Martin Marietta Materials (NYSE: MLM) is a producer of aggregates for the infrastructure, agricultural, nonresidential, and residential construction.The company also produces other chemicals used in industrial, agricultural, and environmental applications. The company is segmented into the Mideast Group, Southeast Group, and West Group, collectively the Aggregates business, and the Specialty Products segment. As a producer of aggregates, the company's revenues depend on the construction industry.
Martin earned $97 million on 2010 revenues of $1.78 billion, versus $85 million on 2009 revenues $1.70 billion. Growth depends on residential construction activity, which has the potential of growth. In addition, the price increases also resulted in revenue growth.
A majority of Martin's aggregate products are used in the construction industry, so the company's results depend in part on the strength of the construction industry. The housing slump beginning in 2007 has negatively affected Martin's business as new home construction dropped, reducing the number of residential homes to be built (and supplied with aggregates). While private residential construction is a small market for MLM, the severe downturn in activity hurts business. In general, the ongoing economic slowdown is leading lower levels of construction activity. A prolonged period of slow construction activity has the potential of significant curtailing Martin's growth.
Martin requires a continued supply of diesel fuel, natural gas, coal, petroleum coke and other forms of energy for production. Increasing energy costs, then, negatively affect the production of Martin's aggregates. As a result, the price of oil and other energy sources have a significant impact of the company's margin.
Of the more than 3,800 aggregate companies in the United States, the company estimates that the five largest aggregates producers control control 31% of the market.Due to transportation costs, competition in the aggregates industry is limited by a company's proximity to its production facilities. Some of the largest competitors are as follows: