Martin Marietta Materials Q1 2025 Earnings Report

Martin Marietta Materials EPS Results

• Actual EPS: $1.90
• Consensus EPS: $1.88
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $1.93

Martin Marietta Materials Revenue Results

• Actual Revenue: $1.35 billion
• Expected Revenue: $1.36 billion
• Beat/Miss: Missed by -$2.16 million
• YoY Revenue Growth: +8.20%

Martin Marietta Materials Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 11:00AM ET

Martin Marietta Materials (NYSE:MLM), a natural resource-based building materials company, supplies aggregates and heavy-side building materials to the construction industry in the United States and internationally. It offers crushed stone, sand, and gravel products; ready mixed concrete and asphalt; paving products and services; and Portland and specialty cement for use in the infrastructure projects, and nonresidential and residential construction markets, as well as in the railroad, agricultural, utility, and environmental industries. The company also produces magnesia-based chemicals products; dolomitic lime primarily to customers for steel production and soil stabilization; and cement treated materials. Its chemical products are used in flame retardants, wastewater treatment, pulp and paper production, and other environmental applications. The company was founded in 1939 and is headquartered in Raleigh, North Carolina.

Martin Marietta Materials Q1 2025 Earnings Call Transcript

Key Takeaways

• Martin Marietta delivered a record first quarter with aggregate revenues, gross profit and margins all at all‐time highs (7% pricing growth driving a 23% rise in gross profit to $335 million and a 300 bp margin uplift).
• The company reaffirmed its 2025 adjusted EBITDA guidance of $2.25 billion at the midpoint, citing double‐digit organic shipment growth, strong April price realizations, and resilient end‐market demand.
• Federal and state infrastructure spending remains robust, with only one‐third of IIJA funds reimbursed to date and budgets increasing in eight of the top ten operating states, supporting sustained aggregate volumes and pricing.
• Magnesia Specialties posted all‐time quarterly records for revenue ($87 million), gross profit ($30.8 million) and margin (40.4%), and the business is positioned for further organic and inorganic growth.
• A CFO transition is underway with Bob Carden appointed interim CFO following Jim Nicholas’ departure, ensuring leadership continuity as the search for a permanent CFO continues.

Presentation

[Operator]

Ladies and gentlemen, welcome to Martin Marietta's First Quarter twenty twenty five Earnings Conference Call. All participants are now in a listen only mode and a question and answer session will follow the company's prepared remarks. As a reminder, today's call is being recorded and will be available for replay on the company's website. I will now turn the call over to your host, Ms. Jacqueline Rooker, Martin Marietta's Director of Investor Relations.

[Operator]

Jacqueline, you may begin.

[Jacklyn Rooker, Director of Investor Relations at Martin Marietta Materials]

Good morning, and welcome to Martin Marietta's First Quarter twenty twenty five Earnings Call. Joining me today are Ward Nye, Chair and Chief Executive Officer and Bob Carden, Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer. Today's discussion may include forward looking statements as defined by United States securities laws in connection with future events, future operating results, or financial performance. Like other businesses, Martin Marietta is subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation, except as legally required, to publicly update or revise any forward looking statements, whether resulting from new information, future developments, or otherwise.

[Jacklyn Rooker, Director of Investor Relations at Martin Marietta Materials]

Please refer to the legal disclaimers contained in today's earnings release and other public filings, which are available on both our own and the Securities and Exchange Commission's websites. We have made available during this webcast and on the Investors section of our website supplemental information that summarizes our financial results and trends. Non GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix to the supplemental information, as well as our filings with the SEC and are also available on our website. Ward Nye will begin today's earnings call with a discussion of our operating performance, 2025 outlook, and related market trends. Bob Carden will then review our financial results and capital allocation.

[Jacklyn Rooker, Director of Investor Relations at Martin Marietta Materials]

After which, Ward will provide closing comments. A question and answer session will follow. Please limit your Q and A participation to one question. I will now turn the call over to Ward.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you, Jacqueline. Good morning, and thank you all for joining today's teleconference. Before discussing our Q1 results, I'll take a moment to discuss our previously announced Chief Financial Officer transition. On April 10, we announced Jim Nicholas' departure as CFO to move his family back to their beloved hometown of Chicago. We're grateful to Jim for his nearly eight years of service to Martin Marietta, over which time he made meaningful contributions to our success.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

We wish him and his family the best in their next chapter. In partnership with a leading executive search firm, we've initiated a process to identify our company's next CFO and are considering both internal and external candidates. While the search is underway, we're pleased Bob Carden will serve as our interim CFO. Since joining Martin Marietta in 2019, Bob has been an integral member of our executive and finance teams. We're grateful he's willing to assume this role in addition to his responsibilities as Senior Vice President, Controller and Chief Accounting Officer and are confident that under Bob's leadership, we'll not miss a beat during this transition period.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Now turning to our financial results. I'm pleased to report this year is off to a strong start, highlighted by record first quarter aggregate revenues, gross profit, gross margin, and gross profit per ton despite some challenging winter weather in January and February across key Southeast, Southwest, and Midwest markets. This record setting performance was driven by 7% pricing growth, disciplined cost control, and margin accretive acquisitions. Additionally, building upon its full year 2024 performance, Magnesia Specialties established new quarterly record revenues, gross profit and gross margin, with gross margin increasing eight zero six basis points compared with the prior year quarter. These results demonstrate why we have consistently said this business has earned the right to grow, and we'll continue to evaluate both organic and inorganic opportunities to do so.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

We also established several consolidated first quarter records, including consolidated gross profit of $335,000,000 a 23% increase consolidated gross margin of 25%, an increase of 300 basis points consolidated adjusted EBITDA of $351,000,000 a 21% increase and consolidated adjusted EBITDA margin of 26%, an increase of two seventy four basis points. These results underscore the resiliency of our differentiated business model and benefits of our twenty twenty four portfolio optimization actions. Given current macro uncertainty, we continue to focus on matters within our control, most notably realizing fair value for our vital materials while appropriately managing our costs with product demand. Looking ahead, we're encouraged by the double digit growth in organic March aggregate shipments, April daily shipment trends, and realization of April 1 aggregate price increases in select markets, all of which provide us confidence in reaffirming our full year 2025 adjusted EBITDA guidance of $2,250,000,000 at the midpoint. Consistent with our past practice, the company will revisit its guidance at mid year.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Moving to end market trends, we'll start with observations regarding infrastructure, which continues to benefit from robust federal and state investments, including the five year Infrastructure and Investments and Jobs Act, or IIJA. As a result, the American Road and Transportation Builders Association, or ARPA, expects construction activity to grow in 2025 as work advances on projects supported by federal and state funding sources. Importantly, with only about one third of the IIJA funds reimbursed to states through the February 2025, we expect IIJA spending will peak next year in 2026, followed by an extended tail thereafter, as further described on page eight in today's supplemental information. Our contract award growth rates have moderated as reflected in the value of contract awards for the twelve month period ended 02/28/2025. The underlying baseline remains elevated.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Funding certainty, reinforced at both federal and state levels, provides the impetus for steady product volume levels and underpins a strong pricing environment for years ahead in this countercyclical public end market. Importantly too, congressional priorities now appear to be increasingly shifting toward the reauthorization of federal surface transportation programs with key legislative discussions already underway. Early indications suggest the successor bill may emphasize projects with national or regional significance favoring roads, bridges, and ports. Shifting to nonresidential construction, artificial intelligence or AI continues to drive strong demand for data centers across The United States as hyperscalers invest significant capital in new sites. Projects underway in our geographic footprint, including Stargate in Texas, Google in South Carolina, and Meta's four million square foot facility in Louisiana underscore this momentum.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

While not yet a meaningful contributor to product shipments, we expect data center energy consumption requirements will drive ancillary demand for new aggregates intensive power generation facilities across many of our key markets. Warehouse construction appears to have reached cyclical bottom with more green shoots emerging, including large Amazon warehouse projects in Claiborne, Texas Fort Myers, Florida and Wilmington, North Carolina, to name a few. With respect to residential activity, affordability challenges continue to act as a natural governor on single family housing starts. We don't expect this dynamic to resolve in the near term absent either a modest home price contraction, lower mortgage rates, or both. That said, long term housing market fundamentals remain resilient, underpinned by demographic shifts and structurally underbuilt conditions in many of Martin Marietta's key Sunbelt markets.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

In summary, we anticipate demand for infrastructure in our public end markets and data centers in the nonresidential sector will remain robust, while portions of interest rate sensitive private construction demand is expected to remain subdued in the near term. I'll now turn the call over to Bob to discuss our first quarter financial results. Bob?

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Thank you, Ward, and good morning, everyone. The building materials business posted revenues of $1,300,000,000 an 8% increase. Gross profit increased 20% to $298,000,000 and gross margin improved by two twenty nine basis points to nearly 24%, both first quarter records. As Ward mentioned, our aggregates business achieved record first quarter revenues, gross profit, gross margin, and unit profitability of $1,000,000,000 2 90 7 million dollars 30 percent, and 7.6 per ton, respectively. Notably, aggregates gross profit per ton improved over 16% and aggregates gross margin expanded two sixty basis points as organic price cost improvement and the benefit of margin accretive acquisitions more than offset headwinds from targeted inventory management efforts.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

As mentioned in our previous earnings call, we will continue to prudently manage our inventory levels. That said, we expect these inventory drawdown headwinds on gross margin will conclude by mid year as we began reducing inventory levels in the third quarter of last year. Cement and concrete revenues decreased 12% to $233,000,000 due to the threefold impact of the February 2024 divestiture of the South Texas cement plant and related concrete operations, winter weather this past February, and slower residential demand. Gross profit decreased 23% to $24,000,000 as the year over year gross profit improvement in cement was more than offset by a decline in ready mixed concrete gross profit due to higher raw material costs. Asphalt and paving revenues grew 37% to $80,000,000 due to increased asphalt shipments in California.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

This business posted a $23,000,000 gross loss due to customary winter shutdowns in Minnesota, consistent with typical first quarter seasonality trends, as well as higher raw material costs in Colorado. Magnesia Specialties achieved all time quarterly records for revenues, gross profit, and gross margin of $87,000,000 30 8 million dollars and 40 4 percent respectively, driven by pricing improvement and continued cost discipline. Turning now to capital deployment, Martin Marietta's capital allocation priorities remain consistent and focused on prioritizing value enhancing acquisitions, responsible reinvestment in the business and returning capital to shareholders. Relative to the latter, during the quarter, we repurchased nearly 911,000 shares at an average share price of $494 and paid $49,000,000 of dividends. Since Martin Marietta's repurchase authorization announcement in February of twenty fifteen, we have returned a total of $3,800,000,000 to shareholders through dividends and share repurchases.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Our $1,300,000,000 of total liquidity, free cash flow generation, and net debt to EBITDA ratio of 2.5 times as of March 31 provide ample balance sheet flexibility to capitalize on our active M and A pipeline. With that, I'll turn the call back over to Ward.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you, Bob. We're pleased with our strong first quarter financial results and remain optimistic about the opportunities ahead in 2025. The foundational strengths in our resilient aggregates led business, strong balance sheet, disciplined execution of our strategic plan and proven experience successfully navigating market cycles reinforce our confidence in delivering our full year adjusted EBITDA guidance. Longer term, in 2026 and beyond, we remain confident that Martin Marietta is exceptionally well positioned for sustainable growth and compelling value creation. To conclude these prepared remarks, I'll briefly touch on tariffs.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Tariffs present both opportunities and challenges. Some enhance profitability, while others may increase certain input costs or impact product demand. However, it's worth noting that our company's supply chain is largely domestic. That said, given the uncertainty surrounding potential exemptions and retaliatory measures, our 2025 guidance neither assumes any material tariff related tailwinds nor headwinds at this time. If the operator will provide the required instructions, we'll turn our attention to addressing your questions.

