Martin Marietta Materials reported a 41 percent jump in net sales in the second quarter that nonetheless fell short of Wall Street estimates due to a deluge of rainy weather nationwide.
The producer of rock, gravel and other materials used to construct roads and buildings also announced Tuesday that it was selling its California cement business for $420 million. The company plans to use the sale proceeds to repurchases its shares as part of a stock buyback program unveiled in January.
Shares of the Raleigh-based company were trading at $156.57, up 5 cents, Tuesday morning. Its shares have risen 42 percent this year as the improving economy has boosted construction.
Net sales in the second quarter totaled $850.2 million, up from $601.9 million a year ago. Analysts polled by Bloomberg News were projecting, on average, net sales of $929.1 million.
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Net income totaled $81.9 million, or $1.22 per share, up from $59.5 million. Analysts had projected earnings per share of $1.58.
The company said that “historic levels of rainfall throughout the United States,” and especially in Texas, lowered earnings per share by 32 cents to 36 cents. Citing National Oceanic and Atmospheric Administration data, Martin Marietta said it was the second-wettest second quarter nationwide in more than a century.
CEO Ward Nye said in a prepared statement that the company is upbeat about the second half of the year.
“Assuming normal levels of precipitation, we expect exceptional performance from our businesses in response to strong demand that was delayed during the first half of the year,” he said.
The company also said that it now expects that last year’s acquisition of Texas Industries will create annual savings of $120 million by the end of next year – more than 70 percent of its original estimate.
Still, the company lowered its guidance for EBITDA – earnings before interest, taxes, depreciation and amortization – for the full year. The company is now anticipating EBITDA will range from $810 million to $850 million, down from $835 million to $875 million previously.
The sale of its California cement business to the U.S. subsidiary of Tokyo-based Taiheiyo Cement, which requires regulatory approval, is expected to be completed by the end of September.
Martin Marietta said that although its California cement plant ranks among “the most up-to-date plants in the region,” it’s not close to other Martin Marietta operations and shareholders would be better served by selling the facility.
Martin Marietta will discuss its second-quarter results in a conference call with analysts Tuesday afternoon.