Martin Marietta Materials, Inc. (NYSE:MLM) Q1 2024 Earnings Call Transcript

Martin Marietta Materials, Inc. (NYSE:MLM) Q1 2024 Earnings Call Transcript April 30, 2024

Martin Marietta Materials, Inc. beats earnings expectations. Reported EPS is $16.87, expectations were $1.88. Martin Marietta Materials, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to Martin Marietta’s First Quarter 2024 Earnings Call. All participants are now in a listen-only mode. 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. Jacklyn Rooker, Martin Marietta’s Director of Investor Relations. Jacklyn, you may begin.

Jacklyn Rooker: Good morning, and thank you for joining Martin Marietta’s first quarter 2024 earnings call. With me today are Howard Nye, Chair and Chief Executive Officer; and Jim Nickolas, Executive Vice President and Chief Financial 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.

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. As a reminder, all financial and operating results discussed today are for continuing operations. In addition, 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. Howard Nye will begin today’s earnings call with a discussion of our first quarter operating performance and our recently completed transactions, as well as market trends.

Jim Nickolas will then review our financial results and capital allocation, after which Howard will provide some brief concluding remarks. A question-and-answer session will follow. Please limit your Q&A participation to one question. I will now turn the call over to Howard.

Howard Nye: Thank you, Jacklyn, and welcome, everyone, and thank you for joining today’s teleconference. Martin Marietta’s continued growth and results demonstrate our industry-leading performance and disciplined adherence to, and execution of, our proven Strategic Operating Analysis and Review or SOAR plan. With the native that as always, the industry’s first quarter concluded and the 2024 construction season meaningfully underway, we remain confident that steady product demand supporting favorable commercial dynamics, continued adherence to our value over volume strategy, ongoing operational excellence undertakings, and portfolio optimizing transactions will position Martin Marietta for continued outperformance in 2024 and beyond.

As detailed in today’s earnings release, we raised our full-year 2024 adjusted EBITDA guidance to a range to $2.30 billion to $2.44 billion or $2.37 billion at the mid-point. This increase reflects the benefits that will be realized from the recently acquired Blue Water operations as well as the strong realization of this year’s pricing actions. As is customary, we’ll revisit our guidance again at mid-year. Consistent with our SOAR 2025 initiatives, we’ve executed $4.5 billion of portfolio-enhancing transactions this year, reducing cyclical downstream exposure, while redeploying the proceeds to expand our aggregates footprint and improve our ability to generate consistently higher margins. More specifically, on January 12, we completed the acquisition of Albert Frei & Sons, a leading aggregates producer in Colorado, strengthening our aggregates platform in the high-growth Denver Metropolitan Area.

And on April 5, we acquired 20 aggregate operations from Blue Water Industries, providing us a new growth platform in Tennessee and Florida. These two pure-play aggregates transactions are expected to add approximately 17 million tons of annual shipments and generate approximately $180 million of annualized EBITDA, more than offsetting the EBITDA from the February 9th divestiture of the company’s South Texas cement and related concrete business. These transactions are all reflected in our revised adjusted EBITDA guidance as of their respective closing dates. Turning now to the company’s first-quarter operating performance, aggregate’s pricing fundamentals remain attractive, increasing 12.2% or 12.7% on an organic mix-adjusted basis, underscoring the advantages of our value-over-volume commercial strategy and our sales team’s unwavering commitment to receiving appropriate commercial consideration for our valuable and long-lived reserves.

Aggregate shipments declined 12.3% due largely to the well-chronicled weather-impacted start to the year in our East and Southwest divisions, and softening demand in warehouse, office, and retail construction, partially offset by more favorable weather and relative strength in our Central and West divisions. Aggregates product line gross profit per ton increased 14% and gross margin expanded by 90 basis points, notwithstanding the shipment decline. Looking ahead, we remain enthusiastic about Martin Marietta’s attractive market fundamentals and long-term secular trends across our three primary end uses of public works, non-residential, and residential construction. More specifically, we believe these markets in Martin Marietta’s chosen geographies will drive aggregate-intensive growth and favorable pricing trends for the foreseeable future.

