Martin Marietta Materials Aktie

Welcome to the Martin Marietta conference call. [Operator Instructions] 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 Vice President of Investor Relations. Jacklyn, you may begin.

Hello, and thank you for joining today's conference call following our announced agreement to combine with Lhoist North America this morning. With me are Ward Nye, Chair, President and Chief Executive Officer; and Michael Petro, Senior Vice President and Chief Financial Officer. Today's discussion may include forward-looking statements as defined by United States securities laws. These statements relate to future events, operating results or financial performance and are subject to risks and uncertainties that could cause actual results to differ materially. Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements except if legally required, whether due to new information, future developments or otherwise.

For additional details, please refer to the legal disclaimers contained in today's press release and other public filings, which are available on both our own and the Securities and Exchange Commission's websites. An investor presentation summarizing the transaction is available during this webcast and in the Investors section of our website. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the investor presentation appendix in our SEC filings and on our website. I will now turn the call over to Ward.

Thank you, Jacklyn. Good morning, and thank you for joining this teleconference, especially at such short notice. We appreciate your involvement with Martin Marietta. Today marks a transformative milestone for Martin Marietta and meaningfully accelerates our SOAR 2030 portfolio strategy. Most importantly, it represents a disciplined step forward in our commitment to create long-term shareholder value through the ownership of scarce, high-quality upstream materials assets. As we outlined at our September 2025 Capital Markets Day, a key priority is expanding our complementary upstream specialty segment, particularly in lime and other specialty quarries.

This transaction is exactly the type of portfolio enhancement we identified as a strategic priority. Importantly, we pursued this opportunity through the same disciplined lens we have consistently applied to capital allocation, strategic fit and long-term value creation. As indicated in this morning's press release, we've entered into a definitive agreement for $13.5 billion in cash and stock to combine with Lhoist North America or LNA. They are the North American business of Lhoist Group and a premier U.S. producer of lime and industrial mineral products with industry-leading reserve positions and a highly attractive commercial and financial profile.

This transaction will combine 2 highly complementary businesses with shared operating disciplines, leading market positions and exceptionally valuable reserve bases. In doing so, it will position Martin Marietta as the nation's leading lime and limestone franchise while providing immediate scale, an irreplicable upstream materials platform across key sunbelt markets and substantial high-quality limestone reserves. LNA also brings durable recurring revenue with more than 50% under contract, a network of 20 production facilities and 45 distribution terminals serving diverse end markets. Collectively, these characteristics support resilient cash flows, earning visibility and through-cycle profitable growth.

Again, as we highlighted at our Capital Markets Day, lime shares many of the same compelling characteristics as aggregates, beginning with the fact that it starts with limestone quarrying through drilling, blasting, loading, hauling and crushing. All core competencies that have long defined Martin Marietta's success. Beyond those operational similarities, the business is supported by structural value drivers. Limestone reserves suitable for finished lime production are scarce due to geological availability and face stringent permitting requirements for new supply. These mission-critical materials represent a relatively small percentage of customers' overall input costs and have no meaningful substitutes.

As shown on Slide 6, these attributes drive more compelling price cost dynamics than those that have long underpinned the strength and consistency of our core aggregates business. Given strong cultural alignment, shared operating discipline and quarrying competencies, we expect a seamless integration and are confident in our ability to realize the identified synergies. As you can see on Slide 5, LNA represents a high-margin, well-invested asset base positioned for long-term compounding profit growth and through-cycle resilience. Its Sunbelt footprint in high-growth metropolitan areas and corridors is highly complementary to Martin Marietta's and meaningfully deepens our presence in Texas and the Southeastern United States while enhancing distribution reach and efficiency across the combined terminal network.

As outlined on Slide 8, the transaction diversifies our end market exposure beyond traditional construction into industrial process applications, infrastructure and environmental solutions, including municipal wastewater and flue gas treatment. These end markets provide consistent demand and serve to balance both heavy-side construction cyclicality and seasonal stability, further enhancing the resilience of our portfolio through economic cycles. At the same time, the combined platform is well positioned to benefit from powerful infrastructure and reindustrialization tailwinds.

With the combined company having a scaled and differentiated product portfolio of aggregates, lime and specialty products, we enhance our ability to serve complex critical infrastructure and industrial mega projects, including highways, data centers, semiconductor fabrication and LNG facilities across the Southern United States. Most notably in Texas, our largest and one of the most attractive construction markets in North America, where demand continues to outpace the broader United States. Within this context, LNA's Texas operations are primarily producing lime for soil stabilization applications, as lime enhances ground strength and workability for heavy nonresidential construction and surface transportation projects.

Importantly, the Texas Department of Transportation requires lime to stabilize clay-rich soils and strengthen road-based materials, establishing a specified source of demand that is highly synergistic with our aggregates base course product offering. Beyond infrastructure and construction applications, lime is an essential input in steel production where it serves as a fluxing agent to remove impurities and improve both yield and finished product quality. As the steel industry continues to transition toward electric arc furnace production, particularly across the Southern United States, LNA's advantaged sunbelt footprint is uniquely positioned to serve these new facilities with quality products.

Importantly, this more southern shift in the steel industry is being accelerated by ongoing domestic manufacturing investment supported by America first trade policies, heightened national security priorities and a broader reindustrialization trend that is driving incremental domestic steel demand. Lastly, lime plays a critical role in water and wastewater treatment, supporting pH control, softening and contaminant removal to meet regulatory standards. With that, I'll turn the call over to Michael to take you through the transaction details and review the combined financial profile, including our synergy opportunities and balance sheet implications. Michael, over to you, please.

Thank you, Ward, and good morning, everyone. The $13.5 billion purchase price implies an enterprise value to 2025 adjusted EBITDA multiple of approximately 15x inclusive of an expected $85 million of run rate cost synergies. Consideration for the transaction consists of $7 billion of cash, which is supported by a fully committed bridge facility, and newly issued shares of Martin Marietta common stock valued at $6.5 billion based on a 15-day volume-weighted average price per share prior to signing. Upon closing, the Berghmans family is expected to own approximately 15% of Martin Marietta on a fully diluted basis. They will have the right to appoint 1 director and 1 observer to our Board. We look forward to welcoming the Berghmans family as our single largest shareholder as we execute on the many value-enhancing opportunities ahead for the combined business.

On Slide 11, we've outlined combined financial profile of the company as compared to the midpoint of our 2026 guidance. On a combined basis, we expect revenues of approximately $9.1 billion, an increase of 28%. And synergized adjusted EBITDA of approximately $3.4 billion, an increase of 38%. Further, we expect LNA's attractive margins and modest maintenance capital requirements to enhance our already industry-leading margin profile by over 270 basis points and our free cash flow conversion by over 450 basis points. Together, these attributes make this transaction compelling not only strategically but financially from day 1.

From a cost synergy perspective, we expect to realize $85 million of savings driven primarily by procurement scale, operational efficiencies and logistics, distribution terminal and SG&A rationalization. We view that $85 million as achievable based on our demonstrated history of integrating large-scale acquisitions and delivering on synergy targets. In addition to cost synergies, we see notable long-term upside from commercial and operational opportunities. This begins with realizing the full value of our unique long-lived and differentiated limestone reserve base across construction aggregates, high calcium lime, dolomitic lime and other industrial minerals. Our combined geologic exploration and mine planning expertise, together with a cohesive go-to-market strategy, will unlock this large, albeit longer-term opportunity.

The combined platform enables delivery of a broader and more integrated suite of product solutions including lime stabilized aggregates base to critical infrastructure projects as well as hydrated lime as an anti-stripping agent to our existing asphalt customers. Importantly, we will be able to extend our market reach of both aggregate and lime through our highly complementary distribution terminal network across key sunbelt metropolitan areas as indicated on Slide 9. These expanded capabilities enable a more comprehensive approach to serving customers and a go-to-market solution that simply no one else in the industry can provide. Taken together with the expected cost synergies, these opportunities reinforce our expectation for significant value creation resulting from this transaction.

Turning now to balance sheet. We expect net debt to adjusted EBITDA of approximately 3.7x at closing and are committed to maintaining our investment-grade credit rating. Accordingly, we expect to reduce our net leverage to less than 2.5x within 24 months of closing, which is consistent with our proven track record of disciplined integration and rapid deleveraging following acquisitions. While deleveraging will be a near-term focus, we expect to continue investing in bolt-on aggregate M&A, organic CapEx and maintaining our dividend. With that, I'll turn it back over to you, Ward.

Thank you, Michael. Since we launched SOAR over 15 years ago, we've executed a clear and consistent strategy with discipline. More importantly, we've delivered on the commitments that we've made. This transaction is a natural extension of that strategy and is fully aligned with SOAR, the framework that we've used to guide how we build and strengthen Martin Marietta over time. This transaction adds to Martin Marietta a premier portfolio of scarce, long-lived, high-margin upstream assets that complements our existing franchise and enhances our ability to generate sustainable growth, strong returns and compelling cash flow generation for decades to come.

Supported by a proven leadership team and a disciplined operating culture, we believe this combination creates a uniquely positioned upstream materials company with enhanced durability, stronger growth prospects and compelling value creation opportunities for our shareholders for decades to come. If the operator now provides the required instructions, we'll turn our attention to addressing your questions.

Thank you. We'll now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Adam Thalhimer from Thompson Davis.

Ward, I'm just curious, you have a lot of options when it comes to M&A. Why lime?

We do have a lot of options. You're right. And why lime? Because, number 1, it's totally in our wheelhouse. If we look at what we do across our portfolio, we're one of the nation's largest producers of lime, if not the largest producer today. But if we look at this component of what we're doing, it's got higher margins. It's got a stronger market position. It has more diversified end markets, and it has pricing power that's outlined really nicely on Slide 6 of what we put out today. So I would say several things in addition, Adam.

Number 1, this is a best-in-class aggregates-like upstream platform. It's got resource scarcity. It has high barriers to entry. As we said in the prepared remarks, these are mission-critical products. We're also seeing something that I like relative to diversified end markets, and we think that's important. So will we continue to have nice exposure to infrastructure? Sure. But is it heightened to water, air, environmental, agricultural, steel, et cetera? It is. Another nice component of this business, too, is they have long-term contracts with nice pricing escalators in them. And about 50% of the volume, as I indicated in the prepared remarks, are basically very steady. This is also not a business that's going to have a high degree of seasonal variability. So if we're really thinking about what this does, Adam, it takes that very attractive specialties business that we have and takes it to about $1 billion a year of EBITDA.

And that is such a steady, attractive piece of our business. And then lastly, like aggregates, this is the low cost of the overall performance in a job. You and I have spoken about in the past, look, if you're building a road, which is the most aggregates-intensive thing that we do, it's about 10% of the cost. If we're in a subdivision, stone is about 2%. If we look at this business, Adam, it tends to be 1% to 4% of customer production costs. So like stone, it's the product that's essential. It doesn't have anything that can come in and really upset it. There's no natural substitute for it. And it puts us in what you've long heard us say we like, a #1 position. If we look at what we done in stone. From 2010 to today, we've gone from #1 in 65% of our markets to over 90%. And this puts us in that same coveted #1 position in something that's so core to what we do. But Adam, I hope that's responsive, and thank you for the question.

Thank you. Your next question comes from the line of Kathryn Thompson from Thompson Research Group.

Thank you for taking my question today and congratulations on today's announcement. So we actually know a little bit about lime and based on some of the work that we have done in CRG and a couple of questions. But one is the barriers, yes, Lhoist has very high, top market share. But from an industry standpoint, it is there also some fairly high barriers to entry just in terms of having expertise and ability to operate these plants in addition to obviously being able to capitalize on the broadly industrialization and AI build-out theme. Maybe talk just a little bit more about the industry structure and those high barriers to entry.