[Operator]

Thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

[Operator]

And our first question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Hi, good morning and thank you for taking my question today. Thanks for the color that you gave in prepared commentary and going to the earnings season broadly. At TRG has been focused on talking to a wide range of construction value chain companies. And there certainly seem to be some that are doing better versus others, and the heavy materials generally seem to be doing better, but it's still early days with the tariff debate that is ongoing. I guess that backdrop, what gives you confidence with the volume guidance and maintaining it?

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

And pulling the string a little bit further, we are seeing some green shoots, stabilization in certain end markets like distribution that previously had been weak. What are you seeing there, and are you seeing any projects canceled or delayed or any other upside that you're seeing as you said in the infrastructure market? Thanks so much.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Kathryn, good morning. Thank you for the question. Several things, one, I do believe heavyside materials in these types of circumstances fare better than most and I think that's exactly what we're seeing. I think we've long been a safe haven for investors. I think we'll continue to be.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

If we're looking at the trends that I think are worth noting, infrastructure as we noted is going to be good for the rest of this year. Infrastructure ought to be good going into next year as well. We talked about the fact that only 30 some percent of the state reimbursements have even occurred so far with IIJA, so there's lots of money to come in that. And the state DOTs in which we're doing business, if we look at our top 10 states, eight of the top 10 have budgets up year over year. Infrastructure is strong, it's going to remain strong.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Equally, and you called it out, data centers and what's going to be coming behind data centers will be at the moment. We're seeing that in a host of markets, as you know they are terribly power generative and as a consequence we think we're going to see good energy activity in those markets as well. But the other thing that I called out in the prepared remarks and you noted is warehousing we believe has found a bottom. And the fact is we have the largest Amazon project in North America underway right now just outside the Dallas Fort Worth Metroplex. We're seeing good activity in the West Coast Of Florida, we're seeing good activity in that respect on the coastal areas of North Carolina as well.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

But separate distinct from that, if we're looking at customer backlogs right now, they're nicely up year over year and sequentially. So that's looking at work, it's also looking at perspective work. But here's what's important too because I think this is something that's really important. We're not seeing project cancellations. And so the backlogs are building, projects are not being canceled.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And so those three building blocks, I think, Kathryn, really give us some nice outlook for the year. The other thing that I think is important for us to remember is we really got washed out last year in Q2, particularly in the Southwest and in Dallas Fort Worth, which is our largest single MSA market. So as we're looking at volume and we look at the trends in Q1, and I mentioned in my prepared remarks the daily trends that we're seeing in April right now, all of that points to me to a very steady and attractive and appealing volume environment for heavyside building materials, particularly in the aggregate space. So Kathryn, thank you, I hope that helps.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

It does, thank you very much.

[Operator]

And your next question comes from the line of Trey Grooms with Stephens. Your line is open.

[Trey Grooms, Managing Director at Stephens Inc]

Hey, good morning Ward. Good morning Bob.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Hey Trey. Good Good morning.

[Trey Grooms, Managing Director at Stephens Inc]

So I did want to touch on the cement business. I mean it's fairly small part of the overall business now. But if you look at the margins there in the segment, it looks like ready mix, the headwinds there more than offset the improvement you may have seen in the cement margins. So how are you thinking about margins in that segment as we progress through the year, especially with any additional increases in cement pricing that we could see going forward? And then to that point, the Texas market is clearly an importer of cement.

[Trey Grooms, Managing Director at Stephens Inc]

How do you think the tariff backdrop could play into that and potentially into the pricing outlook for

[Trey Grooms, Managing Director at Stephens Inc]

your cement business? Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Great. Thank you for the question. I'd say several things. One, if we're looking just at cement, I mean pricing was up 6% and profits and gross margin actually grew despite the fact that we had lower production volume in cement. So when we're looking at that business, it performed really well despite what was a pretty tough February simply because of the weather.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

The other thing that's worth noting is FM7 is obviously finished, it's operating well. Obviously pricing growth in cement is moderating, that's totally as expected from the rates that we've seen the past couple of years, but we expect good mid single digit growth this year. And again to that end pricing was up 6% in Q1. If we're looking at ready mix, mean ready mix, several things were driving that portion of the business in Q1. Some of it was simply seasonality.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And the other is if we're looking at organic shipments, they were down 2% to prior year and that's really due to continued softness, largely driven by residential demand and degrees of weather headwind as well. The other thing that's happening there is in our downstream businesses, we're taking the increased aggregates and cement cost impacts as well. So keep in mind that really ends up being a distribution chain for us more than anything else. Now relative to your question on Texas cement and tariffs, it's interesting because I think that actually could provide some upside for us because that's going to further insulate Midlothian cement from the waterborne imports. And frankly, as I just think about tariffs generally for our business, I know I said in the prepared remarks that we're neither putting in a headwind nor a tailwind.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

If I really think about them, it's really in two different buckets, Trey, what happens from a revenue perspective and what happens from a cost perspective. And if I'm thinking about it from a revenue perspective, frankly it's pretty helpful to aggregates because you end up passing the cost through. We talked about cement. The fact is in Magnesia specialties, depending on what happens with steel production, the more steel production we see, the more dolomitic lime that's going to go out the gates as well. And of course much of this is driven to drive more reshoring and manufacturing demand across The United States generally, which will help us specifically.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And again, as I noted, our supply chain is largely domestic. So we really don't see a notable threat there. But I do think relative to tariffs and the essence of your question that was around cement, I don't see that there's any downside for us in that respect whatsoever, Trey. So again, hope that's responsive.

[Trey Grooms, Managing Director at Stephens Inc]

Yes. Super helpful, Ward. Thank you and best of luck.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thanks, Trey.

