Martin Marietta Earnings: Higher Selling Prices and Infrastructure Spending Drive Growth

Narrow-moat-rated Martin Marietta Materials reported strong first-quarter results that were ahead of our expectations. Net sales rose over 8% year over year due to robust growth in the company’s aggregates and asphalt businesses. Martin Marietta continues to execute well, driving price growth across much of its portfolio despite choppy end-market demand. Higher interest rates continue to weigh on private construction end-markets, with residential construction faring worse. That said, data centers remain a bright spot, a trend that we expect will persist at least through the end of the year. Infrastructure spending from the 2021 infrastructure bill remains strong and continues to boost shipments. Nevertheless, some uncertainty remains as tariffs and higher interest rates could have an adverse effect on private sector construction spending this year, which would likely weigh heavily on shipments. Still, we expect robust infrastructure spending will support shipments this year.