Well, as you said, Kathryn, the industry structure is rather tight. Obviously, Lhoist is an industry leader. It's been interesting over time. The 2 largest producers in the United States have been 2 Belgium-based players. So Lhoist has been #1. Carmeuse is also a very good player in the market. Obviously, there are a number of private players at Graymont and Mississippi Lime. And then actually, there's one company that's smaller, but a portion of it is publicly traded, US Lime, a very attractive and very good business in Texas. So again, to your point, this industry does not have the same quantum of participants that aggregates does. But it's also a very sophisticated business with a host of attributes as shown particularly on Slide 6 that it shares with aggregates.

So again, I think you're right. There's going to be a significant number, in my view, of synergies that we're going to see between the historic business that we've had particularly in Woodville, Ohio, where we have a dolomitic lime operation with these other businesses that tend to be high cal and other degrees of lime. So if you really think about what this is doing, Kathryn, to your point, in specialties, we've long had 2 different arms there, right? We've had a chemicals arm that we actually had some M&A with over the more recent months, and we've had this lime arm that, frankly, looks just like our core aggregates business.

If I took you to Woodville, Ohio, you would see a big quarry where we drill, we blast, we process, we crush, et cetera. At the same time, having these resources in these places particularly in a more southern climate oriented. And that's what you see very clearly when you look at the map that's included in our deck. When you get a sense of the map and again that's going to be on Page 9 in the deck, it gives you a sense of the southern orientation of this business and why we feel like this #1 position that we're buying and what we can do with this from an operating synergy perspective and how we can better serve our customers will be very powerful.

Yes. No, and I noted also, how it pretty significantly enhances free cash flow generation, as you noted in the deck, too. Follow-up on that is why now for the family?

Different families have different views. And the Berghmans family, who will now become our largest shareholder, has been an extraordinary steward of this business for a long time. And different families have different family dynamics. Clearly, what they're doing is they're in a position that they're going to maintain the rest of world business. They're going to sell this business in the United States to us. So they do a couple of things. They're bringing some cash in for their family, but they're also demonstrating a fidelity to what they believe the long-term future of this business is. Because if you look at the deck, you see that they're coming in as a 15% owner. They'll be appointing someone to our Board. They'll be appointing an observer as well, which I think is indicative of the fact that they like what the future of Lhoist and Martin Marietta together looks like in the United States. They've been wonderful stewards. We look forward to working with them. They've been tremendous to work with all the way through this process.

Your next question comes from the line of Trey Grooms from Stephens Inc. Your line is open.

So Ward, you mentioned how LNA has experienced really strong pricing and margins. But how should we think about maybe other considerations relative to aggregates, growth trends, capital requirements, returns, anything else like that? And I mean, I think it's pretty obvious that this fits and complements aggregates pretty well. But for those of us that might not be as close to the lime market as aggregates, could you go into a little bit more detail on maybe how some of those synergies or how it fits specifically with aggregates and complements it?

Yes. I'll take the first part of your question, and I'll ask Michael to come back and talk more about how that $85 million rolls up. But I would say several things. First, Trey, the geographic markets in which they operate and that we operate are nicely synergistic, number 1. Number 2, I would outline and Michael's commentary on the prepared remarks spoke to it to a degree, this is a well-capitalized business. We're not coming into a business that someone has been dressing up to sell. That's not at all what this is. They've been investing in this business thoroughly.

There are significant capital projects that are enhancing that are underway right now. So as we look at the business, it's not going to be a business that's going to be particularly capital hungry, and that's decidedly different than you oftentimes see in transactions going forward. Now part of what we've outlined is $85 million in annual run rate synergies. I want Michael to take you through that because what we're really talking about there is what we believe we can do together operationally. So Michael, if you want to address that, please?

Yes. Thank you, Ward. Trey, just a quick point on the CapEx requirements from a maintenance CapEx perspective, it's about 3-ish percent of sales for the Lhoist business. But as Ward indicated, they do have an expansion project in Texas underway that we will pick up upon closing. So but for modeling purposes, maintenance ex-growth is about 3%. On the synergy side, we discussed it in the prepared remarks, but the $85 million, importantly, is just cost synergies. So leveraging scale from a procurement perspective because this is a quarrying business. So if you think about mobile equipment, repair, supplies, explosives, stripping and contract services and the like, that will, we get more scale as we go to market on those opportunities.

From an SG&A perspective, this is actually a carve-out of a broader European business. So the group overhead allocation is already excluded in the EBITDA that we're acquiring. So it's a little bit less from an SG&A rationalization perspective than if you were buying the entire company. But then lastly, and you look at it on the distribution network slide, so there's 2 things there. Captured in the $85 million is really just rationalizing that distribution footprint where we may have terminals near each other in proximity. So I think Dallas-Fort Worth, as you look on the map in and around Celina, Texas. But the piece that's not quantified in that $85 million is actually on the opportunity -- the commercial opportunity. So we can extend our reach in aggregates through the Lhoist terminal network, where we might not have a terminal today, in particular, in Texas and the Southeast. And the same on the lime side, where Lhoist may not have a terminal today, but we, as Martin Marietta do in the Carolinas and Denver, Colorado, for example. So I hope that's responsive to your question.

Yes, that's helpful. And just kind of again on the educating of the lime business. Is this -- I guess, as we think about aggregates being a very local business, what type of, how local, I guess, is the lime business and kind of relative to aggregates? Is it more of a long-haul type business or is it similar to aggregates as far as its local dynamics? If you could touch on that.

It's relatively similar to ags and its local dynamics, but it does have the capacity to travel a bit further because, again, the pricing situation around it tends to be a bit different, Trey. And that's 1 reason when we look at their distribution network and we pair that up with ours, we feel like it's so impressive because keep in mind, aggregates can travel when it's traveling to a market for the deposit does not naturally exist. It's not that same degree in lime, but it does trend toward that direction.