We expect robust multi-year demand in public infrastructure, US-based manufacturing, energy projects, and data center construction will partially offset near-term softness in warehouse, light non-residential, and residential end-markets. That said, we fully expect the housing recovery, particularly in single-family once affordability challenges subside as demand in our key markets remains robust. Infrastructure activity is expected to continue to grow in 2024 as early Infrastructure Investment and Jobs Act or IIJA projects advance to the major construction phase. Notably, according to the annual market outlook provided by the American Road and Transportation Builders Association or ARTBA, public highway, pavement, and street construction, the largest market sector is expected to increase 16% to $126 billion in 2024, as compared with $109 billion in 2023, as record State Department of Transportation or DOT budgets match federal funds and provide additional investments.

The value of state and local government highway, bridge, and tunnel contract award is a leading indicator for our future product demand grew 11% to $116 billion for the 12-month-period ending February 29, 2024. This generational investment in our nation’s infrastructure supported by federal, state, and local actions provides State DOTs with certainty to advance projects in their backlogs, driving sustained multi-year demand in this aggregates-intensive, often countercyclical market. Shifting to the heavy non-residential market, manufacturing projects continue to be supported by steady demand from ongoing reshoring of critical product supply chains. Construction spending for domestic manufacturing continues to trend positively with the February seasoning adjusted annual rate of spending for 2024 at $223 billion, a 32% increase from the February 2023 value of $169 billion.

Equally, we expect the long-term secular trends toward cloud-based services and artificial intelligence will drive renewed growth in data center construction, which had moderated from its post-COVID peak. As an example, in March, Google announced a new $1 billion data center in Kansas City to help drive its artificial intelligence efforts, which requires nearly 800,000 tons of aggregates from our uniquely positioned underground operations. Looking at the light non-residential market, we expect 2024 demand will be challenged given higher for longer interest rates, high office vacancy rates, and the natural construction lag from the last two years of single-family residential declines. As for the residential market, despite near-term uncertainty around mortgage rates, we’re encouraged by positive trends in single-family housing starts, a leading indicator of aggregates demand, which were at 1 million units in March 2024, a nearly 21% increase from a year ago.

Notably, single-family housing starts have been at or above 1 million units since November 2023, indicative of a recovery from the 2023 trough. Given the well-publicized structural housing deficit in our company’s key metropolitan areas, we expect Martin Marietta to benefit disproportionately from new home construction once interest rates moderate and monthly mortgage payments become more affordable. I will now turn the call over to Jim to discuss our first-quarter financial results. Jim?

Jim Nickolas: Thanks, Howard, and good morning, everyone. As Howard mentioned and indicated in our earnings release, we raised our full-year 2024 adjusted EBITDA guidance to $2.37 billion at the mid-point and our full-year 2024 aggregates gross profit guidance to $1.75 billion at the mid-point. The updated guidance for aggregates gross profit includes a $30 million non-recurring, non-cash purchase accounting impact expected in the second quarter for the fair market value write-up of inventory related to the Blue Water acquisition. The Building Materials business generated revenues of $1.2 billion, a decrease of 8%, and gross profit of $248 million, a decrease of 10%. The vast majority of the decline in both metrics is due to the effect of the divestiture of our South Texas cement and ready-mix business.

A much smaller portion of the decline was due to shipments impacted by tougher weather this quarter compared to the prior year’s unseasonably favorable weather conditions. Despite the lower shipment volumes, aggregates gross profit increased modestly to $239 million and gross margin increased 90 basis points to 27%. These results reflect our team’s focus on what we can control, specifically the efficacy of our commercial discipline and flexible cost structure, which drives higher profits without the benefit of growing volumes. Turning to our Texas Cement and targeted downstream businesses. Our cement and concrete revenues decreased 22% to $265 million and gross profit decreased 47% to $31 million, driven primarily by the divestiture of our South Texas cement plant and its related concrete operations and secondarily by wet weather in Texas.

Additionally, the new finish mill at our Midlothian cement plant in North Texas, which will add approximately 450,000 tons of incremental high-margin annual production capacity is still on track to be operational in the third quarter of 2024. Consistent with typical seasonal trends in relevant geographies, the asphalt and paving business posted a $22 million gross loss as our Minnesota-based asphalt facilities are inactive during the first quarter due to winter operational shutdowns and our Colorado-based operations experienced unfavorable winter conditions. Magnesia Specialties achieved an all-time quarterly gross profit record of $29 million, despite a 3% decrease in revenues to $81 million, as strong pricing, improved maintenance cost control, and energy tailwinds more than offset continued headwinds in metal mining end markets.

