filings.toolsItem 1. Financial Statements.
82K characters. Original on sec.gov · Markdown
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| (Dollars in Millions, Except Par Value Data) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 2,381.4 | $ | 207.3 | ||||
| Restricted cash | 1.7 | 97.1 | ||||||
| Accounts receivable, net | 801.9 | 575.1 | ||||||
| Inventories, net | 717.5 | 709.0 | ||||||
| Other current assets | 98.2 | 79.8 | ||||||
| Total Current Assets | 4,000.7 | 1,668.3 | ||||||
| Property, plant and equipment | 9,536.9 | 8,955.0 | ||||||
| Allowances for depreciation, depletion and amortization | (3,926.4 | ) | (3,712.7 | ) | ||||
| Net property, plant and equipment | 5,610.5 | 5,242.3 | ||||||
| Goodwill | 2,610.6 | 2,414.0 | ||||||
| Other intangibles, net | 787.2 | 508.0 | ||||||
| Operating lease right-of-use assets, net | 417.8 | 453.0 | ||||||
| Other noncurrent assets | 359.4 | 295.2 | ||||||
| Total Assets | $ | 13,786.2 | $ | 10,580.8 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 249.3 | $ | 207.8 | ||||
| Accrued salaries, benefits and payroll taxes | 65.5 | 82.6 | ||||||
| Accrued other taxes | 59.4 | 45.4 | ||||||
| Current maturities of long-term debt and short-term facilities | 20.1 | — | ||||||
| Accrued interest | 46.1 | 18.3 | ||||||
| Operating lease liabilities | 47.3 | 48.6 | ||||||
| Other current liabilities | 113.5 | 96.6 | ||||||
| Total Current Liabilities | 601.2 | 499.3 | ||||||
| Long-term debt | 5,099.4 | 2,625.8 | ||||||
| Deferred income taxes, net | 809.3 | 781.5 | ||||||
| Noncurrent operating lease liabilities | 375.9 | 410.4 | ||||||
| Other noncurrent liabilities | 542.2 | 370.5 | ||||||
| Total Liabilities | 7,428.0 | 4,687.5 | ||||||
| Equity: | ||||||||
| Common stock, par value $0.01 per share (62.4 and 62.3 shares outstanding at September 30, 2021 and December 31, 2020, respectively) | 0.6 | 0.6 | ||||||
| Preferred stock, par value $0.01 per share | — | — | ||||||
| Additional paid-in capital | 3,463.3 | 3,440.8 | ||||||
| Accumulated other comprehensive loss | (151.4 | ) | (158.4 | ) | ||||
| Retained earnings | 3,043.4 | 2,607.7 | ||||||
| Total Shareholders' Equity | 6,355.9 | 5,890.7 | ||||||
| Noncontrolling interests | 2.3 | 2.6 | ||||||
| Total Equity | 6,358.2 | 5,893.3 | ||||||
| Total Liabilities and Equity | $ | 13,786.2 | $ | 10,580.8 |
See accompanying notes to the consolidated financial statements.
Page 3 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (In Millions, Except Per Share Data) | ||||||||||||||||
| Products and services revenues | $ | 1,462.7 | $ | 1,240.7 | $ | 3,679.9 | $ | 3,321.2 | ||||||||
| Freight revenues | 94.6 | 80.7 | 237.7 | 229.1 | ||||||||||||
| Total Revenues | 1,557.3 | 1,321.4 | 3,917.6 | 3,550.3 | ||||||||||||
| Cost of revenues - products and services | 1,021.0 | 836.1 | 2,676.9 | 2,390.9 | ||||||||||||
| Cost of revenues - freight | 94.4 | 80.8 | 239.0 | 232.0 | ||||||||||||
| Total Cost of Revenues | 1,115.4 | 916.9 | 2,915.9 | 2,622.9 | ||||||||||||
| Gross Profit | 441.9 | 404.5 | 1,001.7 | 927.4 | ||||||||||||
| Selling, general & administrative expenses | 86.0 | 71.1 | 248.2 | 221.0 | ||||||||||||
| Acquisition-related expenses | 7.4 | 0.4 | 18.0 | 1.2 | ||||||||||||
| Other operating income, net | (8.4 | ) | (67.6 | ) | (28.2 | ) | (59.6 | ) | ||||||||
| Earnings from Operations | 356.9 | 400.6 | 763.7 | 764.8 | ||||||||||||
| Interest expense | 44.3 | 28.7 | 99.9 | 89.7 | ||||||||||||
| Other nonoperating income, net | (5.6 | ) | (4.0 | ) | (23.8 | ) | (5.9 | ) | ||||||||
| Earnings before income tax expense | 318.2 | 375.9 | 687.6 | 681.0 | ||||||||||||
| Income tax expense | 63.6 | 81.5 | 141.7 | 143.0 | ||||||||||||
| Consolidated net earnings | 254.6 | 294.4 | 545.9 | 538.0 | ||||||||||||
| Less: Net earnings attributable to noncontrolling interests | — | — | 0.2 | — | ||||||||||||
| Net Earnings Attributable to Martin Marietta Materials, Inc. | $ | 254.6 | $ | 294.4 | $ | 545.7 | $ | 538.0 | ||||||||
| Consolidated Comprehensive Earnings: | ||||||||||||||||
| Earnings attributable to Martin Marietta Materials, Inc. | $ | 256.2 | $ | 298.0 | $ | 552.7 | $ | 545.2 | ||||||||
| Earnings attributable to noncontrolling interests | — | — | 0.2 | — | ||||||||||||
| $ | 256.2 | $ | 298.0 | $ | 552.9 | $ | 545.2 | |||||||||
| Net Earnings Attributable to Martin Marietta Materials, Inc. | ||||||||||||||||
| Per Common Share: | ||||||||||||||||
| Basic attributable to common shareholders | $ | 4.08 | $ | 4.72 | $ | 8.74 | $ | 8.63 | ||||||||
| Diluted attributable to common shareholders | $ | 4.07 | $ | 4.71 | $ | 8.72 | $ | 8.61 | ||||||||
| Weighted-Average Common Shares Outstanding: | ||||||||||||||||
| Basic | 62.4 | 62.3 | 62.4 | 62.3 | ||||||||||||
| Diluted | 62.6 | 62.4 | 62.6 | 62.4 |
See accompanying notes to the consolidated financial statements.