[Operator]

And your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Yes. Hi. Good morning, everyone.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Hi, Jerry.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Ward, in your prepared remarks, you spoke about Magnesia Specialty has earned the right to grow organically and via M and A. Correct me if I'm wrong, believe this is the first time I recall you saying that. Can you just expand on what value added M and A would look like in this line of business where you folks add value and ag is very clear. What's that recipe for value add if we see you move down the M and A trail for Magnesium Specialty?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Jerry, I appreciate the question. So first, let's begin with the baseline. If we look at that business, number one, it's always been a very good steady performer for us. If we look at the recent years, the working work that they've done on pricing actions, operational reliability and efficiency efforts are really coming together and you just saw a very attractive story for the quarter. And we actually think that business has more upside than downside right now.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

The reason that we think that business has the right earned the right to grow is it's got many of the same attributes that aggregates does. It's got very high barriers to entry. It's got pricing power through cycles. This is a business that has been through what we feel like is probably the single most challenging chemical marketplace that we've seen in my career and it's a business that continues to put in record quarters. If you think back to the financial crisis and by the way, I don't think we're anywhere near that, but if you think about the financial crisis, Martin Marietta always remained profitable.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

We never cut or suspended a dividend. And one of the big reasons why was we had that differentiated portion of our business that was Magnesia Specialties. So to the extent that we can take that portion of our business and grow it responsibly, it's something that we will certainly look at. Obviously, we're going to continue to be an aggregates led business. But when we look at our business and we recognize that is truly a differentiator for us, it's something that number one, I think they've earned the right to be called out on because they're really good at it.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And number two, to the extent that we can continue to invest organically and invest inorganically, we should and I believe our shareholders would richly benefit from that.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Great. Thank you. Good to hear your voice.

[Operator]

And your next question comes from the line of Phil Ng with Jefferies. Your line is open.

[Phil Ng, Managing Director at Jefferies]

Hey guys, congrats on a strong quarter. Ward, I mean you sounded uber bullish on infrastructure, which is great. With the new administration, certainly a lot of head stake in terms of projects being paused and what's formal base and whatnot. So one, help educate us what you're seeing out there. And then two, you kind of hinted at, as we kind of look out to 2026, maybe we get a new service transportation act.

[Phil Ng, Managing Director at Jefferies]

There was some news the other day with Transportation and Infrastructure Chairman, Sam Graves, potentially pushing for a new source of funding for the Highway Trust Fund, which is the first on ED and hybrids. Wanted to get your thoughts on that opportunity and what that could mean for you guys.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Phil, thank you for the question. I would say several things. One, in true heavyside construction that we're looking at, the traditional highway funding, we haven't seen any projects pulled. We've seen some of the grant projects pulled. And again, those that's an entirely different animal and a very small portion of overall infrastructure.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So that's been nothing that has caused us any concern. Again, if we're looking at really what we're tracking right now, several things, you've seen the data that I've seen as well and that is if we're looking at highway contract awards and we're looking at LTM from March of twenty three to March of twenty five, they're up 19%. So number one, that's a great number. Number two, if we're looking at the cumulative state reimbursements, mentioned this before, 118,000,000,000 has gone out of the $350,000,000,000 that's really been set aside for highways and bridge funds. So as a practical matter, only 34% of the total funds have found their way out into commerce at this point in time.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

But if we also go back in time and say how does this usually play out? That ticks and ties back into my commentary both on '25 and '26. So we're going to see a nice continued build over the next couple of years. And again if you look at the slide, I guess the slide, forget which slide it is, particularly in the supplemental material, but it takes you through the ARPA snapshot of what these '25, '20 '6 and '27 will look like and then it shows the out years, but importantly the out years are not showing what we anticipate will be an attractive successor bill. Now to your point, the successor bill is already gaining some degree of dialogue in both the House Transportation and Infrastructure Committee as well as EPW.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And I'm seeing a couple of things. One, they are talking increasingly about projects of regional and national scope. So look, think there's gonna be less about bicycle trails and a lot more about highways, bridges, roads and streets. I mean, I think that's code for what that means. But importantly too, and this goes to the gravamen of your question, Sam Graves, you mentioned, Republican from Missouri who heads House T and I, opened a dialogue here this week that needed to be opened, and that is he he's looking at what are we gonna do with EVs?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

What are we gonna do with hybrid vehicles? And how are they gonna be in a position that they're helping pay for infrastructure when they're wearing out infrastructure just as much as a gasoline car is, and in some respects more because these vehicles tend to be really heavy. So actually, what we're seeing is the revenue package put forward would begin, from my perspective, a much overdue conversation and bring some fresh ideas to a problem that's long been avoided. And and the issue is simply this, the gas tax and the diesel tax were never indexed for inflation. And if we go back and look at what's happened or more to the point, not happened there since Bill Clinton's first term in office, it has remained utterly static.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So as a consequence, we've been having to go to the general fund for years. And if you look over the last seventeen years, it's been to the tune of about $275,000,000,000. Now, do I think we're gonna have to look to the general fund going forward? Yeah. Probably so.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

But do we need to have multiple drivers, no pun intended, that are putting funds into that highway trust fund? The answer is that we do, and that's what the states have been doing very effectively. I think the fact that now we're having that conversation at a national level is important and it's a really good start.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Okay. Appreciate the color. And

[Operator]

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

[Tyler Brown, Financial Advisor at Raymond James Financial]

Good morning.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Hi, Tyler.

[Tyler Brown, Financial Advisor at Raymond James Financial]

Hi, Tyler. Hey, Bob. Actually, performance was very solid in aggregates. I know that there is some discussion with the peer that maybe some maintenance or stripping costs got pushed out on the weather. One, I guess, I'm just curious if you saw the same thing.