Our long-standing disciplined capital allocation priorities remain focused on responsibly growing our business through value-enhancing acquisitions, prudent organic capital investment, and the consistent return of capital to shareholders, all while maintaining our investment-grade credit rating profile. In the first quarter, we invested $200 million of capital into our business. We also returned to shareholders almost $200 million during the quarter with $150 million of that used to repurchase over 255,000 shares at an average price of $586.85. Since our repurchase authorization announcement in February 2015, we have returned a total of $2.8 billion to shareholders through both dividends and share repurchases. Our net debt-to-EBITDA ratio was 0.8 times as of March 31.

Assuming no further M&A activity, we expect net leverage to be 1.4 times by year-end below our targeted range of 2.0 times to 2.5 times, providing a strong balance sheet to capitalize on our robust acquisition pipeline. With that, I will turn the call back over to Howard.

Howard Nye: Jim, thanks so much. To conclude, we expect 2024 will be another year of significant achievement for Martin Marietta. We’re well-positioned to benefit from infrastructure tailwinds, providing steady product demand and favorable commercial dynamics across our coast-to-coast footprint. Over the past 30 years, years as a public company, Martin Marietta has built a resilient and durable business. We’ll continue to build on the foundation that has proven so successful, an aggregates-led platform with an unwavering commitment to safety, commercial, and operational excellence, and the disciplined execution of our strategic priorities. The operator will now provide the required instructions, we’ll turn our attention to addressing your questions.

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Q&A Session

Operator: Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Kathryn Thompson from Thompson Research Group. Your line is open. Kathryn Thompson you might be on mute. All right, we’re going to proceed with the next question. And your next question comes from the line of Trey Grooms from Stephens. Your line is open.

Trey Grooms: Hey, thank you. Good morning, Howard and Jim.

Howard Nye: Good morning, Trey and the good news is we can hear you.

Trey Grooms: Yes, sorry about that for Kathryn. You have clearly been very busy with acquisitions and overall portfolio optimization. And I know it’s early days, but maybe if you could talk about kind of the integration of AFS and BWI, how that’s going so far, maybe where you see opportunities there? And then with that, relative to the information you’ve given us in the past, I think you might be adjusting your view of the demand environment just a little bit, but taking up the ASP and maybe even the standalone EBITDA guide a bit. First off, do I have that right and maybe could you help us out with that? Thank you.

Howard Nye: You do have it right and thanks for the questions. I’ll try to do all three parts. So let’s talk first about integration and your question is a good one. And look, we’ve — we closed on Frei, we’ve closed on Blue Water, the transactions went well. And the nice thing from our perspective, one, our teams have done this and done a lot and done it well. Number two, we typically close on a Friday and we open up on Monday morning and it’s a Martin Marrietta operation. It has our signs, it has our tickets, they’re on our networks, and that’s exactly what we’ve seen. So again, the blocking, the tackling, and the people integration is complete and it’s exactly where you would expect it to be based on our history. Now from a commercial excellence and operational excellence integration perspective, a couple of views on that.

If we’re looking at the commercial excellence, I mean, given the fact that we closed on Blue Water relatively quickly, number one, we were able to announce mid-years in all of those markets effective July 15, and we generally like to provide people with at least 90 days of notice to our customers. So again, the early closing of Blue Water worked to our advantage in that respect. With regard to operational excellence, several things that I think are worth noting. Look, we look for quick wins. We’re looking for suppliers. We’re looking to spend more on favorable contracts that typically happen within the first 90 days without any incremental CapEx. We’re seeing that. Longer-term, we’re obviously going to be looking at plant upgrades, we’re looking at fleet modernization, and that typically takes some time, and it’s got a CapEx component.

And actually one of the things that you’ll see in the guidance is CapEx is up modestly and that’s up modestly because of things just like that in addition to what we feel like could be some opportunistic land purchases later. One thing relative to BWI in particular, keep in mind that was a carve out, so no corporate SG&A came with that business. So it was just already basically synergized from that perspective. So again, all of that has actually gone very nicely, Trey. The other piece of it that you mentioned and you’re right on, if we’re looking overall at volume, you remember when we came out at the year, not taking these transactions into account, we said we thought minus 2 to plus 2 midpoint was zero. What we’re seeing now because of interest longer, really a bit of a weather-impacted start to the year.