Page 4 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Consolidated net earnings | $ | 545.9 | $ | 538.0 | ||||
| Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: | ||||||||
| Depreciation, depletion and amortization | 320.0 | 292.2 | ||||||
| Stock-based compensation expense | 33.0 | 22.4 | ||||||
| Gain on divestitures and sales of assets | (26.6 | ) | (71.2 | ) | ||||
| Deferred income taxes | 25.7 | 24.8 | ||||||
| Other items, net | (8.3 | ) | 0.8 | |||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | ||||||||
| Accounts receivable, net | (218.0 | ) | (104.5 | ) | ||||
| Inventories, net | 65.1 | (22.6 | ) | |||||
| Accounts payable | 66.9 | (0.8 | ) | |||||
| Other assets and liabilities, net | (23.4 | ) | 4.9 | |||||
| Net Cash Provided by Operating Activities | 780.3 | 684.0 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Additions to property, plant and equipment | (321.3 | ) | (250.8 | ) | ||||
| Acquisitions, net of cash acquired | (792.9 | ) | (64.0 | ) | ||||
| Proceeds from divestitures and sales of assets | 41.4 | 141.2 | ||||||
| Investments in life insurance contracts, net | 13.9 | (12.7 | ) | |||||
| Other investing activities, net | — | (5.4 | ) | |||||
| Net Cash Used for Investing Activities | (1,058.9 | ) | (191.7 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Borrowings of debt | 2,896.6 | 628.1 | ||||||
| Repayments of debt | (400.0 | ) | (777.0 | ) | ||||
| Payments on financing leases | (7.6 | ) | (2.3 | ) | ||||
| Debt issuance costs | (6.1 | ) | (2.0 | ) | ||||
| Distributions to owners of noncontrolling interest | (0.5 | ) | — | |||||
| Repurchases of common stock | — | (50.0 | ) | |||||
| Dividends paid | (109.7 | ) | (104.8 | ) | ||||
| Proceeds from exercise of stock options | 1.1 | 1.4 | ||||||
| Shares withheld for employees' income tax obligations | (16.5 | ) | (13.0 | ) | ||||
| Net Cash Provided by (Used for) Financing Activities | 2,357.3 | (319.6 | ) | |||||
| Net Increase in Cash, Cash Equivalents and Restricted Cash | 2,078.7 | 172.7 | ||||||
| Cash, Cash Equivalents and Restricted Cash, beginning of period | 304.4 | 21.0 | ||||||
| Cash, Cash Equivalents and Restricted Cash, end of period | $ | 2,383.1 | $ | 193.7 |
See accompanying notes to the consolidated financial statements.
Page 5 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY
| (In Millions, Except 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 June 30, 2021 | 62.4 | $ | 0.6 | $ | 3,451.1 | $ | (153.0 | ) | $ | 2,827.2 | $ | 6,125.9 | $ | 2.3 | $ | 6,128.2 | ||||||||||||||||
| Consolidated net earnings | — | — | — | — | 254.6 | 254.6 | — | 254.6 | ||||||||||||||||||||||||
| Other comprehensive earnings, net of tax | — | — | — | 1.6 | 1.6 | — | 1.6 | |||||||||||||||||||||||||
| Dividends declared ($0.61 per share) | — | — | — | — | (38.4 | ) | (38.4 | ) | — | (38.4 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | — | — | 0.4 | — | — | 0.4 | — | 0.4 | ||||||||||||||||||||||||
| Shares withheld for employees' income tax obligations | — | — | (0.4 | ) | — | — | (0.4 | ) | — | (0.4 | ) | |||||||||||||||||||||
| Stock-based compensation expense | — | — | 12.2 | — | — | 12.2 | — | 12.2 | ||||||||||||||||||||||||
| Balance at September 30, 2021 | 62.4 | $ | 0.6 | $ | 3,463.3 | $ | (151.4 | ) | $ | 3,043.4 | $ | 6,355.9 | $ | 2.3 | $ | 6,358.2 | ||||||||||||||||
| Balance at December 31, 2020 | 62.3 | $ | 0.6 | $ | 3,440.8 | $ | (158.4 | ) | $ | 2,607.7 | $ | 5,890.7 | $ | 2.6 | $ | 5,893.3 | ||||||||||||||||
| Consolidated net earnings | — | — | — | — | 545.7 | 545.7 | 0.2 | 545.9 | ||||||||||||||||||||||||
| Other comprehensive earnings, net of tax | — | — | — | 7.0 | — | 7.0 | — | 7.0 | ||||||||||||||||||||||||
| Dividends declared ($1.75 per share) | — | — | — | — | (110.0 | ) | (110.0 | ) | — | (110.0 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | 0.1 | — | 6.0 | — | — | 6.0 | — | 6.0 | ||||||||||||||||||||||||
| Shares withheld for employees' income tax obligations | — | — | (16.5 | ) | — | — | (16.5 | ) | — | (16.5 | ) | |||||||||||||||||||||
| Stock-based compensation expense | — | — | 33.0 | — | — | 33.0 | — | 33.0 | ||||||||||||||||||||||||
| Distributions to owners of noncontrolling interest | — | — | — | — | — | — | (0.5 | ) | (0.5 | ) | ||||||||||||||||||||||
| Balance at September 30, 2021 | 62.4 | $ | 0.6 | $ | 3,463.3 | $ | (151.4 | ) | $ | 3,043.4 | $ | 6,355.9 | $ | 2.3 | $ | 6,358.2 |
See accompanying notes to the consolidated financial statements.
Page 6 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY (Continued)
| (In Millions, Except 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 June 30, 2020 | 62.3 | $ | 0.6 | $ | 3,431.0 | $ | (142.2 | ) | $ | 2,201.7 | $ | 5,491.1 | $ | 2.5 | $ | 5,493.6 | ||||||||||||||||
| Consolidated net earnings | — | — | — | — | 294.4 | 294.4 | — | 294.4 | ||||||||||||||||||||||||
| Other comprehensive earnings, net of tax | — | — | — | 3.6 | — | 3.6 | — | 3.6 | ||||||||||||||||||||||||
| Dividends declared ($0.57 per share) | — | — | — | — | (35.6 | ) | (35.6 | ) | — | (35.6 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | — | — | 0.2 | — | — | 0.2 | — | 0.2 | ||||||||||||||||||||||||
| Stock-based compensation expense | — | — | 2.7 | — | — | 2.7 | — | 2.7 | ||||||||||||||||||||||||
| Balance at September 30, 2020 | 62.3 | $ | 0.6 | $ | 3,433.9 | $ | (138.6 | ) | $ | 2,460.5 | $ | 5,756.4 | $ | 2.5 | $ | 5,758.9 | ||||||||||||||||
| Balance at December 31, 2019 | 62.4 | $ | 0.6 | $ | 3,418.8 | $ | (145.8 | ) | $ | 2,077.2 | $ | 5,350.8 | $ | 2.5 | $ | 5,353.3 | ||||||||||||||||
| Consolidated net earnings | — | — | — | — | 538.0 | 538.0 | — | 538.0 | ||||||||||||||||||||||||
| Other comprehensive earnings, net of tax | — | — | — | 7.2 | — | 7.2 | — | 7.2 | ||||||||||||||||||||||||
| Dividends declared ($1.67 per share) | — | — | — | — | (104.7 | ) | (104.7 | ) | — | (104.7 | ) | |||||||||||||||||||||
| Issuances of common stock for stock award plans | 0.1 | — | 5.7 | — | — | 5.7 | — | 5.7 | ||||||||||||||||||||||||
| Shares withheld for employees' income tax obligations | — | — | (13.0 | ) | — | — | (13.0 | ) | — | (13.0 | ) | |||||||||||||||||||||
| Repurchases of common stock | (0.2 | ) | — | — | — | (50.0 | ) | (50.0 | ) | — | (50.0 | ) | ||||||||||||||||||||
| Stock-based compensation expense | — | — | 22.4 | — | — | 22.4 | — | 22.4 | ||||||||||||||||||||||||
| Balance at September 30, 2020 | 62.3 | $ | 0.6 | $ | 3,433.9 | $ | (138.6 | ) | $ | 2,460.5 | $ | 5,756.4 | $ | 2.5 | $ | 5,758.9 |
See accompanying notes to the consolidated financial statements.