[Tyler Brown, Financial Advisor at Raymond James Financial]

And two, can you just help us shape how we should think about cost inflation for the rest of the year? I know you lapped the inventory pressures midyear. And are you kind of looking at double digit gross profit per ton each quarter? Appreciate it.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Yes. Thanks for the question. So in the first quarter, I would say that we saw just excellent cost management by our operations teams. In light of the inventory reduction, the team was very proactive. So if you look at energy and contract services on a per unit basis, they were down low double digits.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Supplies and repairs kind of down in the mid single digit range, again on a per unit basis. So overall, I think just effective management. We do have a diesel fuel tailwind that's helping us as well. The other thing I'll mention is if you back out the impact of the $0.72 per ton impact from the inventory drawdown, we were actually down 2.3% on a unit cost basis. So as we look forward, we expect in future quarters that we will see continued healthy expansion in gross margin.

[Tyler Brown, Financial Advisor at Raymond James Financial]

Perfect. Yes. Thank you very much.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you, Tyler.

[Operator]

And your next question comes from the line of Angel Castillo with Morgan Stanley. Your line is open.

[Angel Castillo, Executive Director at Morgan Stanley]

Hi, thanks for taking my question. And again, congrats on a strong quarter here. Just maybe wanted to unpack a little bit more along the lines of that kind of 2Q and 3Q, but maybe more from the price perspective. So you had some of your pricing maybe get pushed out to April. So just curious how should we think about the progression of price growth as we get into 2Q?

[Angel Castillo, Executive Director at Morgan Stanley]

And as part of that, could you talk about mid years, what you're seeing in terms of any pushback from perhaps those customers that have shipped out to April or anybody else perhaps pushing back on mid years?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Angel, good morning. Thank you for the question. So several things. One, if we look at the pricing as reported, up 6.8%, so that was nice steady growth. Keep in mind, we do have some April increases that are going in as well.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So that's primarily to certain select concrete customers. I think this is important, Angel, if we're looking at our organic business, the pricing was up about 7.4%. So actually you saw a pretty healthy delta between as reported cumulatively and the organic business. That tells me several things. One, we continue to have some room ahead of us relative to the assets that we have bought to get them up to Martin Marietta pricing.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

I think that also tells us that they're going to be mid years in a number of markets. And keep in mind, the guide that we have given you does not assume any mid year price increases. And we're going to see degrees of mid year price increases. I think the other thing to keep in mind, just from an optical perspective, during the first quarter in particular, the Central Division operations because they tend to be more northern climate are not operating and not selling as much. Those will now start coming on and into play more meaningfully obviously in Q2 and Q3.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Their average selling prices tend to be modestly lower. Now all that said, really as I'm looking at the ranges that we've given for pricing, at this point I'm thinking we're probably going to be on the higher end of ASPs relative to the guide that we've given. And obviously we'll come back and review the overall guide at half year as is our custom. But I think if you think about pricing in Q1, strong. If you think about pricing relative to the organic business, particularly strong.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

If you think about the price increases that we believe can be coming relative to the acquisitions, they look actually quite good. And I think I've given you a sense of how I think that's going to play out for the full year, Angel. So I hope that was responsive to your question.

[Angel Castillo, Executive Director at Morgan Stanley]

Absolutely. Very helpful. Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

You bet. Take care, Angel.

[Operator]

And your next question comes from the line of Anthony Pettinari with Citi. Your line is open.

[Trey Grooms, Managing Director at Stephens Inc]

Hi, good morning.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Hi, Anthony.

[Anthony Pettinari, Analyst at Citigroup]

Hey, Ward, you referenced, I think historically bad weather that you saw in North Texas in 2Q last year. Is there a way to think about or can you remind us sort of what the impact of that was or if there's sort of an add back we can think about? I'm just trying to kind of circle back on this. You saw such strong gross profit per ton growth in 1Q. Just wondering what that could look like in 2Q given some of the puts and takes?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Look, think it will look attractive in Q2. Again, I'd have to go back and pull out exactly what the hit was last year in Q2 because of the weather in North Texas. But it was notable Anthony and I know I spoke to it last year very specifically. We can go back and maybe take offline what that was. But again, I think we should see a nice sequential build throughout this year.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And keep in mind, the other thing that will happen by the time we're done with Q2 is the inventory headwinds that we're working our way through will have been totally dealt with. As Bob mentioned in his comments a few minutes ago, if we're simply looking at this quarter, the inventory headwind was $28,000,000 And we had indicated coming into the year that we thought it would be somewhere between 20,000,000 and $30,000,000 a quarter in both quarter one and quarter two. So do I think quarter two ought to be more attractive simply because we don't anticipate something that's epic in North Texas in the quarter? Yes, I think we probably do. Do I think you've got a nice build also into quarter three because suddenly you don't have that real headwind from what we're going through right now relative to the inventories.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So Anthony, I hope that helps.

[Anthony Pettinari, Analyst at Citigroup]

Yeah, no, that's very helpful. I'll turn it over.

[Tyler Brown, Financial Advisor at Raymond James Financial]

Thanks Anthony.

[Operator]

And your next question comes from the line of Timna Tanners with Wolfe Research. Your line is open.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Hey, good morning, guys.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Hi, Timna.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Good morning.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Wanted to couldn't help but notice the really strong share buyback in the quarter, bigger than all of last year. It might just be a question of just authorizing, but I didn't see a reauthorization to keep that level going forward. And just wanted any thoughts on the amount? Was opportunistic because of where the share price is? Is it a commentary on a lull in M and A?

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Any more color would be great. Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Timna, thank you for the question. It was not a commentary on M and A because I continue to think that's going be attractive for us this year. It was really more of a commentary that, look, we like where that share price was and we thought that was a great place to go in and buy. So we bought 911,000 shares and that was $450,000,000 because we thought it was opportunistic and a good buy. So and if you recall, actually when we bought TXI in twenty fourteen, twenty fifteen, we had an authorization at that point to buy back 20,000,000 shares.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And if we look at where we are in that, we bought back about half of that over that period of time. So we still have plenty of runway ahead of us. Importantly, you look at where we finished the quarter relative to a debt to EBITDA ratio, we're still very much in the range that we'd like to be. And obviously, we're about to hit the time of year where we really start making considerable money as well. So no, it's not a commentary on a lack of M and A pipeline because in fact that actually looks quite good.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It is a commentary on the fact that we thought that was an attractive entry place for the stock and we proverbially put our money where our mouth is. So thank you for the question though, Timna.

