Martin Marietta Materials Inc. (MLM), a provider of aggregates for the construction industry, on Tuesday reported a net loss for the fourth quarter compared to a profit in the year-ago period. The latest quarter's results were negatively impacted by a legal reserve as well as a 20% decline in revenues.
Net loss attributable to the company for the fourth quarter was $3.2 million or $0.07 per share, compared to net income of $25.3 million or $0.60 per share in the year-ago quarter.
The company noted that the West Group legal reserve decreased earnings per share for the latest quarter by $0.18. In January 2010, the Missouri Supreme Court declined to accept the company's appeal on a matter pending between the company and the City of Greenwood, Missouri. Accordingly, the company recorded an $11.9 million legal reserve as of December 31, 2009.
Loss from continuing operations for the latest quarter was $2.7 million or $0.07 per share, compared to earnings from continuing operations of $26.5 million or $0.60 per share a year ago. On average, sixteen analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter decreased 20.3% to $374.7 million from $470.5 million last year. Analysts had a consensus revenue estimate for the quarter of $383.01 million.
Net sales for the latest quarter were $327.8 million, down 20.7% from $413.5 million in the previous-year quarter. Freight and delivery revenues declined to $46.9 million from $57.0 million a year ago.
Gross profit for the quarter fell to $59.7 million from $104.0 million in the same period last year. Operating margin for the quarter was 3.9%, down from 12.8% a year ago.
Net sales for the Aggregates business declined 23.8% to $290.1 million from $380.7 million a year ago. The company noted that aggregates pricing at heritage locations was down 1.1% and volume decreased 24.3%. Earnings from operations for the quarter were $9.0 million, down from $68.0 million in the year-ago period.
Specialty Products' fourth-quarter net sales increased 15.2% to $37.7 million from $32.8 million in the previous-year quarter, while earnings from operations for the fourth quarter rose to $9.6 million from $0.7 million in the year-ago period.
During the fourth quarter, Martin Marietta sold 726,200 shares of its common stock at an average price of $85.78 per share, raising $60.9 million after related expenses.
The company said it pays non-forfeitable dividend equivalents during the vesting period on its restricted stock awards and incentive stock awards, which results in these being considered participating securities.
Accordingly, diluted earnings per share for the year-ago quarter, previously reported as $0.60, remains unchanged. Meanwhile, diluted earnings per share for the year ended December 31, 2008, previously reported as $4.20, has been adjusted and is now reported as $4.18.
For fiscal year 2009, net earnings attributable to the company were $85.5 million or $1.91 per share, down from $176.3 million or $4.18 per share in the prior year.
Martin Marietta noted that West Group legal reserve decreased earnings per share for the latest year by $0.18.
Earnings from continuing operations for the year dropped to $87.9 million or $1.90 per share from $175.0 million or $4.07 per share in the previous year. Analysts expected the company to report earnings of $2.33 per share for the year.
The company posted an after-tax gain on discontinued operations of $0.3 million in the year, compared with $4.8 million in the prior year.
Total revenues for the year dropped 19.8% to $1.70 billion from $2.12 billion in the previous year. Wall Street analysts had a consensus revenue estimate for the year of $1.70 billion.
Net sales for the year declined 19.4% to $1.50 billion from $1.86 billion in the previous year, while freight and delivery revenues declined to $206.0 million from $256.7 million in the prior year.
Ward Nye, President and CEO of Martin Marietta Materials, stated, "In 2009, Martin Marietta Materials successfully navigated the most difficult economic environment we have seen in our industry since the Great Depression. However, because of our ability to achieve positive pricing growth and by maintaining our discipline and focusing on controlling the Corporation's costs, we were able to remain profitable and generate significant cash flows despite the 15th consecutive quarter of declining shipment volume."
Martin Marietta noted that each of its end markets, with the exception of its chemical rock and ballast product sales, experienced a volume decline during the year. The infrastructure construction market, which represented 55% of shipments in 2009, was weakened as state budgets were negatively impacted by the prolonged recession and further exacerbated by the expiration of the federal highway bill in September 2009.
The company noted that the federal highway program continued to operate under a Congressional continuing resolution. However, the absence of a fully enacted multi-year appropriation left state departments of transportation reluctant to initiate and undertake new multiyear construction projects.
The company ended fiscal year 2009 with $264 million in cash and cash equivalents, available borrowings of $323 million on its revolving credit agreement and available borrowings of $100 million on the company's secured accounts receivable credit facility. Capital expenditures for the year were $139.2 million, down from $258.2 million in the prior year.
For the full year, Martin Marietta sold 3.8 million shares of common stock at an average price of $79.42 per share, raising net proceeds of $293.4 million.
Looking ahead to fiscal year 2010, Martin Marietta expects a 2%-4% increase in overall aggregates volume. However, the company noted that if the decline in commercial construction is greater than anticipated, volumes may be flat or down compared with the prior year.
In Tuesday's regular trading session, MLM is currently trading at $76.32, down $3.29 or 4.13% on a volume of 0.65 million shares.
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