Page 7 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Significant Accounting Policies |
|---|
Organization
Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of September 30, 2021, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 320 quarries, mines and distribution yards in 26 states, Canada and The Bahamas. In the southwestern and western United States, 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 has a leading aggregates position. 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, ready mixed concrete, asphalt and paving product lines are reported collectively as the “Building Materials” business.
The Company’s Building Materials business includes two reportable segments: the East Group and the West Group.
| BUILDING MATERIALS BUSINESS | ||||
|---|---|---|---|---|
| Reportable Segments | East Group | West Group | ||
| Operating Locations | Alabama, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, eastern Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Nova Scotia and The Bahamas | Arkansas, Colorado, Louisiana, western Nebraska, Oklahoma, Texas, Utah, Washington and Wyoming | ||
| Product Lines | Aggregates and Asphalt | Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving |
The Company’s Magnesia Specialties business, which represents a separate reportable segment, has manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries.
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited
Page 8 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events. As future events and their effects cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs.
Reclassifications
As of January 1, 2021, the Company reclassified accrued income taxes from Other current liabilities to Accrued other taxes on the Company’s consolidated balance sheet. Prior-year information has been reclassified to conform to current year presentation. The reclassification had no impact on the Company’s previously reported results of operations, financial position or cash flows.
Consolidated Comprehensive Earnings and Accumulated Other Comprehensive Loss
Consolidated comprehensive earnings and accumulated other comprehensive loss 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 earnings and comprehensive earnings.
Comprehensive earnings attributable to Martin Marietta is as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Net earnings attributable to Martin Marietta | $ | 254.6 | $ | 294.4 | $ | 545.7 | $ | 538.0 | ||||||||
| Other comprehensive earnings, net of tax | 1.6 | 3.6 | 7.0 | 7.2 | ||||||||||||
| Comprehensive earnings attributable to Martin Marietta | $ | 256.2 | $ | 298.0 | $ | 552.7 | $ | 545.2 |
Page 9 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Changes in accumulated other comprehensive loss, net of tax, are as follows:
| (Dollars in Millions) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pension and Postretirement Benefit Plans | Foreign Currency | Accumulated Other Comprehensive Loss | ||||||||||
| Three Months Ended September 30, 2021 | ||||||||||||
| Balance at beginning of period | $ | (153.5 | ) | $ | 0.5 | $ | (153.0 | ) | ||||
| Other comprehensive loss before reclassifications, net of tax | — | (0.6 | ) | (0.6 | ) | |||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 2.2 | — | 2.2 | |||||||||
| Other comprehensive earnings (loss), net of tax | 2.2 | (0.6 | ) | 1.6 | ||||||||
| Balance at end of period | $ | (151.3 | ) | $ | (0.1 | ) | $ | (151.4 | ) | |||
| Three Months Ended September 30, 2020 | ||||||||||||
| Balance at beginning of period | $ | (140.0 | ) | $ | (2.2 | ) | $ | (142.2 | ) | |||
| Other comprehensive earnings before reclassifications, net of tax | — | 0.5 | 0.5 | |||||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 3.1 | — | 3.1 | |||||||||
| Other comprehensive earnings, net of tax | 3.1 | 0.5 | 3.6 | |||||||||
| Balance at end of period | $ | (136.9 | ) | $ | (1.7 | ) | $ | (138.6 | ) |
| (Dollars in Millions) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pension and Postretirement Benefit Plans | Foreign Currency | Accumulated Other Comprehensive Loss | ||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||
| Balance at beginning of period | $ | (158.1 | ) | $ | (0.3 | ) | $ | (158.4 | ) | |||
| Other comprehensive earnings before reclassifications, net of tax | — | 0.2 | 0.2 | |||||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 6.8 | — | 6.8 | |||||||||
| Other comprehensive earnings, net of tax | 6.8 | 0.2 | 7.0 | |||||||||
| Balance at end of period | $ | (151.3 | ) | $ | (0.1 | ) | $ | (151.4 | ) | |||
| Nine Months Ended September 30, 2020 | ||||||||||||
| Balance at beginning of period | $ | (144.9 | ) | $ | (0.9 | ) | $ | (145.8 | ) | |||
| Other comprehensive loss before reclassifications, net of tax | — | (0.8 | ) | (0.8 | ) | |||||||
| Amounts reclassified from accumulated other comprehensive loss, net of tax | 8.0 | — | 8.0 | |||||||||
| Other comprehensive earnings (loss), net of tax | 8.0 | (0.8 | ) | 7.2 | ||||||||
| Balance at end of period | $ | (136.9 | ) | $ | (1.7 | ) | $ | (138.6 | ) |
Page 10 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Changes in net noncurrent deferred tax assets related to accumulated other comprehensive loss are as follows:
| Pension and Postretirement Benefit Plans | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Balance at beginning of period | $ | 87.9 | $ | 83.6 | $ | 89.4 | $ | 85.2 | ||||||||
| Tax effect of other comprehensive earnings | (0.8 | ) | (1.1 | ) | (2.3 | ) | (2.7 | ) | ||||||||
| Balance at end of period | $ | 87.1 | $ | 82.5 | $ | 87.1 | $ | 82.5 |
Reclassifications out of accumulated other comprehensive loss are as follows:
| Three Months Ended | Nine Months Ended | Affected line items in the | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | consolidated statements of earnings | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | and comprehensive earnings | ||||||||||||||
| (Dollars in Millions) | ||||||||||||||||||
| Pension and postretirement benefit plans | ||||||||||||||||||
| Amortization of: | ||||||||||||||||||
| Prior service credit | $ | — | $ | — | $ | — | $ | (0.1 | ) | |||||||||
| Actuarial loss | 3.0 | 4.2 | 9.1 | 10.8 | Other nonoperating income, net | |||||||||||||
| 3.0 | 4.2 | 9.1 | 10.7 | |||||||||||||||
| Tax benefit | (0.8 | ) | (1.1 | ) | (2.3 | ) | (2.7 | ) | Income tax expense | |||||||||
| $ | 2.2 | $ | 3.1 | $ | 6.8 | $ | 8.0 |
Earnings per Common Share
The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta reduced by dividends and undistributed earnings attributable to certain of the Company’s stock-based compensation. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. 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 are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three and nine months ended September 30, 2021 and 2020, the diluted per-share computations reflect the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.