[Operator]

Thanks, Lawrence. And your next question comes from the line of Steven Fisher with UBS. Your line is open.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thanks. Good morning.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Good morning.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Just good morning. So back in February, you had characterized the guidance as being sort of conservative guidance. And I'm curious how you feel about that today. Was there any conservatism you think you needed to draw on in Q1 or the first four months of the year or that you see in Q2? And I know you just said a couple of questions ago that the guidance does include does not include the midyear.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

So I'm just curious how you'd kind of characterize the outlook today, also in light of things that have kind of changed a little bit in the macro backdrop.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you for the question. They have changed a little bit in the macro backdrop. But what I'll say is this, you're right. I forget whether we use the word measured or conservative coming out of coming into the year. But I think it was one or the other and they're probably synonymous.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Where I'm sitting today, I actually feel better today than I felt in February. So to the extent that we felt like it was a measured guide at the time, I probably feel that same way maybe a little bit more strongly today than I did then. Obviously, as we indicated in the prepared remarks, we come back and we'll revisit our guide at half year, which we typically do. I've already indicated, I think our pricing is going to be at the higher end of that. So obviously more to come, but there's been nothing that I'm seeing in the way this year is playing out and the way that our teams are responding, whether it's relative to cost, whether it's relative to pricing, whether it's relative to what we're looking at from M and A that has been a disappointment to me.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

I think our teams are performing well. And again, I think the business is revealing the type of durability that I would expect it to, particularly given the significant portfolio shaping that we brought to the business last year. Seeing these nice margin enhancements are not a surprise to us. It is a nice affirmation on where the business is, and I think it gives you a good sense of where the business is going.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Terrific.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

You're most welcome.

[Operator]

And your next question comes from the line of Michael Dudas with Vertical Research. Your line is open.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Good morning, Jacqueline, Bob, Ward.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Hey, good morning, We're having a hard time hearing you. If you can speak up just a little bit, please.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Can you hear me now?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Much better. Thank you so much.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Great. Terrific. Following up on Tibnus question, let me turn to acquisitions. Has the macro environment looking at the sentiment amongst your acquisition pipeline changed materially? Have things been maybe pushed off a little bit because of the uncertainty?

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

And take your temperature on where you feel like you've transformed portfolio quite a bit in the last eighteen months. Are we at similar types of levels given where the cash flows are going to be in your balance sheet and the opportunities ahead of you given there's going be some pretty reasonably sized assets maybe coming on the market?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Great questions and I would say several things. One, I don't see material changes in the sentiment on businesses that are looking to do M and A today. I think it feels broadly the same. As we've discussed before, typically people aren't selling businesses because they're trying to time it in our space. They're typically doing it relative to family succession and other issues that drive M and A.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So we haven't seen that as a significant issue for us. As I've also indicated before, I think we're in a place that give and take normal year is going to be around $1,000,000,000 worth of M and A. But don't expect that to be linear. There are going to be years that it's likely going to be notably more than that. And again, I think in some respects M and A can be a little bit like the buybacks that we did this year.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It can have a head of opportunism that comes with it because if some businesses come along that are particularly compelling businesses, you'll see us lean in and be smart and sensible about a business because you're frankly not going to see it come through again. So am I seeing anything that I would view as a material change? No. Do I think it will continue to be an attractive year for us on aggregates led M and A? Yes.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And do I think that's likely to be the case? Not for a matter of quarters, but really for a matter of years and likely through this next SOAR 02/1930 period? I think the answer is undeniably yes, because when I'm looking at simply closely held aggregate businesses in markets in which we want to grow. We've identified businesses that produce and sell, let's call it two fifty million tons of stone per annum right now, which tells us there's effectively a business out there that's modestly larger than Martin Marietta is today that would be in something that we would think of as our sweet spot. So I think there's a lot that's been done on shaping.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

There's a lot that's going to be done over the next several years and decades in growing this business and continuing to shape it and doing it in ways that hopefully you'll continue to see more profitability, but you'll see continued margin expansion and the quality of the business continue to grow.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

That's a lot of rock out there, Ward. Good luck.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thanks so much.

[Operator]

And your next question comes from the line of David MacGregor with Longbow Research. Your line is open.

[David Macgregor, President at Longbow Research]

Good morning, everyone, and congrats on a good quarter, Ward.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you, David.

[David Macgregor, President at Longbow Research]

I guess, wanted to yes, I wanted to just take your temperature, I guess, this is an M and A question of sorts, but it would relate to just any changes you're seeing in the permitting prospects out there and the permitting process that would improve your ability to increase reserves oriented acquisitions.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It's interesting, David. I don't see that changing notably and I would say several reasons why. Obviously, there is a certain degree of aggressiveness relative to the regulatory state that's underway with the current administration. And frankly, I welcome that. The fact is the regulatory state that drives what's happening relative to permitting, greenfields, adding reserves, etcetera, tends not to be a national issue, it tends to be a local issue.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Is it a national issue relative to an air quality permit?