And the fact is, if we look at 5 million tons down in Q1, if we parse that, several things are worth noting. One, there were three less shipping days in this quarter than there were last year. That’s probably about, let’s call that a couple of million tons all by itself. But if we’re looking then at the balance, which is what, about 3 million tons really, Trey. I mean, about a third of that was slower private, about a third of that was weather, and about a third of that is value over volume. So again, when we’re taking those components into account and we’re looking at organic or Heritage volume, look, we think we’re probably closer to the lower end of that original guide, let’s call it down 2, down 3. And then what you’re seeing in the new guide takes the acquisition effect into account.

So hopefully, that gives you the bridge that you wanted, Trey. So, I tried to go through the integration components of it and then deal also with the volume bridge. Was there a piece of your question I did not respond to yet?

Trey Grooms: Yes, the one thing was just, you know, again, there’s a lot of moving pieces here, but just based on some of the information you’ve given us in the past about BWI in particular, it seems like maybe you’re adjusting that kind of standalone EBITDA guide up a bit. Do I have that right?

Howard Nye: No, we are. So if you look at the overall EBITDA mid-point, it’s now $2.37 billion. Now that’s 11% over where we were last year. So you take that into account that basically, we’re going to give you a year’s worth of Blue Water in only nine months. So, that’s one way to think of it. But the other thing that’s important to state is we’re also seeing improvement in the Heritage business as well. So, we’re getting a two for there. We’re getting the benefit of Blue Water, by the way, which we think there’s going to be more to come. We’re also seeing improvement in the Heritage business. You can see among other things, we raised the aggregate pricing to 12% at the midpoint. So again, that’s going to include some degree of mid-years this year.

And keeping in mind, some of the difficulty that we have is, if we’re looking at pricing that was at Frei and pricing that was at Blue Water, their pricing was actually below Heritage Martin Marietta pricing. So, the pricing that you’re seeing and the changes that you’re seeing are despite the overall headwind that we actually have from the new businesses that we brought in, Trey. So, I hope that helps relative to the EBITDA range and what we’re doing relative to pricing as well.

Trey Grooms: Yes, very helpful color, Howard. Thank you very much. Very encouraging and good luck for the rest of the year. Thank you.

Howard Nye: Thank you so much, Trey. Take care.

Trey Grooms: You too.

Operator: Thank you. And we’ll be taking the next question again from Kathryn Thompson from Thompson Research Group. Your line is now open.

Kathryn Thompson: Hi, thank you for taking my question. Apology for the technology glitch back here 15 years in the [Multiple Speakers]. Just a cleanup question from your prior answer, which was very helpful around guidance. Just a clarification, how much of the pricing guidance takes into account mid-year pricing actions, and also any other factors that we should take into account, given a change in mix from acquired and the opportunities for pricing with those acquisitions? And then finally, if I could just do one follow-on with Magnesia Specialties, while a small portion of EBITDA contribution, you had a very good quarter. What can we read through from a broader macro perspective on this business segment’s outperformance? Thank you.

Howard Nye: Thank you, Kathryn. So a couple of things. One, if we’re looking at the pricing guide that we’ve given for the rest of the year, I mean, here’s the direct answer. It’s got some mid-years, it doesn’t have everything that we believe we’re going to see. So what does that mean? It means that now that we bought Blue Water, we’ve already indicated to those customers, they’re going to get mid-years. So we’ve built that in. As you may recall, coming into the year, we had indicated though we had not put it in guidance, we had already indicated to our customers in California that they were going to get mid-years. That has been worked in. So there have been some very specific mid-years that have been worked into the numbers that you see.

So, the numbers that you’re seeing reflect two things, some very direct mid-years, very nice realization of the beginning gear increases that we put in. But the fact is, we still think we’re going to see some more mid-years at mid-year. So what that tells you is, you should expect us to come back with more color on what that looks like when we’re reporting during the summertime. So, that’s the way I would ask you to think about that. Now relative to Mag Specialties, I would say several things. Number one, the chemical markets globally are still very difficult markets. Now that said, Mag just had its best quarter ever. So I would say a couple of things are worth reading through on that. Number one, is steel doing relatively well? It is. Is it blowing the doors off?