Page 11 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following table reconciles the numerator and denominator for basic and diluted earnings per common share:
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (In Millions) | ||||||||||||||||
| Net earnings attributable to Martin Marietta | $ | 254.6 | $ | 294.4 | $ | 545.7 | $ | 538.0 | ||||||||
| Less: Distributed and undistributed earnings attributable to unvested awards | — | 0.3 | — | 0.5 | ||||||||||||
| Basic and diluted net earnings available to common shareholders attributable to Martin Marietta | $ | 254.6 | $ | 294.1 | $ | 545.7 | $ | 537.5 | ||||||||
| Basic weighted-average common shares outstanding | 62.4 | 62.3 | 62.4 | 62.3 | ||||||||||||
| Effect of dilutive employee and director awards | 0.2 | 0.1 | 0.2 | 0.1 | ||||||||||||
| Diluted weighted-average common shares outstanding | 62.6 | 62.4 | 62.6 | 62.4 |
Restricted Cash
At September 30, 2021 and December 31, 2020, the Company had restricted cash of $1.7 million and $97.1 million, respectively, which is 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 is restricted from utilizing the cash for purposes other than the purchase of the qualified assets for a designated period from receipt of the proceeds from the sale of the exchanged property. Any unused cash at the end of the designated period will be transferred to unrestricted accounts of the Company and can then be used for general corporate purposes. The Company has until January 10, 2022 to use the remaining restricted cash to purchase qualified assets under Section 1031.
In connection with Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230), the statement of cash flows reflects 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:
| September 30, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| Cash and cash equivalents | $ | 2,381.4 | $ | 207.3 | ||||
| Restricted cash | 1.7 | 97.1 | ||||||
| Total cash, cash equivalents and restricted cash presented in the consolidated statements of cash flows | $ | 2,383.1 | $ | 304.4 |
New Accounting Pronouncement
In March 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, an optional guidance for a limited period of time to ease the transition from the London interbank offered rate (“LIBOR”) to an alternative reference rate. The
Page 12 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
ASU intends to address certain concerns relating to accounting for contract modifications and hedge accounting. These optional expedients and exceptions to applying U.S. GAAP, assuming certain criteria are met, are allowed through December 31, 2022, and any amendments should be applied on a prospective basis. The Company does not expect the transition from LIBOR to have a material impact on its consolidated financial statements.
| 2. | Revenue Recognition |
|---|
Total revenues include sales of products and services to customers, net of any discounts or allowances, and freight revenues. Product revenues are recognized when control of the promised good is transferred to the customer, 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. Freight revenues reflect delivery arranged by the Company using a third party on behalf of the customer and are recognized consistently with the timing of the product revenues.
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. For product revenues and freight revenues, 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 due 30 days from invoice date.
Future revenues from unsatisfied performance obligations at September 30, 2021 and 2020 were $183.0 million and $150.2 million, respectively, where the remaining periods to complete these obligations ranged from one month to 21 months and one month to 13 months, respectively.
Page 13 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Revenue by Category. The following table presents the Company’s total revenues by category for each reportable segment.
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | ||||||||||||
| Products and Services | Freight | Total | ||||||||||
| (Dollars in Millions) | ||||||||||||
| East Group | $ | 641.8 | $ | 42.3 | $ | 684.1 | ||||||
| West Group | 749.0 | 45.8 | 794.8 | |||||||||
| Total Building Materials business | 1,390.8 | 88.1 | 1,478.9 | |||||||||
| Magnesia Specialties | 71.9 | 6.5 | 78.4 | |||||||||
| Total | $ | 1,462.7 | $ | 94.6 | $ | 1,557.3 | ||||||
| Three Months Ended | ||||||||||||
| September 30, 2020 | ||||||||||||
| Products and Services | Freight | Total | ||||||||||
| (Dollars in Millions) | ||||||||||||
| East Group | $ | 514.1 | $ | 35.2 | $ | 549.3 | ||||||
| West Group | 671.4 | 39.8 | 711.2 | |||||||||
| Total Building Materials business | 1,185.5 | 75.0 | 1,260.5 | |||||||||
| Magnesia Specialties | 55.2 | 5.7 | 60.9 | |||||||||
| Total | $ | 1,240.7 | $ | 80.7 | $ | 1,321.4 |
Service revenues, which include paving services located in Colorado , were $100.5 million and $112.8 million for the three months ended September 30, 2021 and 2020, respectively, and are reported in the West Group .
Page 14 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| Nine Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | ||||||||||||
| Products and Services | Freight | Total | ||||||||||
| (Dollars in Millions) | ||||||||||||
| East Group | $ | 1,610.9 | $ | 103.5 | $ | 1,714.4 | ||||||
| West Group | 1,861.9 | 116.3 | 1,978.2 | |||||||||
| Total Building Materials business | 3,472.8 | 219.8 | 3,692.6 | |||||||||
| Magnesia Specialties | 207.1 | 17.9 | 225.0 | |||||||||
| Total | $ | 3,679.9 | $ | 237.7 | $ | 3,917.6 | ||||||
| Nine Months Ended | ||||||||||||
| September 30, 2020 | ||||||||||||
| Products and Services | Freight | Total | ||||||||||
| (Dollars in Millions) | ||||||||||||
| East Group | $ | 1,371.8 | $ | 94.1 | $ | 1,465.9 | ||||||
| West Group | 1,785.4 | 118.8 | 1,904.2 | |||||||||
| Total Building Materials business | 3,157.2 | 212.9 | 3,370.1 | |||||||||
| Magnesia Specialties | 164.0 | 16.2 | 180.2 | |||||||||
| Total | $ | 3,321.2 | $ | 229.1 | $ | 3,550.3 |
Service revenues for the nine months ended September 30, 2021 and 2020 were $182.7 million and $221.3 million, respectively.
Contract Balances. Costs in excess of billings relate to the conditional right to consideration for completed contractual performance and are contract assets on the consolidated balance sheets. Costs in excess of billings are reclassified to accounts receivable when the right to consideration becomes unconditional. Billings in excess of costs relate to customers invoiced in advance of contractual performance and are contract liabilities on the consolidated balance sheets. The following table presents information about the Company’s contract balances:
| (Dollars in Millions) | September 30, 2021 | December 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Costs in excess of billings | $ | 10.8 | $ | 2.2 | ||||||
| Billings in excess of costs | $ | 10.7 | $ | 14.0 |
Revenues recognized from the beginning balance of contract liabilities for the three months ended September 30, 2021 and 2020 were $7.1 million and $8.5 million, respectively, and for the nine months ended September 30, 2021 and 2020 were $11.9 million and $7.2 million, respectively.
Retainage, which primarily relates to the paving services, represents amounts that have been billed to customers but payment withheld until final acceptance by the customer of the performance obligation. Included in other current assets on the Company’s consolidated balance sheets, retainage was $10.0 million and $10.6 million at September 30, 2021 and December 31, 2020, respectively.
Policy Elections. When the Company arranges 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
Page 15 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Company acts as a principal in the delivery arrangements and, as required by the accounting standard, the related revenues and costs are presented gross and are included in the consolidated statements of earnings.
| 3. | Business Combinations |
|---|
On July 30, 2021, the Company acquired assets of Southern Crushed Concrete (SCC). SCC is a leading producer of recycled concrete in the Houston area, one of the country’s largest addressable aggregates markets. Recycled concrete is principally used as a base aggregates product in infrastructure, commercial and residential construction applications. The Company acquired inventories; property, plant and equipment; intangible assets (including goodwill), and right-of-use assets; and assumed asset retirement obligations; lease obligations; and other liabilities. The goodwill generated by the transaction will be deductible for income tax purposes. Although the initial accounting for the business combination has been recorded, the fair values of these amounts are subject to change during the measurement period, which remains open as of September 30, 2021. The acquisition is reported in the Company’s West Group, but is immaterial for pro-forma financial statement disclosures.
On April 30, 2021, the Company completed the acquisition of Tiller Corporation (Tiller), a leading aggregates and hot mix asphalt supplier in the Minneapolis/St. Paul area, one of the largest and fastest growing midwestern metropolitan areas. The Tiller acquisition complements the Company’s existing product offerings in the surrounding areas. Additionally, Tiller sells asphalt solely as a materials provider and does not offer paving or other associated services. The Company financed the acquisition using available cash and borrowings under its credit facilities. The Company has recorded preliminary fair values of the assets acquired and liabilities assumed, which are subject to asset verification and a normal post-closing working capital adjustment. Therefore, the measurement period for property, plant and equipment and goodwill remains open as of September 30, 2021. The goodwill generated by the transaction will be deductible for income tax purposes. The acquisition is reported in the Company’s East Group, but is immaterial for pro-forma financial statement disclosures.
| 4. | Goodwill and Other Intangibles |
|---|
The following table shows the changes in goodwill by reportable segment and in total:
| East | West | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group | Group | Total | ||||||||||
| (Dollars in Millions) | ||||||||||||
| Balance at January 1, 2021 | $ | 572.5 | $ | 1,841.5 | $ | 2,414.0 | ||||||
| Acquisitions | 185.9 | 12.8 | 198.7 | |||||||||
| Goodwill allocated to assets held for sale | — | (2.1 | ) | (2.1 | ) | |||||||
| Balance at September 30, 2021 | $ | 758.4 | $ | 1,852.2 | $ | 2,610.6 |
Page 16 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Intangible assets subject to amortization consist of the following:
| Gross Amount | Accumulated Amortization | Net Balance | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions) | September 30, 2021 | |||||||||||
| Noncompetition agreements | $ | 4.2 | $ | (4.1 | ) | $ | 0.1 | |||||
| Customer relationships | 312.7 | (44.3 | ) | 268.4 | ||||||||
| Operating permits | 523.8 | (53.7 | ) | 470.1 | ||||||||
| Use rights and other | 16.4 | (13.8 | ) | 2.6 | ||||||||
| Trade names | 23.3 | (13.3 | ) | 10.0 | ||||||||
| Total | $ | 880.4 | $ | (129.2 | ) | $ | 751.2 | |||||
| December 31, 2020 | ||||||||||||
| Noncompetition agreements | $ | 4.2 | $ | (4.1 | ) | $ | 0.1 | |||||
| Customer relationships | 91.3 | (35.6 | ) | 55.7 | ||||||||
| Operating permits | 460.8 | (48.4 | ) | 412.4 | ||||||||
| Use rights and other | 16.3 | (13.0 | ) | 3.3 | ||||||||
| Trade names | 12.8 | (12.3 | ) | 0.5 | ||||||||
| Total | $ | 585.4 | $ | (113.4 | ) | $ | 472.0 |
At September 30, 2021 and December 31, 2020, intangible assets deemed to have an indefinite life and not being amortized consist of the following:
| (Dollars in Millions) | Building Materials business | Magnesia Specialties | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating permits | $ | 6.6 | $ | — | $ | 6.6 | ||||||
| Use rights | 26.7 | — | 26.7 | |||||||||
| Trade names | 0.2 | 2.5 | 2.7 | |||||||||
| Total | $ | 33.5 | $ | 2.5 | $ | 36.0 |
For the nine months ended September 30, 2021, the Company acquired $294.9 million of intangibles, which consists of the following:
| (Dollars in Millions) | Amount | Weighted-average amortization period | ||||
|---|---|---|---|---|---|---|
| Subject to amortization: | ||||||
| Customer relationships | $ | 221.4 | 24 years | |||
| Permits | 63.0 | 40 years | ||||
| Trade name | 10.5 | 9 years | ||||
| Total | $ | 294.9 | 27 years |
Total amortization expense for intangible assets for the nine months ended September 30, 2021 and 2020 was $15.2 million and $9.8 million, respectively.
Page 17 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The estimated amortization expense for intangibles for the remainder of 2021, each of the next four years, and thereafter is as follows:
| (Dollars in Millions) | ||||
|---|---|---|---|---|
| October - December 2021 | $ | 6.4 | ||
| 2022 | 25.0 | |||
| 2023 | 24.7 | |||
| 2024 | 24.4 | |||
| 2025 | 24.3 | |||
| Thereafter | 646.4 | |||
| Total | $ | 751.2 |
| 5**.** | Inventories, Net |
|---|
| September 30, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| Finished products | $ | 683.2 | $ | 667.0 | ||||
| Products in process | 25.6 | 37.1 | ||||||
| Raw materials | 55.9 | 35.3 | ||||||
| Supplies and expendable parts | 152.0 | 149.9 | ||||||
| 916.7 | 889.3 | |||||||
| Less: Allowances | (199.2 | ) | (180.3 | ) | ||||
| Total | $ | 717.5 | $ | 709.0 |
| 6**.** | Long-Term Debt |
|---|
| September 30, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| 0.650% Senior Notes, due 2023 | $ | 696.9 | $ | — | ||||
| 4.250% Senior Notes, due 2024 | 398.1 | 397.6 | ||||||
| 7% Debentures, due 2025 | 124.5 | 124.5 | ||||||
| 3.450% Senior Notes, due 2027 | 297.9 | 297.6 | ||||||
| 3.500% Senior Notes, due 2027 | 496.2 | 495.8 | ||||||
| 2.500% Senior Notes, due 2030 | 490.9 | 490.1 | ||||||
| 2.400% Senior Notes, due 2031 | 891.7 | — | ||||||
| 6.25% Senior Notes, due 2037 | 228.3 | 228.2 | ||||||
| 4.250% Senior Notes, due 2047 | 592.0 | 591.9 | ||||||
| 3.200% Senior Notes, due 2051 | 882.9 | — | ||||||
| Trade Receivable Facility, interest rate of 0.77 % at September 30, 2021 | 20.0 | — | ||||||
| Other notes | 0.1 | 0.1 | ||||||
| Total debt | 5,119.5 | 2,625.8 | ||||||
| Less: Current maturities of long-term debt | (20.1 | ) | — | |||||
| Long-term debt | $ | 5,099.4 | $ | 2,625.8 |
Page 18 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On July 2, 2021, the Company issued $700 million aggregate principal amount of 0.650% Senior Notes due 2023 (the 0.650% Senior Notes), $900 million aggregate principal amount of 2.400% Senior Notes due 2031 (the 2.400% Senior Notes) and $900 million aggregate principal amount of 3.200% Senior Notes due 2051 (the 3.200% Senior Notes) and, together with the 0.650% Senior Notes and the 2.400% Senior Notes (the Senior Notes), 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 Fourth Supplemental Indenture, dated as of July 2, 2021 and, together with the Base Indenture (the Indenture) between the Company and Regions Bank, as trustee, governing the Senior Notes. The Senior Notes are carried net of original issue discount, which will be amortized using the effective interest method over the lives of the issues. The Company used the net proceeds of the 2.400% Senior Notes, the 3.200% Senior Notes and the 0.650% Senior Notes to pay the consideration for the acquisition of Lehigh Hanson, Inc.’s West Region (Lehigh West Region) business, and for general corporate purposes. See Note 16 for more information on the Lehigh West Region acquisition, which was consummated on October 1, 2021.
