C. Howard Nye
Chairman, Chief Executive Officer & President at Martin Marietta Materials
Thank you, Jenny, and welcome to Martin Marietta. And good morning to everyone, and thank you for joining today's teleconference. I'm pleased to report the record results that Martin Marietta delivered in the second quarter, extending our strong track record of commercial excellence, profitable growth and disciplined execution of our strategic plan. In light of the challenging macroeconomic environment, including the rapid acceleration of key input costs, our strong quarterly performance is a testament to our team's focus, ability to respond quickly and appropriately to changing dynamics and the resiliency of our differentiated business model.
In addition to our impressive results and consistent with our aggregates-led product strategy, we also closed two previously announced downstream divestitures in the quarter. These transactions further enhance our company's margin profile, both near and long term while strengthening Martin Marietta's balance sheet and further improving the durability of our business through cycles. Our first half performance, coupled with these strategic divestitures, provide an even more attractive foundation for accelerated growth in the second half of 2022 and beyond. As highlighted in today's release, we achieved a number of significant financial and operating records in the second quarter, a few specific examples include: consolidated total revenues increased 19% to $1.64 billion, consolidated gross profit increased 10% to $425 million, adjusted EBITDA increased 9% to $478 million and adjusted earnings per diluted share from continuing operations increased 4% to $3.96.
Our strong performance was due in large part to the diligent execution of our value over volume commercial strategy following the implementation of our April first price increases, widespread product demand across our coast-to-coast footprint and contributions from acquisitions. However, we were not immune to high input cost inflation, and as such, gross margins declined slightly. Notably, our teams are taking actions to mitigate the impacts of this historic inflation by implementing third quarter price increases broadly across products and geographies, which primarily take effect between July one and September one. Additionally, we're advising customers of a fourth quarter price increase in a number of our markets. We believe these commercial initiatives, together with other operational inflation management actions position Martin Marietta well to benefit in the near term from anticipated record second half pricing growth rates.
Continued product demand, together with customer preference for material quality and availability, is expected to support an extended favorable pricing environment. We're well positioned to produce quality products, meeting this demand as a result of recent and ongoing capital investments as well as focused operational improvements at our key facilities. It's important to remember that historically, inflation supports a constructive pricing environment for upstream materials, the benefits of which endure a long after other inflationary pressures abate. While we typically invest in our business for growth, we also review the overall portfolio for opportunities to maximize value through either monetizing or exchanging select assets where we may not be the best owners.
Consistent with that approach, on April first, we closed the sale of our Colorado and Central Texas ready-mixed concrete businesses to Suburban Ready Mix, and on June 30, we completed the previously announced sale of our Redding cement plant, its related distribution terminals and certain California concrete operations to CalPortland Company. Together, these margin-accretive portfolio refinements enhance the overall durability of our business and provide Martin Marietta with the balance sheet flexibility to increase shareholder value by redeploying proceeds into future aggregates-led acquisitions. We're focused on continuing our organic growth improvements and initiatives while returning capital to shareholders and reducing our net leverage to within our targeted range.
Let's now turn to our second quarter operating performance, starting with aggregates. We continue to experience healthy aggregates demand across our three primary end markets, with total aggregate shipments, inclusive of acquisitions, increasing over 9% to a second quarter record of 57.8 million tons. Organic aggregate shipments increased 1.8% despite numerous supply chain and logistics issues governing the overall pace of construction activity. Additionally, in key Sun Belt markets, cement shortages negatively impacted our ready-mix concrete customers thereby, constraining aggregate shipments to that segment. Organic aggregates pricing increased 8.8% or 7.5% on a mix-adjusted basis, as our April first increase is built upon our first quarter pricing momentum based on high demand and increased costs.
The Texas cement market is experiencing robust demand and tight supply. Against that backdrop and combined with our cement team's focused execution on commercial and operational excellence, we delivered record quarterly shipments of 1.1 million tons and pricing growth of 14.7% as our $12 per ton increase went into effect on April first. The market conditions in Texas, together with ongoing import challenges in Martin Marietta's core cement regions of Dallas/Fort Worth, Austin and San Antonio, set the stage for further pricing actions this year, including a second $12 per ton price increase that was effective as of July one. The outlook for Texas cement remains extremely attractive for the foreseeable future. Shifting to our downstream businesses.
Organic ready-mix concrete shipments increased 3.4%, reflecting strong product demand in the Texas Triangle, partially offset by the previously mentioned cement tightness. Organic pricing grew a robust 17%, reflecting multiple pricing actions, including fuel surcharges, which have passed through raw material and other inflationary cost pressures. Organic asphalt shipments were effectively flat as strong demand in Denver was offset by a later-than-usual start to the construction season in Minneapolis, while organic pricing improved 17%, following the increase in raw materials costs, principally bitumen. Including contributions from our acquired operations in California and Arizona, asphalt shipments increased 40%. Despite the dynamic macroeconomic operating environment and the impact on housing starts, inflation and interest rates, Martin Marietta continued to experience strong second quarter product demand across our geographic footprint.
As we entered the third quarter, customer backlogs are firmly ahead of prior year levels with logistics challenges serving as the primary governor to the cadence of product shipments. As we examine each of the company's three primary end users, the combined outlook for continued aggregates demand is attractive as robust infrastructure funding and secular nonresidential demand trends are expected to more than offset any potential affordability-driven air pocket in today's historically underbuilt residential segment. With that backdrop, let's now turn to an end-use overview, starting with infrastructure.
We're on the cusp of increased levels of infrastructure investment not seen in the United States since the introduction of the interstate highway system in 1956 as already healthy state Department of Transportation budgets receive incremental federal funding from the Infrastructure Investment and Jobs Act, or IIJA, allocations for the 2023 fiscal year, most of which began on July one. As a result, we expect aggregates demand benefits will begin to accrue later this calendar year with a more pronounced expansion in 2023. Importantly, this increased investment in public works provides a base level of stable demand for our products for years to come.
Similar to infrastructure, nonresidential construction in Martin Marietta markets should continue to be an area of strength as pandemic impacted sectors, including like commercial, retail, hospitality and energy recover from their pandemic troughs and supply chain disruptions, lead businesses to establish manufacturing facilities closer to in demand. We've seen a notable acceleration and announcements of large aggregates intensive domestic manufacturing facilities. Some examples of these projects in our markets include: the Samsung Semiconductor facility in Austin, the Stellantis Samsung joint venture lithium-ion battery plant near Indianapolis, the Taiwan Semiconductor campus near Phoenix and the Vinfast electric vehicle site near Raleigh-Durham.
Relative to pandemic accelerated growth sectors, warehouses and data centers are currently experiencing different impacts, starting with warehouses, consistent with Amazon's public announcement in April. We expect a moderation in their rapid square footage growth rate. However, we're continuing to shift to their end process projects. Importantly, though, we're experiencing an uptick in warehouse and cold storage construction from businesses other than Amazon as traditional brick-and-mortar retailers and grocers adapt to a secular shift and consumers' preference for delivered goods. Additionally, data center demand remains robust, including meta data center projects in Kansas City and Atlanta, which we're well positioned to serve from our nearby locations.
With respect to the residential end use, location is always the essential factor. We've been purposeful and intentional in positioning our business in geographies where home prices are comparatively affordable and residential demand is far greater than supply due to a decade of underbuilding amid significant population inflows. As such, we expect the current housing slowdown to be: one, moderate in our key metropolitan areas as home prices and borrowing rates find equilibrium; and two, constructive for continued single-family community development in more affordable suburban areas.
As shown in our supplemental information slides, it's important to be mindful that even with June slowdown in housing, single-family housing starts remain at approximately $1 million on a seasonally adjusted basis, which, in our view, is a healthy level and supportive of continued aggregates demand to both the direct residential sector as well as the ancillary construction that suburban community development requires. I'll now turn the call over to Jim to discuss our second quarter results in more detail and provide some context for our updated full year guidance. Jim?