[Jacklyn Rooker, Director of Investor Relations at Martin Marietta Materials]

Yeah.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It sort of kind of is. Is it a national issue relative to water quality and discharge? Yeah.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It sort of kind of is. But the bigger issues aren't those. The bigger issues are zoning and the bigger issues are land use relative to either conditional use permitting or special use permitting and those tend to be decidedly local. And when I say local, I don't mean at the state level, I mean at the city level or the county level. And the fact that those barriers to entry are notable, I think it's important.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

It also plays to the strength that we have relative to land use. Part of what you'll see us do, and you can see in some of the CapEx numbers, is we will buy properties adjacent to our existing operations and recognize that we can go through a special use and a zoning process on those parcels that at times can take years. And that's okay because we typically have long lived reserves. But when we get those adjacent reserves zoned and permitted, two things happen. One, the setbacks that we have on our existing quarries basically go away.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And then we also have opened up to us the new reserves that we've just bought. So the fact is we end up winning twice under those circumstances. So do I think it's changing relative to greenfielding? No, I don't. I think it's going to continue to be a challenge in many instances.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Do I think it's changing relative to next door? No, I don't. And do I think there's opportunity at the national level to change that? Actually I really don't because this ends up being a highly local issue and it's an area in which Martin Marietta has long had I think a very capable resource and we've done that well. So I hope that helps David.

[David Macgregor, President at Longbow Research]

Yes, does. Thanks Ward.

[David Macgregor, President at Longbow Research]

Good luck.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Take

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

care. Thank you.

[Operator]

And your next question comes from the line of Brent Thielman with D. A. Davidson. Your line is open.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Hey, great. Thanks. Good morning. Ward, appreciate the detail. Appreciate all the color around the federal funding visibility here.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

That's really great. And I think the other side of the question that we seem to get is on the state side. I mean, you sort of scrutinize some of your largest states on the public infrastructure side and the mechanisms for funding infrastructure projects, Just be curious what's your assessment, your experience as to whether there's risk of reallocation within those state budgets away from transportation funding, especially if the economy begins to see a shortfall in tax revenue?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Brent, thank you so much for the question. So I would say several things. One, if we're looking at Texas, Florida, North Carolina, Indiana, Georgia, Colorado, Arizona, Iowa, as I indicated before in my comments, our top 10 states, eight of them are seeing budgets year over year that are up. And that's particularly true if we're looking at their baseline budgets. I think more importantly if we go and look at some of the information on those individual states themselves and really think about that.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

I mean if we're looking at the 2025 approved increasing for Texas long term ten year program, it's already up 4% to $104,000,000,000 And if we look at how that translates, if we're looking at our March 25 aggregates backlog for customers in that state, they're up about 18%. So again, these state budgets matter. If we're looking at Colorado, they expect to have about $3,700,000,000 available to spend in FY 2025. That's a nice increase of what we've seen in recent years. Equally in North Carolina, their budget has increased year over year, but importantly, and this goes back to the question I had before relative to federal budgets, North Carolina did something that was important and they started taking sales tax revenue and shifting that to the highway fund and beginning in 2025, that goes up to 6% here in this state.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And if we're even stepping back and looking at what has to be done, you recall, obviously, Hurricane Helene came through, created a lot of mayhem in the western part of the state, and we're seeing nearly $5,000,000,000 worth of work that has to be done there. 3,000,000,000 of it will come from the federal government, 2,000,000,000 from the state, and North Carolina have has a $6,000,000,000 rainy day fund. Part of the reason I I call all of this out, when we began our SOAR process in 02/2010, we were looking to do business in states that had a very, very strong fiscal condition because we believed that was going to be important as state populations continued to grow and we wanted to be in states that had the capacity to continue to grow what they're seeing from a DOT perspective. Again, that's what we're seeing in Georgia as well. They've got a 7% increase this year from their original 2024 FY budget, FY 2024 budget.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So I think if we look at federal side that you mentioned and then go to the state side that you specifically asked about, eight at the top 10 are up. And then if you take even within a subset of those 10 and start looking at precisely what we're seeing, it's a very healthy story.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Very good. Thank you.

[Robert Cardin, SVP, Interim CFO, Controller & CAO at Martin Marietta Materials]

Thank you.

[Operator]

And your next question comes from the line of Adam Thalhimer with Thompson Davis. Your line is open.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Hey, good morning guys. Nice quarter.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Thanks Adam.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

When

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

you talk about data centers and the associated power demand, Ward, are those projects are you thinking about those as a driver in 2025 or is that more 2026 plus?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

I think that's more 2026 plus. So I think in the near term you're going to see more activity on data centers and I think that's going be pretty significant. I think in the near term you'll see growing activity on warehousing. I think in the medium to longer term you're going see more energy activity. I mean for example, we've got local power companies talking about small nuclear facilities for the first time in years.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And and the fact is we're gonna have to see a number of those types of things. It's been interesting to watch what's happened in Europe this week relative to Spain, Portugal and and other countries. And I do think The United States is going to have to be really thoughtful about the way that we're going to continue to grow in light non res. And we're going to continue to see population shifts and dynamics to the Southeast and Southwest. And these states in particular are going to have to be ready for that type of power transition.

[Adam Thalhimer, Director of Research at Thompson Davis & Co]

Got it. Thank you.

[Kathryn Thompson, Founding Partner & CEO at Thompson Research Group]

Thank you, Adam.

[Operator]

And your next question comes from the line of Keith Hughes with Truist Securities. Your line is open.

[Keith Hughes, Managing Director at Truist Securities]

Thank you. Ward, I want to go

[Keith Hughes, Managing Director at Truist Securities]

back to your comment on potential new legislation. Is there any kind of timeline emerging when that would formally be introduced in Congress and potentially push down the law?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

There hasn't been anything formal Keith that's come out, but I'll tell you anecdotally what I'm hearing and that is I think there's going to be a push to get that done before the midterms next year. I think there are practical reasons that people are going to want to see that done. I think the other thing that it does is it makes the takeoff for the next bill much smoother. I would not be surprised to see a headline bill that's less than $1,200,000,000,000 but I'd be really surprised to see within that bill the same geography that we saw this last time. Dollars 1,200,000,000,000.0 bill that had $350,000,000,000 dedicated to highways, bridges, roads and streets.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

That's not the way I think this is going to come out. So I think we're going to see several things. One, I think what you've seen in House C and I this week relative to funding is a good part of an overall conversation. We'll probably see House T and I take the lead on putting this out. That's the way that historically has worked.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

So they've taken the lead, EPW has followed. But I still think it's going to be something that we will see done before midterms, Keith.