Prior to July 2, 2022 (the 2023 Par Call Date), the Company may redeem the 0.650% Senior Notes, at its option, at any time in whole or from time to time in part at a price equal to the greater of: (i) 100% of the principal amount of the 0.650% Senior Notes to be redeemed and (ii) the sum of the present values of the principal amount of the 0.650% Senior Notes to be redeemed and the remaining scheduled payments of interest thereon after the date of optional redemption (a 2023 Optional Redemption Date) through the 2023 Par Call Date (assuming, for this purpose, that the 0.650% Senior Notes are scheduled to mature on the 2023 Par Call Date), excluding interest, if any, accrued thereon to such 2023 Optional Redemption Date, discounted to such 2023 Optional Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Indenture) plus 10 basis points (or 0.100%) plus, in each case, unpaid interest, if any, accrued thereon to, but excluding, such 2023 Optional Redemption Date. On or after the 2023 Par Call Date and prior to maturity, the Company may redeem the 0.650% Senior Notes at any time in whole or from time to time in part at a price equal to 100% of the principal amount of the 0.650% Senior Notes, at its option, to be redeemed, plus unpaid interest, if any, accrued thereon to, but excluding, the 2023 Optional Redemption Date.
Prior to April 15, 2031 (the 2031 Par Call Date), the Company may redeem the 2.400% Senior Notes, at its option, at any time in whole or from time to time in part at a price equal to the greater of: (i) 100% of the principal amount of the 2.400% Senior Notes to be redeemed and (ii) the sum of the present values of the principal amount of the 2.400% Senior Notes to be redeemed and the remaining scheduled payments of interest thereon after the date of optional redemption (a 2031 Optional Redemption Date) through the 2031 Par Call Date (assuming, for this purpose, that the 2.400% Senior Notes are scheduled to mature on the 2031 Par Call Date), excluding interest, if any, accrued thereon to such 2031 Optional Redemption Date, discounted to such 2031 Optional Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Indenture) plus 15 basis points (or 0.150%) plus, in each case, unpaid interest, if any, accrued thereon to, but excluding, such 2031 Optional Redemption Date. On or after the 2031 Par Call Date and prior to maturity, the Company may redeem the 2.400% Senior Notes at any time in whole or from time to time in part at a price equal to 100% of the principal amount of the 2.400% Senior Notes, at its option, to be redeemed, plus unpaid interest, if any, accrued thereon to, but excluding, the 2031 Optional Redemption Date.
Page 19 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Prior to January 15, 2051 (the 2051 Par Call Date), the Company may redeem the 3.200% Senior Notes, at its option, at any time in whole or from time to time in part at a price equal to the greater of: (i) 100% of the principal amount of the 3.200% Senior Notes to be redeemed and (ii) the sum of the present values of the principal amount of the 3.200% Senior Notes to be redeemed and the remaining scheduled payments of interest thereon after the date of optional redemption (a 2051 Optional Redemption Date) through the 2051 Par Call Date (assuming, for this purpose, that the 3.200% Senior Notes are scheduled to mature on the 2051 Par Call Date), excluding interest, if any, accrued thereon to such 2051 Optional Redemption Date, discounted to such 2051 Optional Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Indenture) plus 20 basis points (or 0.200%) plus, in each case, unpaid interest, if any, accrued thereon to, but excluding, such 2051 Optional Redemption Date. On or after the 2051 Par Call Date and prior to maturity, the Company may redeem the 3.200% Senior Notes at any time in whole or from time to time in part at a price equal to 100% of the principal amount of the 3.200% Senior Notes, at its option, to be redeemed, plus unpaid interest, if any, accrued thereon to, but excluding, the 2051 Optional Redemption Date.
The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility). On September 22, 2021 the Company extended the maturity to September 21, 2022. The Trade Receivable Facility, with Truist Bank, Regions Bank, PNC Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, LTD. (New York Branch), and certain other lenders that may become a party to the facility from time to time, is backed by eligible trade receivables, as defined, and is limited to the lesser of the facility limit or the borrowing base, as defined. These receivables are originated by the Company and then sold by the Company 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 asset-backed commercial paper costs of conduit lenders plus 0.60% for borrowings funded by conduit lenders and one-month LIBOR plus 0.70%, subject to change in the event that this rate no longer reflects the lender’s cost of lending, for borrowings funded by all other lenders. 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. There was $20.0 million outstanding under the Trade Receivable Facility at September 30, 2021, and no borrowings outstanding at December 31, 2020.
The Company has a $700 million five-year senior unsecured revolving facility (the Revolving Facility) with JPMorgan Chase Bank, N.A., as Administrative Agent, Truist Bank, Deutsche Bank Securities, Inc., and Wells Fargo Bank, N.A., as Co-Syndication Agents, and the lenders party thereto. Borrowings under the Revolving Facility bear interest, at the Company’s option, at rates based upon LIBOR or a base rate, plus, for each rate, a margin determined in accordance with a ratings-based pricing grid. There were no borrowings outstanding under the Revolving Facility at September 30, 2021 or December 31, 2020. The Revolving Facility requires the Company’s ratio of consolidated debt-to-consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by the Revolving Facility, for the trailing-twelve months (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during such quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 3.75x. Additionally, if there are no amounts outstanding under the Revolving Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Company is a co-borrower, may be reduced by the Company’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million, for purposes of the covenant calculation. The Company was in compliance with this covenant at September 30, 2021.
The Revolving Facility expires on December 5, 2024, with any outstanding principal amounts, together with interest accrued thereon, due in full on that date. Available borrowings under the Revolving Facility are reduced by any
Page 20 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
outstanding letters of credit issued by the Company under the Revolving Facility. The Company had $2.6 million of outstanding letters of credit issued under the Revolving Facility at September 30, 2021 and December 31, 2020.
| 7**.** | 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. The estimated fair values for all financial instruments are estimated based on Level 2 of the fair value hierarchy.
Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposits. The Company’s cash equivalents have original 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 is held in a trust account with a third-party intermediary. Due to the short-term nature of this account, the fair value of restricted cash approximates its carrying 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. No single customer accounted for 10% or more of consolidated total revenues in the three-month and nine-month periods ended September 30, 2021 and 2020. The estimated fair values of accounts receivable approximate their carrying amounts due to the short-term nature of the accounts.
Accounts payable represent amounts owed to suppliers and vendors. The estimated fair value of accounts payable approximates the carrying amount due to the short-term nature of the payables.
The carrying values and fair values of the Company’s long-term debt were $5.12 billion and $5.49 billion, respectively, at September 30, 2021 and $2.63 billion and $3.08 billion, respectively, at December 31, 2020. The estimated fair value of the publicly-registered long-term notes was estimated using quoted market prices. The estimated fair values of other borrowings approximate their carrying amounts as the interest rates reset periodically.
| 8**.** | Income Taxes |
|---|
The effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with the statutory depletion deduction for mineral reserves. For the nine months ended September 30, 2021, the effective income tax rate was 20.6%, which included a $2.9 million discrete benefit for research and development tax credits. For the nine months ended September 30, 2020, the effective income tax rate of 21.0% reflected a $6.9 million discrete benefit from financing third-party railroad track maintenance. In exchange, the Company received a federal income tax credit and deduction.
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 and comprehensive earnings.
Page 21 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| 9**.** | Pension and Postretirement Benefits |
|---|
The estimated components of the recorded net periodic benefit cost (credit) for pension and postretirement benefits are as follows:
| Pension | Postretirement Benefits | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended September 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Service cost | $ | 11.6 | $ | 9.8 | $ | — | $ | — | ||||||||
| Interest cost | 8.9 | 9.3 | 0.1 | 0.1 | ||||||||||||
| Expected return on assets | (17.7 | ) | (15.2 | ) | — | — | ||||||||||
| Amortization of: | ||||||||||||||||
| Prior service cost (credit) | 0.2 | 0.2 | (0.2 | ) | (0.2 | ) | ||||||||||
| Actuarial loss | 3.0 | 4.2 | — | — | ||||||||||||
| Net periodic benefit cost (credit) | $ | 6.0 | $ | 8.3 | $ | (0.1 | ) | $ | (0.1 | ) |
| Pension | Postretirement Benefits | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nine Months Ended September 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Service cost | $ | 34.7 | $ | 29.4 | $ | — | $ | — | ||||||||
| Interest cost | 26.7 | 27.8 | 0.2 | 0.3 | ||||||||||||
| Expected return on assets | (52.8 | ) | (43.8 | ) | — | — | ||||||||||
| Amortization of: | ||||||||||||||||
| Prior service cost (credit) | 0.5 | 0.5 | (0.5 | ) | (0.6 | ) | ||||||||||
| Actuarial loss (gain) | 9.2 | 10.9 | (0.1 | ) | (0.1 | ) | ||||||||||
| Net periodic benefit cost (credit) | $ | 18.3 | $ | 24.8 | $ | (0.4 | ) | $ | (0.4 | ) |
The service cost component of net periodic benefit cost (credit) is included in Cost of revenues – products and services and Selling, general and administrative expenses. All other components are included in Other nonoperating income, net, in the consolidated statements of earnings and comprehensive earnings.
| 10**.** | Commitments and Contingencies |
|---|
Legal and Administrative Proceedings
The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities, including matters relating to environmental protection. The Company considers various factors in assessing the probable outcome of each matter, including but not limited to the nature of existing legal proceedings and claims, the asserted or possible damages, the jurisdiction and venue of the case and whether it is a jury trial, the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, the Company’s experience in similar cases and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond to the proceeding or claim. The Company’s assessment of these factors may change over time as proceedings or claims progress. The Company believes the probability is remote that the outcome of any currently pending legal or administrative proceeding will result in a material loss to the Company as a whole, based on currently available facts.
Page 22 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Borrowing Arrangements with Affiliate
The Company is a co-borrower with an unconsolidated affiliate for a $12.5 million revolving line of credit agreement with Truist Bank, of which $5.4 million was outstanding as of September 30, 2021 and has a maturity date of March 2022. The affiliate has agreed to reimburse and indemnify the Company for any payments and expenses the Company may incur from this agreement. The Company holds a lien on the affiliate’s membership interest in a joint venture as collateral for payment under the revolving line of credit.
In addition, the Company has a $6.0 million interest-only loan, due December 31, 2022, outstanding from this unconsolidated affiliate as of September 30, 2021 and December 31, 2020. The interest rate is one-month LIBOR plus a current spread of 1.75%.
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 September 30, 2021, the Company was contingently liable for $35.0 million in letters of credit, of which $2.6 million were issued under the Company’s Revolving Facility.
| 11. | Business Segments |
|---|
The Building Materials business contains two reportable segments: the East Group and the West Group. The Company also has a Magnesia Specialties segment. The Company’s evaluation of performance and allocation of resources are based primarily on earnings from operations. Consolidated earnings from operations include total revenues less cost of revenues; selling, general and administrative expenses; acquisition-related expenses; other operating income and expenses, net; and exclude interest expense; other nonoperating income and expenses, net; and income taxes. Corporate loss from operations primarily includes depreciation; expenses for corporate administrative functions; acquisition-related expenses; and other nonrecurring income and expenses excluded from the Company’s evaluation of business segment performance and resource allocation. All long-term debt and related interest expense are held at Corporate.
The following table displays selected financial data for the Company’s reportable segments. Total revenues, as presented on the consolidated statements of earnings and comprehensive earnings, exclude intersegment revenues, which represent sales from one segment to another segment and are eliminated in consolidation.
Page 23 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Total revenues: | ||||||||||||||||
| East Group | $ | 684.1 | $ | 549.3 | $ | 1,714.4 | $ | 1,465.9 | ||||||||
| West Group | 794.8 | 711.2 | 1,978.2 | 1,904.2 | ||||||||||||
| Total Building Materials business | 1,478.9 | 1,260.5 | 3,692.6 | 3,370.1 | ||||||||||||
| Magnesia Specialties | 78.4 | 60.9 | 225.0 | 180.2 | ||||||||||||
| Total | $ | 1,557.3 | $ | 1,321.4 | $ | 3,917.6 | $ | 3,550.3 | ||||||||
| Products and services revenues: | ||||||||||||||||
| East Group | $ | 641.8 | $ | 514.1 | $ | 1,610.9 | $ | 1,371.8 | ||||||||
| West Group | 749.0 | 671.4 | 1,861.9 | 1,785.4 | ||||||||||||
| Total Building Materials business | 1,390.8 | 1,185.5 | 3,472.8 | 3,157.2 | ||||||||||||
| Magnesia Specialties | 71.9 | 55.2 | 207.1 | 164.0 | ||||||||||||
| Total | $ | 1,462.7 | $ | 1,240.7 | $ | 3,679.9 | $ | 3,321.2 | ||||||||
| Earnings (Loss) from operations: | ||||||||||||||||
| East Group | $ | 205.8 | $ | 181.4 | $ | 465.3 | $ | 386.1 | ||||||||
| West Group | 150.6 | 212.3 | 284.2 | 368.2 | ||||||||||||
| Total Building Materials business | 356.4 | 393.7 | 749.5 | 754.3 | ||||||||||||
| Magnesia Specialties | 23.1 | 16.4 | 69.8 | 51.2 | ||||||||||||
| Corporate | (22.6 | ) | (9.5 | ) | (55.6 | ) | (40.7 | ) | ||||||||
| Total | $ | 356.9 | $ | 400.6 | $ | 763.7 | $ | 764.8 |
| September 30, 2021 | December 31, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets employed: | (Dollars in Millions) | |||||||
| East Group | $ | 5,075.9 | $ | 4,342.5 | ||||
| West Group | 5,613.4 | 5,355.5 | ||||||
| Total Building Materials business | 10,689.3 | 9,698.0 | ||||||
| Magnesia Specialties | 169.6 | 167.9 | ||||||
| Corporate | 2,927.3 | 714.9 | ||||||
| Total | $ | 13,786.2 | $ | 10,580.8 |
The increase in assets from December 31, 2020 to September 30, 2021 primarily relates to the proceeds from the Senior Notes issued in July 2021, new right-of-use assets for finance leases and the Tiller and SCC acquisitions. The proceeds from the Senior Notes issuance are reflected as Corporate assets as of September 30, 2021.
Page 24 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| 12. | Revenues and Gross Profit |
|---|
The Building Materials business includes the aggregates, cement, ready mixed concrete and asphalt and paving product lines. Cement and ready mixed concrete product lines and paving services reside only in the West Group. The following table, which is reconciled to consolidated amounts, provides total revenues and gross profit by product line.
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Dollars in Millions) | ||||||||||||||||
| Total revenues: | ||||||||||||||||
| Building Materials business: | ||||||||||||||||
| Products and services: | ||||||||||||||||
| Aggregates | $ | 857.1 | $ | 766.9 | $ | 2,231.5 | $ | 2,092.1 | ||||||||
| Cement | 132.3 | 115.6 | 358.4 | 331.7 | ||||||||||||
| Ready mixed concrete | 320.8 | 254.6 | 824.5 | 689.4 | ||||||||||||
| Asphalt and paving services | 195.9 | 129.8 | 343.5 | 254.9 | ||||||||||||
| Less: interproduct revenues | (115.3 | ) | (81.4 | ) | (285.1 | ) | (210.9 | ) | ||||||||
| Products and services | 1,390.8 | 1,185.5 | 3,472.8 | 3,157.2 | ||||||||||||
| Freight | 88.1 | 75.0 | 219.8 | 212.9 | ||||||||||||
| Total Building Materials business | 1,478.9 | 1,260.5 | 3,692.6 | 3,370.1 | ||||||||||||
| Magnesia Specialties: | ||||||||||||||||
| Products and services | 71.9 | 55.2 | 207.1 | 164.0 | ||||||||||||
| Freight | 6.5 | 5.7 | 17.9 | 16.2 | ||||||||||||
| Total Magnesia Specialties | 78.4 | 60.9 | 225.0 | 180.2 | ||||||||||||
| Total | $ | 1,557.3 | $ | 1,321.4 | $ | 3,917.6 | $ | 3,550.3 | ||||||||
| Gross profit (loss): | ||||||||||||||||
| Building Materials business: | ||||||||||||||||
| Products and services: | ||||||||||||||||
| Aggregates | $ | 292.9 | $ | 279.1 | $ | 687.7 | $ | 640.4 | ||||||||
| Cement | 49.9 | 46.5 | 101.3 | 117.2 | ||||||||||||
| Ready mixed concrete | 31.4 | 24.7 | 69.9 | 56.7 | ||||||||||||
| Asphalt and paving services | 38.9 | 32.6 | 59.4 | 46.4 | ||||||||||||
| Products and services | 413.1 | 382.9 | 918.3 | 860.7 | ||||||||||||
| Freight | 1.3 | 0.9 | 1.7 | 0.3 | ||||||||||||
| Total Building Materials business | 414.4 | 383.8 | 920.0 | 861.0 | ||||||||||||
| Magnesia Specialties: | ||||||||||||||||
| Products and services | 28.1 | 21.0 | 84.4 | 65.3 | ||||||||||||
| Freight | (1.1 | ) | (1.0 | ) | (3.0 | ) | (3.2 | ) | ||||||||
| Total Magnesia Specialties | 27.0 | 20.0 | 81.4 | 62.1 | ||||||||||||
| Corporate | 0.5 | 0.7 | 0.3 | 4.3 | ||||||||||||
| Total | $ | 441.9 | $ | 404.5 | $ | 1,001.7 | $ | 927.4 |
Page 25 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| 13. | Supplemental Cash Flow Information |
|---|
Noncash investing and financing activities are as follows:
| Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| Noncash investing and financing activities: | ||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 177.8 | $ | 15.0 | ||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 17.3 | $ | 29.3 | ||||
| Accrued liabilities for purchases of property, plant and equipment | $ | 28.6 | $ | 30.5 | ||||
| Remeasurement of operating lease right-of-use assets | $ | (12.4 | ) | $ | 1.9 | |||
For the nine months ended September 30, 2021, the right-of-use assets obtained in exchange for new finance lease liabilities balance was primarily attributable to the leases of the new corporate headquarters, production equipment and leases assumed as part acquisitions completed during the year.
Supplemental disclosures of cash flow information are as follows:
| Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Dollars in Millions) | ||||||||
| Cash paid for interest, net of capitalized amount | $ | 68.7 | $ | 74.7 | ||||
| Cash paid for income taxes, net of refunds | $ | 101.1 | $ | 68.9 |
During the nine months ended September 30, 2021 and 2020, the Company received proceeds of $13.9 million and repaid $13.7 million of loans, respectively, related to its company-owned life insurance policies. The proceeds and repayment, as applicable, are included in the Investments in life insurance contracts, net, in the investing activities of the consolidated statements of cash flows.
| 14. | Other Operating Income, Net |
|---|
Other operating income, net, for the nine months ended September 30, 2021 included a gain on the sale of the Company’s former corporate headquarters of $12.3 million. Other operating income, net for the three and nine months ended September 30, 2020 included $69.9 million on nonrecurring gains on the sales of investment land and divested assets, which are recorded in the West Group.
Page 26 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| 15. | Other Nonoperating Income, Net |
|---|
For the three and nine months ended September 30, 2021, the increase in other nonoperating income, net, was primarily attributable to lower pension expense of $3.9 million and $11.8 million, respectively, compared with the prior-year periods. For the nine months ended September 30, 2020, other nonoperating income, net, included $5.6 million of third-party railroad track maintenance expense and reflected a $8.9 million reduction in pension expense compared with the prior-year period.
| 16. | Subsequent Event |
|---|
On October 1, 2021, the Company successfully completed its previously announced acquisition of the Lehigh West Region business for $2.3 billion in cash. The acquisition was primarily financed using proceeds from the issuance of publicly traded debt during the quarter ended September 30, 2021.
Lehigh West Region has a portfolio of 17 active aggregates quarries, two cement plants (with related distribution terminals), and targeted downstream operations in four states. These operations provide a new upstream, materials-led growth platform across several of the nation’s largest and fastest growing megaregions in California and Arizona, solidifying the Company’s position as a leading coast-to-coast aggregates producer.
The acquisition reflects a stock transaction where the Company acquired 100% of the voting interest of the legal entities that comprise the Lehigh West Region. For tax purposes, the acquisition is being treated as an asset transaction. The Company acquired inventories; property, plant and equipment; intangible assets; right-of-use assets; and other assets; and assumed accrued liabilities, asset retirement obligations, lease obligations and other liabilities. The Company did not acquire any of Lehigh West Region’s cash, cash equivalents or accounts receivable nor did it assume any accounts payable, outstanding debt, or pension obligation. The Company is in the process of determining the acquisition-date fair values of assets acquired and liabilities assumed, and as of November 2, 2021, the initial accounting for the business combination has not been completed.
Page 27 of 54
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.