It’s not. So it tells us that business is actually performing quite well. So, steel utilization is about at 72%. And so if we’re looking at the way that business is overall going, I’m actually very pleased with it. I think a read-through that you may be looking at is this, one of the things that we’re seeing begin to recover nicely is TPO roofing. And that tells us now as we’re looking at degrees of manufacturing and that manufacturing renaissance that we can look for across the United States, that TPO roofing is what we’re going to see in a lot of these data centers and a lot of these new battery plants and others. So, typically, we’re watching those products go into larger industrial uses, but when we’re seeing TPO roofing recover, if you’re looking for that read-through, Kathryn, I don’t think that’s a bad read-through.

Kathryn Thompson: Very helpful. Thanks so much and best of luck.

Howard Nye: Thank you, Kathryn.

Operator: Thank you. Your next question comes from the line of Stanley Elliott from Stifel. Your line is open.

Stanley Elliott: Hey, good morning, everyone. Thank you for the question. Howard, can you talk a little bit about kind of what you’re seeing from an end-market perspective? You know you mentioned about kind of some building into — from a volume standpoint as we’re kind of moving through the rest of the year. And I apologize if some of this was covered on some of the others. I’ve had some technical difficulties as well. But would love to kind of get some color on what’s happening across the end markets? Thanks.

Howard Nye: Stanley, thank you for the question. Happy to do so. I mean, look, let’s start with infrastructure, which is our single largest end-use and an end-use that we think is going to get nicely larger. But we see that up mid-single to high-single digits this year for several reasons. One, you’ve got the bipartisan infrastructure law that’s going to be coming in a meaningful way this year, build into ’25 even more meaningfully. So, we see that working in a very significant way in a multi-year fashion. Keep in mind too, we’ve got very healthy DOTs in our chosen geographies. If we’re looking at our top 10 states, those budgets are up around 10% year-over-year. And last year, keep in mind, those budgets were pretty attractive.

Yes, I mentioned in my prepared comments that if we’re looking at the last 12 months’ highway bridge and tunnel awards, those are up 12%. That’s $116 billion versus $104 billion during the prior period. And the other thing that I think people forget is what’s happening at local levels relative to ballot initiatives and what we saw last year were about $7 billion of transportation funding approved in 2023 that we’ll see in the marketplace this year. So, again, we think infrastructure looks attractive. If we’re looking at non-res, our view is still largely the same. We think that’s down probably mid-single digits, perhaps a little bit more. Keep in mind of the portion of our business that is non-res, around 55% of it is heavy non-res and about 45% of it is light non-res.

And by the way, we think that’s a pretty good break and we like the way that looks. Now if we’re thinking about heavy, several things are worth keeping in mind. One, we put in the supplemental slides the fact that there’s $53 billion worth of CHIPS Act money and about $250 billion of Inflation Reduction Act money that will be flowing through those sectors over the next several years. But what we’re seeing more specifically is demand for heavyside energy and domestic manufacturing, that continues to be really resilient and we think that’s offsetting moderation in degrees of distribution and warehousing. Now where we are seeing some green shoots and I think this is important is in AI and in data centers. So, for example, I mentioned Google is building a new facility in Kansas City.

It’s going to take about 800,000 tons, but it’s not just there. I mean, we’re seeing it across the Midwest, we’re seeing it in Omaha, we’re seeing it in Des Moines. And we’re going to be a disproportionate beneficiary of that due to the availability of land and wind power in those states where we actually have a very significant interest. Now light non-res is in fact, in our view going to be impacted near-term by the high interest rates for longer and office vacancy rates. And I think that partly goes back to the commentary that I was having with Trey relative to what we see going on with organic volume. So that’s certainly a piece of it. And resi, we see that down, let’s call it, low-single digits, maybe modestly higher than that. We think softness will persist there as we continue navigating this period of higher mortgage rates that’s impacting affordability.

I think clearly, people are thinking today that mortgage rates are going to remain higher than they would have thought in February. And I think that’s part of the reality of it. But I do like the recent trends. I mean, if we’re looking at recent trends in single-family housing starts are encouraging because since last November, the starts have been at 1 million units and that’s a nearly 21% year-over-year increase, and we know the demand is going to have to be met with new construction. And again, if you take a look at the states with big population inflows, I mean, think about these states and think about Martin Marietta, Texas, Florida, North Carolina, Georgia, et cetera. So while we think near-term single-family housing is going to be a modest headwind, we think long-term, it’s going to be really very attractive.

So, our view is, if we look at infrastructure and think about how that’s going to build multi-year, we look at res, think about how that’s going to build multi-year, we look at the heavy side of non-res, we think that’s going to continue to be very resilient, and we think the light non-res is going to come behind res, most likely with that six to nine-month lag. So Stanley, I hope that helps.

Stanley Elliott: Great color, Howard. Thanks so much and best of luck.

Howard Nye: Thank you, Stanley.

Operator: Your next question comes from the line of Anthony Pettinari from Citi. Your line is open.

Anthony Pettinari: Good morning.

Howard Nye: Hi, Anthony.

Anthony Pettinari: Hey, with the portfolio moves, it looks like you’ll raise your aggregate mix from the high 60s to high 70s in terms of gross profit. And my question is, is there kind of a long-term target percentage that you envision there and understanding you’ll continue to grow aggregates organically and through acquisitions? I’m just wondering if you could talk about kind of the role you see Mag and the remaining cement assets playing in the broader portfolio?

Howard Nye: Yes, I’d say several things. Number one, we are an aggregates-led company, and we’ve always told people that’s what you should expect us to be. And the moves that we have made are totally consistent with that. So should you expect to see aggregates number go up largely because I think we’ll be buying relatively aggregates pure businesses? I think the answer to that question is, yes. Equally though, if we pivot and talk about the other two businesses that you spoke of, remember, we’ve long spoken of the criticality of strategic cement. And we’ve said strategic cement is where we’re an aggregates leader, where the market is naturally vertically integrated, where we have a significant downstream business, meaning ready-mix concrete that takes a significant portion of the cement and where it cannot be meaningfully interdicted by water.

And the fact is that is precisely what Midlothian means to us. And one of the things that you’ll keep in mind, Anthony, we’ve got 450,000 tonnes worth of annual capacity that will be coming on at Midlothian this year in Q3. So we continue to invest in that business because we like that business and we very much like being in that business in Dallas-Fort Worth. Equally, if you look at the Magnesia Specialties business, and keep in mind, that’s a business that we have about $100 million worth of investment out. That’s a business that’s going to make over $100 million a year. And frankly, as a business if we can find ways to responsibly grow it, they’ve earned that right, because from a margin perspective, that’s a hugely attractive business. So the way that we think of it, yes, is it aggregates-led, you bet.

Are we looking in particular at those three big upstream businesses is driving the vast majority of our revenues and profits? And the upstream businesses, meaning, number one, aggregates, number two, cement, number three, Mag Specialties. So yes, you will see that aggregates percentage go up. And yes, your number was right. I mean, we’re sitting here today looking at gross profit from aggregates at about 77%. And if we look to where we were a year ago, it was somewhere sub 70%, closer to 69%. So expect that number to keep going up, but I hope I’ve also outlined to you the way that we think about our very important and very good cement business in Dallas-Fort Worth and a high-performing Magnesia Specialties business as well.

Anthony Pettinari: Okay. That’s very helpful. I’ll turn it over.

Howard Nye: Thank you, Anthony.

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

Jatin Khanna: Hi. Good morning, everyone. This is Jatin Khanna on behalf of Jerry Revich, from a portfolio standpoint, what has driven significant deal opportunities for you and is there scope for further asset refinement for the industry? What’s the range of additional M&A that’s feasible based on your pipeline? Thank you.

Howard Nye: Thank you for the question. I would say several things. One, we have looked in the markets in which we want to grow, and in the markets, most importantly, that we can grow. So we have several things that advantage us. Number one, the condition of our balance sheet. So if you look at our balance sheet, we are in a position that we can grow and we can continue to grow smartly. Number two, if you look at the transactions that we’ve done, I think you’ll look at the transactions and say that we have done those in a wise and prudent fashion. If we look at businesses that we want to buy in markets in which we want to enter, by our math, we found businesses that on a per annum basis, produce and sell about 238 million tons of aggregates per annum.

Here’s the way to capture that. Basically, there’s another Martin Marietta that’s out there that we believe we have the ability, over time, to buy. Now, can I sit here and tell you from a linear perspective exactly what that’s going to look like? No, I can’t. But can I tell you that I believe economically, geographically, regulatorily, and otherwise, that we are uniquely positioned to do that, in my view, better than any other publicly held company in the United States? I believe that we are. And of course, I look at the world through Martin Marietta lenses, but I also believe that’s a good clinical view of where we are. Our team is good at that. We’re good at identifying businesses. We’re good at the contracting phase of it. And as you heard during my earlier comments, we’re very good at the integration and synergy phase of it as well.