form 10-K ♦ Page 102 | |
Part II ♦ Item 8 – Financial Statements and Supplementary Data
In 2022, other operating income, net, included a $152 million pretax gain on the divestiture of the Colorado and Central Texas ready mixed concrete operations.
Note S: Other Nonoperating Income, Net
Other nonoperating income, net, is comprised generally of interest income; foreign currency transaction gains and losses; pension and postretirement benefit cost (excluding service cost); net equity earnings from nonconsolidated investments and other miscellaneous income and expenses. Other nonoperating income, net, was $58 million, $62 million and $53 million in 2024, 2023 and 2022, respectively. In 2024, other nonoperating income, net, included $40 million of interest income and $10 million of third-party railroad track maintenance expense. In 2023, other nonoperating income, net, included $47 million of interest income and $9 million of third-party railroad track maintenance expense. In 2022, other nonoperating income, net, included $14 million of interest income, a $12 million pretax gain related to the repurchase of the Company's debt and $8 million of third-party railroad track maintenance expense.
| Form 10-K ♦ Page 103 | |
Part II ♦ Item 9A – Controls and Procedures
Previous: Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE