Shares of construction materials producer Martin Marietta Materials rose 8 percent Tuesday as the company blew past Wall Street’s forecasts for first-quarter sales and earnings.
Despite record first-quarter net sales, however, the Raleigh company’s earnings fell short of a year ago due to lower margins. Gross profit margin as a percentage of total revenue fell from 18.4 percent a year ago to 17.4 percent, in part because of higher personnel costs and investments made to ensure that sufficient material is ready for shipment later this year.
Net revenue totaled $791.7 million, up 8 percent from a year ago. Analysts polled by Bloomberg News had been projecting net sales of $726 million.
Earnings for the quarter totaled $42.3 million, or 67 cents per share, versus $45 million, or 69 cents per share, a year ago. Wall Street analysts were projecting 45 cents per share.
Martin Marietta produces rock, gravel, cement and other materials used to build roads, houses and commercial buildings. It employs about 8,000 people, including about 1,000 in North Carolina.
The company’s performance was especially notable because it was measured against a record first quarter in 2016, which was buoyed by unseasonably cold and wet weather in late 2015 that delayed construction projects and shipments into the first quarter.
CEO Ward Nye, speaking during a conference call with analysts, said that Martin Marietta is “well-poised to deliver great results in 2017 and the next several years. Our outlook is firmly supported by continued growth in our key states, solid construction activity with increased materials demand, and attractive pricing opportunities.”
Indeed, higher prices contributed to the company’s first-quarter results. The average price of aggregates increased more than 5 percent from a year ago – including a 10.3 percent increase in the Southeast.
“North Carolina, Georgia and Texas continue to benefit from improving economies, consistent job gains and large corporate relocations – all of which fuel construction activity,” Nye said.
Martin Marietta shares closed Tuesday at $239.85, up $16.98.