Trey Grooms: So, maybe sticking to the pricing theme here particularly in aggregates. If you could maybe talk through your initial 2024 aggregates pricing outlook of low double digits growth that you’ve laid out, and maybe unpack how much you have coming from carryover 2023 midyear increases, and how you’re setting the stage for low double digits price improvement in 2024?
Ward Nye: Happy to try. Thanks for that. So we’re thinking about the 2024 guide, similar to the way that we did the 2023 guide. What I mean by that, is the guide that we’ve given I think this is more to stay out immediately, does not include any midyears and again, just as we saw in 2023, we think we’re going to have mid-years in 2024. But right now, the guide that we’ve given, does not assume that. So, I think that’s important. Secondly, as I indicated in the previous question, we think midyears are becoming more and more the norm, with our customers and we think the expectations have been set, the customer letters that have gone out indicate that pricing is largely effective from January 1 to June 30. So in the correspondence that has already gone, people know that we’re going to protect them through midyear.
Now, in fairness there’s a footnote to that. And the notable exception is California, where our pricing letters already include announced midyear so that our customers can plan for that in that marketplace. We’ve long talked about what we inherited when we bought the business in California and we’re trying to address that. Just to be clear, California totaled 2024 increases right now look like that’s going to be about $4 a ton across all products and markets, as we continue to implement that strategy in particular in what’s a relatively new marketplace for Martin Marietta. Now to your point, if we’re thinking about the way carryovers are going to work carryovers next year are probably going to be in the low single-digits so a little bit lower than they were this year.
But again, we’ve got a lot of confidence in what we think we will come out with on January 1. And then, again, if we have something that even begins to replicate what we saw in midyear next year and frankly there’s probably some upside to that Trey. So I think that gives you a good build on the way that we see that working based off exit rates in 2023.
Trey Grooms: Yeah. Super helpful Ward. Thank you so much and good luck.
Ward Nye: Great. Thanks so much.
Operator: Your next question comes from Stanley Elliott with Stifel. Please go ahead.
Stanley Elliott: Hey, good morning, everyone and congratulations. Can you guys talk about what you guys are seeing on the M&A front? I mean, historically, you’ve done a nice job strategically expanding the footprint. Leverage the 18% free cash flow cement sale even better by year-end. What is the M&A market looking like these days?
Ward Nye: Stanley, thanks for the question and for the comments on the quarter. The M&A market is actually looking increasingly attractive. The level of dialogue has ramped up in the second half of this year. From my perspective, that wasn’t a tremendous surprise. As you know, 2021 was a big year for M&A for us. And part of what we’ve been doing, since then is a lot of what you saw in today’s announcement relative to the sale of Tehachapi, making sure we’re getting our pricing right in different markets making sure we’re getting our hands around the operations. And now, as we sit here today, several things are apparent. Number one, we’re looking at a debt-to-EBITDA ratio of 1.8x. So that’s below our targeted range. Two, you can see from the financials what the cash flow in this organization looks like that can clearly help fuel and will fuel some aggregates led frankly from my perspective pure aggregate transactions.
And then two or three, when we had the proceeds that have just come in from Tehachapi, it puts us in a very attractive place. Do I think we’ll have anything to announce here in the rest of this year? Probably not. Do I hope that we’ll have some things that we can announce early next year? I think that we will. So, more to come on that Stanley. But again, we like financially where we’re sitting. We like strategically where we’re sitting. We like what we believe or what we know we can do from a regulatory perspective because we think that’s a differentiator right now. So we believe that we can continue to give you price. We believe we can continue to give you really good cost control. And we believe we can keep giving you good solid attractive M&A.
And we think that’s a hattrick that we can offer today.
Stanley Elliott: Great. Thanks so much and best of luck.
Ward Nye: Thank you, Stanley.
Operator: Your next question comes from Jerry Revich with Goldman Sachs. Please go ahead.
Jerry Revich: Yes. Hi. Good morning, everyone.
Ward Nye: Hi, Jerry.