[Keith Hughes, Managing Director at Truist Securities]

Okay. Is the talk in the I'm not sure lobbyists and trade groups something greater than the for roads, bridges, streets, something greater than the $348,000,000,000 that we saw in IAJA?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

I think that's certainly where people are trending, yes, Keith.

[Keith Hughes, Managing Director at Truist Securities]

Okay. All right. Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you so much.

[Operator]

And your final question comes from the line of Garik Shmois with Loop Capital. Your line is open.

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

Hi, thanks. Congrats on the quarter. I wanted to just follow-up on kind of mid word that you feel better now on the outlook than you did after 4Q. I wanted to kind of specifically drill down on the volume piece. Given the concern on private construction with affordability and consumer confidence issues, is it fair to assume the outlook?

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

We had a lot of discussion on infrastructure, but is it fair to assume that your outlook for infrastructure this year may be directionally stronger than it was coming out of the fourth quarter?

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Yes, Gerrick. I think that's entirely fair. I mean, we think about it, Q1, if I look at the breakdown that we had, 33% was infrastructure, 36% was non res, 24% was res. Look, think going forward we're clearly going to see that 33% get bigger and I think we should. Given the quantum of projects that are out there, given their relative aggregates intensity, that number should move.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

That to me is a seasonally driven number. At the same time, I think people would be surprised that the 36% was non res. So the fact is we go to the point that the heavy side of that is actually doing pretty well. The light side of it, frankly in some areas are doing better than people would have thought. And at this point, look, we're not putting a lot of stock in what happens on residential all by itself.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

The thing that I think is worth noting though is residential, at least in our markets, is so far from being overbuilt, it's really almost ridiculous. If we're looking at what builders are focused on right now, they are focused on, and this goes back to part of the question that David MacGregor asked, builders are finding that it's taking more time to get zoning and special use permitting for subdivisions, so their notion of buying land and then getting entitlements in place is important. We think they're focused on that. I continue to believe, look, don't put a lot of money on housing on the second half or this year, but we will see that come. It's not going to take a lot of movement relative to interest rates or home prices to have it move pretty notably in our markets.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

And the fact is, we're well positioned to meet that whenever it does show up.

[Garik Shmois, Managing Director at Loop Capital Markets LLC]

Understood. Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you, Karen.

[Operator]

My apologies. Now our final question is from Brian Brophy with Stifel. Your line is open.

[Andrew Maser, Associate Vice President at Stifel Financial Corp]

Hello. This is Andrew Mazer on for Brian. Thank you for taking my question. I just had a quick one on pricing opportunities for prior M and A. I believe some of the M and A you completed in the past year generally had ASPs below corporate averages.

[Andrew Maser, Associate Vice President at Stifel Financial Corp]

I was wondering where you stand on closing that gap? And then separately, how are you thinking about the potential for mid year price increases in markets where last year's M and A won't be a tailwind? Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Thank you so much, Andrew. I would say several things. As I indicated, organic pricing was up 7.4%, reported was up 6.8%. That gives you a pretty good snapshot right there on what's the difference between the M and A sites that we've had and the organic that we've had. There are some places, for example California, where we have now closed that gap, but the fact is from my perspective California shouldn't be at a corporate average.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Barriers to entering California are higher. The difficulty in doing business in California is higher. So the fact that we've closed that gap is nice, but it doesn't indicate to me that we've finished the journey that we started on there. I do think we will see a number of midyear price increases as I indicated before. I think the Quantum will probably look a bit like it did last year.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

More to come on that, we'll talk more about that when we're together at half year. But directionally, I hope that gives you a sense of where we are and where I think we're going.

[Andrew Maser, Associate Vice President at Stifel Financial Corp]

Yep, great. Thank you.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

You're welcome.

[Operator]

And that concludes our question and answer session. I will now turn the conference back over to Mr. Wigneye for closing remarks.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

Abbey, thank you. And thank you all for joining today's earnings call. While the unpredictability of policy shifts heightens broader economic uncertainty, we remain confident about Martin Marietta's ability to appropriately navigate these conditions. Since 2010, we've transformed the durability of our portfolio and positioned our business in attractive markets through disciplined execution of our store plans. We've built a strong foundation to continue extending Martin Marietta's long track record of delivering sustainable growth and superior value creation for investors for years to come.

[C. Howard Nye, CEO, President & Chair of the Board at Martin Marietta Materials]

We look forward to sharing our second quarter twenty twenty five results in the summer. As always, we're available for any follow-up questions. Again, thank you for your time and continued support of Martin Marietta.

[Operator]

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

Participants

Executives

• Jacklyn Rooker, Director of Investor Relations
• C. Howard Nye, CEO, President & Chair of the Board
• Robert Cardin, SVP, Interim CFO, Controller & CAO

Analysts

• Kathryn Thompson, Founding Partner & CEO at Thompson Research Group
• Trey Grooms, Managing Director at Stephens Inc
• Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs
• Phil Ng, Managing Director at Jefferies
• Tyler Brown, Financial Advisor at Raymond James Financial
• Angel Castillo, Executive Director at Morgan Stanley
• Anthony Pettinari, Analyst at Citigroup
• Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC
• Steven Fisher, Managing Director & Equity Research Analyst at UBS Group
• Michael Dudas, Equity Research Analyst at Vertical Research Partners
• David Macgregor, President at Longbow Research
• Brent Thielman, MD & Senior Research Analyst at D.A. Davidson
• Adam Thalhimer, Director of Research at Thompson Davis & Co
• Keith Hughes, Managing Director at Truist Securities
• Garik Shmois, Managing Director at Loop Capital Markets LLC
• Andrew Maser, Associate Vice President at Stifel Financial Corp