Your next question comes from the line of Angel Castillo from Morgan Stanley.

Congratulations on the deal. Just wanted to go a little bit deeper into the kind of capital allocation dynamics here. Just as you think about maybe potential for future M&A, should we view it as kind of, 1, you want to wait until you get to under 2.5x and just that's when we could start to see more M&A? And also, if you do plan to potentially do more in between now and then, can you just talk about the appetite or capabilities for being able to integrate given you have Quikrete, you have this one? And then lastly, just as you think about kind of future path of opportunity, right, you've talked about aggregates led, but now clearly, this really transforms the specialties business and gives you a number of other end markets that perhaps aggregates doesn't touch. So should we still think about it as primarily kind of aggregates M&A? Or does this kind of open up the scope for other areas that you might be interested in?

Angel, thanks for the question. So let's start with really the foundation. This is an aggregates-led company, and it's going to continue to be an aggregates-led company. So your question is so great and timely because I do want to make clear, we've indicated specialties had earned the right to grow. We've been saying that since last fall, and this is evidence of it. And if you think about really what we've done with specialties in the Premier transaction last year and this one now, we've really bulked it up on both sides of it. And if you think about what that means, it means that business today, once this transaction is done, is going to have about $1 billion of EBITDA per year at very high margins. We think that simply makes a very stable, consistent portion of our business that differentiates us from others in the space.

We end up being the one-stop shop on the heavy side that really others can't offer to customers or the marketplace today. Now relative to your other question, I think it's so important for people to realize, look, Martin is not doing this transaction because we don't feel like there are attractive things to do in the aggregates space. There remain enormously attractive things to do in the aggregates space. And that's one of the reasons that we structured the transaction as we have. Maintaining investment grade was important to us, being in a position that we can continue to do attractive aggregates bolt-on transactions is important to us as well. So will we remain aggregates led? Absolutely. Should you expect from a capital allocation perspective, for those to stay broadly the same? Yes.

I mean, does that mean our first call is going to be on attractive M&A? It does. Are we going to invest in the business responsibly, but you've seen us be able to pull down CapEx this year because we've been investing in it responsibly for years to come? As I've indicated before, this business, too, has invested in it very responsibly. Now will we be focused on deleveraging? Absolutely. Will we be at about 3.7x? Sure, we will. But I think it's important to remember, we were at about 3.5x after we did our transaction on the West Coast and in Arizona. And you saw that business delever very, very quickly. So those would be the initial thoughts that I would have answer to your very good question. Michael, anything you want to add to that?

Yes. I would just say when we're saying we would return to below 2.5x within 24 months, that assumes a certain level of continued bolt-on aggregates M&A as well.

That's super helpful. And then just wanted to touch on the accretiveness of the deal within the first 12 months to both earnings and margins. Could you just first maybe talk about the transaction cost synergies or just the cost to actually realize the synergies that might be ultimately expected? I know that's not included in the accretiveness math, but then if you could kind of just layer that into the degree of accretiveness that you expect in the first 12 months, just helping us directionally would be great?

Yes. No, happy to do that. We're assuming about $20 million to realize the synergies. So even baking that in, it would still be nicely accretive. That being said, the reason we excluded it is we haven't done that math and the purchase accounting math yet. So that's what's excluded when we have the footnote and the accretion dilution, but we expect this to be accretive kind of all in as well, and we'll come back closer to closing when we have a better view on purchase accounting.

Your next question comes from the line of Steven Fisher from UBS.

Thanks and congrats on the deal. Maybe you could just give us a sense of LNA's volume and price growth in 2025 and 2026. And can you maybe just give us a sense of how the gross profit per ton has trended over the past few years versus aggregates?

Yes. No, we haven't disclosed that just yet. And as a private company, what we've disclosed is what we're prepared to disclose at this time. But they do about 4.5 million tons of high calcium dolomitic lime annually. And you can see the revenue of the business. So you can kind of back into the price per ton per lime, but I would certainly tell you that it starts with a 2, but not [$23] like aggregate. So well over $200 a ton is the pricing of the business.

Okay. Then maybe just as a follow-up. I mean, I think if you look at Lhoist's biggest end market globally is steel at about 1/3 of the business. I'm guessing that could be different in North America. Obviously, you laid out a number of the end markets they have. Can you just maybe clarify if that is different in North America? And how do you expect maybe that mix to change in the next few years? And to what extent could that impact the margins?

Yes. What I would say is if you look at Page 5 in the deck, you'll get the end market exposure of just North America based on LNA's North American sales. So what you'll see is about 28% steel, 16% is construction. And if you think about where that is, that's largely occurring in Texas because as we said in the prepared remarks, lime has to go down first before you can build on the clay-rich soils in Texas. So it stabilizes the soil very similar and synergistic with our core aggregates-based product. So that's the 16% that you see there.

Water at 14%, that's very sticky recurring revenue. So think about wastewater treatment with both municipalities and industries. The flue gas treatment, so that's treating effectively coal-fired power plants, sulfur dioxide emissions. So it cleans that, the byproduct of which is actually a synthetic gypsum. Then you see nonferrous metal mining. So it's an industrial process application there, again, very sticky recurring revenue. So that's, generally speaking, the end markets, the ones that are embedded in that 50% contracted are to the steel industry, water and flue gas.

Your next question comes from the line of Brian Brophy from Stifel.

Yes. Thanks. Good morning, everybody. Congrats on the deal. I guess continuing the conversation kind of on the structural dynamics of lime, can you talk about to the extent that there's import competition here in the U.S. in the lime market? Thanks.

You bet. As a practical matter, there really is no significant import competition coming into the U.S. And obviously, that's notably different than, for example, cement and the way that, that industry operates in a place that you've seen us access and then again, move very purposely into growing our lime business. So as a practical matter, we're simply not seeing that as a factor, and we don't anticipate that that will be.

Thanks. That's helpful. And then just looking at the PPI chart in the deck that you published, there's quite a significant acceleration in lime pricing in the past, call it, 3-ish years. Have there been any notable drivers there to call out? And just thoughts on the sustainability of that acceleration?

You bet. Look -- if you look at it, it really does look a bit like aggregates. So I would say that the drivers that we've seen there have been very consistent with the drivers that we've seen in aggregates. And again, I think what's different in many respects is the overall market in lime is structured differently than aggregates is. So we don't see anything that should not allow that to be nicely durable as we continue through different cycles. And I think that's particularly true as we're looking at broader reindustrialization and more so in Southern climates than in Northeastern climates. So again, we like the industry. We like the structure, but we particularly like the geography of this business.

Yes, Brian, just on the acceleration coming out of COVID, similar to aggregates, though, as we said when we were having double digits for a number of years, we didn't expect that rate of pricing to continue. We certainly still think the secular pricing dynamic of lime is better than that of aggregates, but not at that type of rate. So it will moderate from that type of growth rate.

Your next question comes from the line of Michael Feniger from Bank of America.

Yes. Thanks for taking my questions, gentlemen. Can you just talk a little bit about this business, the revenue CAGR over the last few years, any variability through cycle? Just seeing like 30% go to steel production. Just kind of curious what the variability looks like when we go through certain soft patches in the industrial economy? And if you could just also highlight the cost inputs? Obviously, we know for aggregates, fuel, diesel, what does it look like for this asset? Is it similar and let's, even on margins at 45%, obviously, very healthy. Where was that a couple of years ago? Do you guys view that as peak or steady state in terms of how to grow that?

Thank you. I would say the volume profile of this business is a lot more stable than that of aggregates. And for all the reasons Ward mentioned in his prepared remarks, aggregates is going to be susceptible to construction cycles. The water treatment, some of the other end-use categories that are stable and recurring tend to nice and consistent through cycles. The steel piece, you mentioned 28% of volume. That's actually we're seeing secular tailwinds in steel, in particular, in the southern states where they're starting to build the new EAF production facilities.

So that's actually a nice tailwind to volume currently. But again, as we mentioned, those are the contracts that we have to supply that end market. So that's spoken for revenue for the next 3 to 5 years. So we feel very good about the product and the volume and the pricing going into the steel industry. I would say in terms of CAGRs over the last couple of years, it grows at a similar rate to what we've seen in aggregates, but the EBITDA was growing at a faster rate, and that's largely organically.

Thank you. Your next question comes from the line of David MacGregor from Longbow Research.

Yes. Good morning and congratulations on the transaction. Great news. I wanted to just -- first of all, just a couple of quick clarifications, and I had a couple of questions for you. But just are there any potential divestitures considered here? And will any of this be reported under aggregates or is it all going into Magnesia Specialties?

A couple of things. Obviously, we would not have gone into this if we hadn't done a good bit of work on the marketplace and had a good feel for what it is. We don't believe that there's any meaningful overlap here at all. So we're not anticipating having any difficulty going through what we feel like will be an ordinary normal HSR process. There are some circumstances in which they are producing stone in a number of places, including, by the way, one with Martin Marietta. They're viewing stone and they have historically as a product that needs to get out of the way as they go to their high calcium carbonate products.

Obviously, we're going to think about it a little bit differently. But at the end of the day, they've got contracts in place with others, and that's how the marketing of that stone works. So it's a practical matter of what you're going to see is this is going to be coming through the specialties portion of our business.

Got it. And then just a couple of quick questions. I guess 2 billion tons of reserves is an awfully big number. Is that all permitted at this point? Or is that still -- it is all permitted?

It's all permitted.

Yes. The reserves and resources number is actually quite larger. So that's going to be proven and probable.

Okay, good. And then last question, I just -- not sure how vertically integrated LNA was, but are they a customer of yours after this -- after the dust settles here? Are they maybe through the steel business or some of the other businesses they have?

No. So just to be clear on steel, they are not in the steel business. Lime is a very critical product in steel production. So steel producers are a customer of LNA. So the lime is a fluxing agent in the production of steel that effectively removes impurities and creates the cementitious products slag as we know it. So that exposure to steel is actually an emission critical, I would say, input cost to the production of steel. You have to have high calcium dolomitic lime in order to produce steel.

And David, that's not new to us. That's something we've been doing for years out of Woodville. So again, it's a core competency that we've had for an extended period of time. We've had that Woodville operation since Martin Marietta went public. And in fact, that business came along back in the day in many respects to give us enough revenue that we were a credible spin.

So if you think about it, historically, the lion's share of steel production in the U.S. had been in the Rust Belt areas where Woodville is located. It's been transitioning to the Southeast over time, and that's where Lhoist is located. So that's again why -- that's a secular tailwind to Lhoist's North American volumes at the moment.

Okay. But the balance of their operations, they're not going to represent a significant amount of your revenue going forward?

Well, we're combining with the entirety of their North American business, which is the lime production 20 locations and the 45 distribution terminals. Their global business, they are retaining, which is a global lime business, but they wouldn't be a customer.

Your next question comes from a line of Keith Hughes from Truist.

Thank you. You've answered most of the questions. You did a good job explaining this business, just specific on the transaction. Are you going to put a collar around the shares, so the closing price is near where we are right now?

Yes. No, the shares are fixed based on that 15-day VWAP that we mentioned in the prepared remarks, Keith.

Okay. The recent 15 days, is that correct?

Yes, the most recent 15 days at signing, which was Friday.

Our next question comes from the line of Tyler Brown from Raymond James. Your line is open.

Michael. I just want to reiterate, so you do expect the deal to be accretive, both including and excluding purchase accounting? Is that correct?

Yes. We just haven't done the work yet. So that's why we have the footnote, but I would expect it to be.

Okay. Secondly, from a reporting perspective, just given the pro forma size of the specialties business, do you think you'll start giving us some unit economics? Or will there be some additional breakdown in the operating statistics maybe starting in like 2027?

Yes. I would say more to come, but yes, we certainly understand the scale of this. So we'll make sure to disclose an appropriate level of metrics so that you can model the business appropriately.

Okay. My last one, this one kind of goes back to Ward where you were talking about a couple of questions ago. But I thought during the high cal mining process, there typically are construction aggregates as a byproduct. And it's kind of hard to kind of view how they view those construction aggregates. So is there any synergy assumed, let's call it a commercial opportunity to think about the byproducts of those construction aggregates to get produced?

Yes. The short answer is no. We have not assumed any synergy of that in the data that we put out. So what you see are really operating synergies and the way that we pull that through in all the areas that Michael talked about. What can we look at operationally, what can we look at from a procurement perspective, et cetera? So that's the way we've measured that to date.

Your next question comes from the line of Michael Dudas from Vertical Research. Your line is open.

Two questions. First, I don't know if you have this number handy, but you mentioned about the exposure in Texas that LNA brings to you guys. On a combined basis, how much revenues do you think will come from that space if it's combined company?

Yes. We'll have to come back to you with that, but it certainly increases our exposure really in a durable fashion because a substantial percentage of LNA's business in Texas is going into infrastructure because as Ward mentioned, it's spec-ed in lime as a soil stabilizer in TxDOT work.

And keep in mind, Texas -- even after the Quikrete transaction, which we sold our Midlothian plant and the ready-mix business is still our single largest state by revenue in Heritage Martin Marietta as well. So again, part of what I outlined in the prepared remarks is if we're looking at Texas as a market, I mean, that has been an enormously attractive market over the last 10-plus years. We don't see anything that upsets that trajectory. And in fact, on a comparative basis, it continues to look even more attractive because we think that's going to be ground zero for this next generation of data centers.

Good state to be in for sure, Ward. My follow-up is, Ward, I'm guessing this transaction didn't occur over a weekend. So maybe you could share with us the thought process when you're putting together SOAR 2030 when you looked at Premier, was these assets like wish list, hopefully, they become available, something that just became opportunistic? Was this something that was -- could have been part of the plan as you were putting your next 5-year process?

So thank you for the question. I would say several things. One, if we just start with the attractiveness matrix, you know what it makes you #1. I mean, so much of what we've done over the last 15 years, whether it's been in stone or in this space, has been driven toward being the market leader. So this clearly puts us in that position, and we covered that. Number 2, if we went back over strategic plans that management puts together that we discuss with our Board, has this been something that has been on that list for not months, as you said, but rather years and as we've gone through different cycles for strategic planning, it has been.

So again, you're right, nothing like this happens over the course of a weekend, but it is the product of long-term planning and making sure you're positioning the company for near-term performance, long-term vision and long-term growth and shareholder value. And so we have long admired this business. I believe they've long admired ours. And it turned out to be an important moment, I believe, for the Berghmans family and for Martin Marietta.

Your next question comes from the line of Ivan Yi from Wolfe Research.

Can you talk about what's Lhoist's market share in the U.S. lime market? And how fast is the overall lime market growing versus Lhoist? Meaning are they taking share? Is share basically staying stable?

What I would say is the top 2 players are clearly the top 2 players. I mean if you look at those 2, I think what you'll find is the top 2 have over 50% of the market. I think what you'll find is clearly the Lhoist is the clear #1. And I think once you get past the top 2 from a percentage perspective, it moves down pretty considerably. So I would hate to go through because I'm just going to be wrong if I give you very specific percentages. But I think directionally, I've given you something that allows you to get to where you need to go with that.

And that concludes our question-and-answer session. I will now turn the call back over to Ward Nye for closing remarks.

Again, thank you for joining today's conference call. This combination is a clear extension of our long-standing strategy, strengthening our position upstream while enhancing the durability and quality of our earnings, all within our disciplined approach to capital allocation and the balance sheet. By bringing together 2 industry-leading organizations with complementary assets, shared cultures and in irreplicable reserve positions, we're creating a stronger company with greater resilience and a longer runway for value creation. As always, we remain available for follow-up questions. Thank you again for your time and your continued support of Martin Marietta.

This concludes today's conference call. You may now disconnect.

Ladies and gentlemen, welcome to Martin Marietta's First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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 Vice President of Investor Relations. Jacklyn, you may begin.

Good morning, and thank you for joining Martin Marietta's First Quarter 2026 Earnings Call. With me today are Ward Nye, Chair, President and Chief Executive Officer; and Michael Petro, Senior Vice President and Chief Financial Officer.

As a reminder, today's discussion may include forward-looking statements as defined by United States securities laws. These statements relate to future events, operating results or financial performance and are subject to risks and uncertainties that could cause actual results to differ materially. Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements, except as legally required, whether due to new information, future developments or otherwise. For additional details, 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 website.

Supplemental information summarizing our financial results and trends is available during this webcast and in the Investors section of our website. As a reminder, our full year 2026 guidance summary on Slide 5 reflects continuing operations only. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the appendix to the supplemental information in our SEC filings and on our website.

Today's earnings call will begin with Ward Nye, who will discuss our first quarter operating performance, 2026 outlook and supporting market trends. Michael Petro will then review our financial results and capital allocation details, after which Ward will provide closing remarks. Please note that all comparisons are to the prior year's corresponding period. A question-and-answer session will follow. Please limit your Q&A participation to 1 question.

I will now turn the call over to Ward.

Thank you, Jacklyn. Good morning, and thank you for joining today's teleconference. Before reviewing our first quarter results, I'll take a moment to discuss the leadership appointment we announced earlier this week. As you may have seen, Chris Samborski was appointed Martin Marietta's Chief Operating Officer, effective May 1. Chris is a highly respected and proven leader who most recently served as President of our West and Specialties division. Under his leadership, both businesses delivered meaningful growth and strong operational execution. Since joining Martin Marietta in 2018, Chris has consistently made a significant and positive impact in every role he's held. His deep operational experience, disciplined leadership style and strong commitment to our culture make him exceptionally well suited for this role.

With Chris serving as COO, Kirk Light will assume leadership of our West and Specialties divisions while continuing in his role as President of our South West division. In addition, our East Division President, Oliver Brookes; Central Division President, Bill Padraic; Vice President of Operational Excellence, Ronnie Walker; and Vice President of Safety and Health, Jessica Cosan, will report directly to Chris. This appointment and enhanced leadership structure reflects a deep bench of talent across our divisions, districts and functions, all focused on consistent execution, continuous improvement and a shared commitment to our one culture. I'm pleased to welcome Chris to his new position, and I'm confident that as COO, he will continue to play a critical role in helping guide Martin Marietta to even greater success.

With that, I'll now turn to the quarter. 2026 is off to a strong start with revenues increasing an impressive 17% to $1.4 billion, a new first quarter record. Organic aggregate shipments growth of 7.2% meaningfully exceeded our guidance, benefiting from an early start to the construction season in the Midwest and Colorado as well as continued strength in infrastructure and heavy nonresidential demand across our geographic footprint. As we look ahead, underlying fundamentals across the business remain favorable.

Notably, the quarter's results reflect a 14% improvement in both adjusted EBITDA from continuing operations as well as adjusted earnings per diluted share from continuing operations. I'm especially pleased to report that our teams delivered the strongest first quarter safety performance in the company's history as measured by both total and lost time incident rates. This achievement reflects the strength of our culture, unwavering commitment to world-class safety and the operational discipline embedded throughout the organization.

The quarter was also highlighted by the February 23 closing of the Quikrete Asset Exchange, our largest aggregates acquisition to date. Importantly, this transaction accelerated our aggregate sludge strategy by shifting the portfolio away from more cyclical cement and concrete assets, enhancing the quality and durability of our earnings profile, while providing $450 million of cash to redeploy into aggregate acquisitions accordingly. And consistent with the company's SOAR 2030 strategic plan, on April 19, we entered into a definitive agreement to acquire New Frontier materials, a complementary bolt-on to our central division that produces over 8 million tons of aggregates annually. This transaction is expected to close in the second half of the year subject to regulatory approvals and other customary closing conditions.

Looking ahead, our M&A pipeline remains active and is primarily focused on pure-play aggregates opportunities across attractive SOAR aligned geographies.

As highlighted in this morning's release, our core aggregates product line delivered record first quarter shipments of 43.9 million tons, a 12% increase and record revenues of $1.1 billion, representing a 14% increase. Our Specialties business also achieved new all-time quarterly records with revenues of $143 million, up 63% year-over-year and gross profit of $45 million, an increase of 17%. Despite ongoing macroeconomic uncertainty and volatility, we continue to benefit from a business intentionally built for durability and resilience, enabling us to remain focused on what we can control regardless of underlying economic trends.

With April's continued strong product demand, the impact of April 1 price increases and ongoing optimization efforts, we're reaffirming our full year 2026 adjusted EBITDA from continuing operations guidance of $2.43 billion at the midpoint.

Turning to wind market trends. We continue to see a constructive backdrop for U.S. infrastructure, our most aggregates-intensive and countercyclical end market. Sustained federal and state investment continues to provide meaningful multiyear funding visibility as we look ahead to the next surface transportation reauthorization. Notably, a significant portion of authorized funding under the Infrastructure Investment and Jobs Act or IIJA, has yet to be deployed with nearly half of highway and bridge funding remaining undistributed as of late February.

Policymakers are negotiating a 5-year successor surface transportation bill with committees targeting reauthorization by October 1, following the current IIJA's expiration on September 30. While the timing remains subject to the legislative process and could include an interim continuing resolution, industry commentary from the American Road and Transportation Builders of America, or ARPA, indicates that state departments of transportation retain multiyear visibility into their project pipelines and continue to plan under assumptions of stable federal funding. As a result, we do not expect a short-term continuing resolution to disrupt construction activity in 2026 and for the near future.

Beyond infrastructure, heavy nonresidential construction demand continues to be driven by robust data center and power generation activity. Aggregates-intensive LNG work along the Gulf Coast is also gaining momentum, including projects such as the one at Port Arthur LNG, which Martin Marietta is actively supplying.

Warehouse and distribution construction trends continue to recover as shipments inflected positively in the third quarter of 2025 and have continued to trend favorably. By contrast, affordability pressures tied to higher interest rates continue to influence the pace of light nonresidential and residential construction activity. Taken together, all these trends underscore the durability of long-term construction demand across our footprint and bode well for our company and shareholders.

I will now turn the call over to Michael to discuss our first quarter financial results. Michael, over to you.

Thank you, Ward, and good morning, everyone. As Ward noted, our core aggregates business delivered record first quarter revenues of $1.1 billion, up 14% year-over-year, driven by organic shipment growth of more than 7% and approximately one month of acquisition contributions. Daily shipments have continued to trend above expectations in April, led by infrastructure and nonresidential strength in our East Division. Organic pricing in the first quarter was negatively impacted by geographic mix driven primarily by robust organic shipment growth of more than 20% in our Central and West divisions, which carry lower average selling prices and gross margins than our East and Southwest divisions.

Reported aggregates gross profit declined 3% to $288 million as stronger volumes and underlying organic pricing improvements were more than offset by geographic mix and purchase accounting impacts. Including a noncash $22 million charge associated with the fair market value step-up of Quikrete inventory as well as higher depreciation, depletion and amortization expense which is now disclosed within our product line reporting.

Importantly, underlying organic cost of goods sold per ton, excluding pass-through freight cost and timing-related items is tracking below our implied 3% guidance as cost optimization efforts continue. Other Building Materials revenues declined 5% to $116 million and consistent with typical first quarter seasonality, posted a $16 million gross loss driven by customary asphalt plant winter shutdowns in both Colorado and Minnesota.

Our Specialties business delivered revenues of $143 million and gross profit increased 17% to $45 million, both all-time quarterly records, reflecting contributions from the July 2025 Premier Magnesia acquisition and organic pricing gains, which were partially offset by lower organic shipments and higher energy costs.

Turning to capital allocation. Completion of the Quikrete asset exchange on February 23 marked a significant milestone, concluding our SOAR 2025 divestiture program, providing $450 million in cash and simultaneously representing the largest aggregates acquisition in our history. With this transaction complete, we've now launched SOAR 2030 supported by a strong balance sheet and a focus on aggregates-led acquisitive growth.

The Quikrete integration is progressing ahead of plan with results since closing, exceeding both our EBITDA and margin expectations. Further, we expect to realize synergies of approximately $50 million over the coming years as we normalize unit profitability. Importantly, the $450 million of cash proceeds, combined with the company's significant free cash flow generation, provides ample capacity to advance our very active M&A pipeline and opportunistically repurchase shares during times of market volatility.

Consistent with this capital deployment framework, we repurchased $200 million of shares in the first quarter and announced the acquisition of New Frontier Materials, which complements our differentiated position along the I-70 corridor from Kansas City to St. Louis. Please note that our reaffirmed 2026 guidance does not include contributions from New Frontier as the transaction has not yet closed. Consistent with historical practice, we will revisit guidance at midyear.

With that, I will now turn the call back over to Ward.

Thank you, Michael. The first quarter of 2026 marked the launch of SOAR 2030 and an important milestone in the continued evolution of our company's portfolio. Our increasingly aggregate led foundation was strengthened by the closing of the Quikrete Asset Exchange and further reinforced by additional bolt-on aggregates acquisition activity already announced this year. Combined with our high-performing differentiated Specialties business, these actions have created a resilient and durable enterprise. This streamlined and focused portfolio supported by attractive long-term demand drivers, advantaged market positions and culture deeply rooted in safety, commercial and operational excellence reinforces our confidence in SOAR 2030 and our ability to deliver sustainable growth and enduring value creation for our shareholders.

If the operator now provides the required instructions, we'll turn our attention to addressing your questions.

[Operator Instructions] And our first question comes from the line of Trey Grooms with Stephens.

So given the more challenging near-term cost environment, particularly around diesel and potentially softer residential demand backdrop. Ward, could you walk us through some of the key assumptions that are supporting your decision to reiterate the full year EBITDA guidance, specifically, maybe how you're thinking about the cadence of pricing through the year, including any catch up to the higher diesel costs and what level maybe of incremental or midyear increases is embedded in that outlook?

Trey, thanks for the question. Good to hear your voice. So several things. One, as you noted, we are reaffirming our guidance for the year relative to EBITDA. We feel very confident in that. As you know, this actually excludes anything from New Frontier because that hasn't closed yet. Secondly, we tend to come back at midyear and reassess our guidance. I'll tell you right now, I'm feeling pretty optimistic about what that reassessment is going to look like. So I'm looking forward to that in midyear.

I would say several things. One, if we just think about some of the reasons why, if we're looking at our shipment trends. As you may recall, when we announced our guide in February for the year, we said if there was any place that we thought we were being a little bit probably conservative on. It may be on the shipment outlook. You can see how that came through in Q1. You can also tell from the prepared remarks today and the headlines to the release that April has come out of the box very attractively as well. So my guess is we're going to see shipments probably trending to the higher end of the guide.

Relative to pricing, I'm not looking at pricing and having any concern about how I think that's going to roll out for the year. We did call out in the prepared remarks, I know Michael said that what we saw in the Central and West groups, in particular, was volumes of 21%. I mean that's a big number. And keep in mind pricing there is notably lower. And by that, I mean dollars per ton lower than it is in the East and the Southwest. And so what we've seen so far in April is we're seeing that mix flow back to the type of cadence that we would ordinarily expect. So we're seeing the East really catch up nicely with that.

Keep in mind, too, I anticipate we're going to see a greater realization of midyear price increases this year than we saw last year. Clearly, the diesel impact and others will be a driver on that, that is not taken into account in our guide. So again, it's something that gives me a lot of confidence in what we're doing.

I know part of your question very specifically with diesel and how we see that. So if you think about the fact that we're going to consume, let's call it, 55-ish million gallons of diesel fuel this year, that's assuming the diesel prices peak probably in Q2 and then return not to lower levels, but probably somewhat more moderated levels in Q3 and Q4. We feel like the overall impact from diesel headwinds, and that's including other items impacted by it -- will be about $36 million in the aggregates business, probably [ $50 ] million for the entire company. So it's not going to be anything that's material.

The other thing that I would remind you is if we go back in time and remember what diesel pricing looks like, back when Ukraine and Russia first started their conflict. Diesel spiked and then we saw that headwind for a while. And then we actually saw a nice margin expansion actually later that year. This is not as pronounced as that was at the time. So I feel like it's very manageable. And again, to your point, with what's going on in infrastructure and what's going on with heavy nonresidential activity, I think the volume backdrop will continue to be very attractive. But Trey, I hope that helps.

That did. That was super helpful, Ward. And specifically on that $36 million you're talking about for 2Q, I'm guessing it'd be more weighted there. Any color just for our modeling?

It is weighted more then. I'll give -- I'll turn it over to Michael to talk to you a little bit more about any modeling questions you may have.

Yes, Trey, you're absolutely right. So we're thinking about $20 million to $25 million of it coming through in Q2 given where spot rates are. But just in terms of the organic cost cadence as compared to last year. Remember, in Q1 of last year, we had sub-2.5% COGS per ton growth. And then we had 6-ish percent in Q2 and Q3 and 4 in Q4. So we've now passed the tough cost comp growth. And so we feel very good about the implied cost per ton through the balance of the year, assuming we do get a little bit of diesel headwind embedded in there as well.

And our next question comes from the line of Kathryn Thompson with Thompson Research Group.

And appreciated your color and prepared commentary on the reauthorization of IIJA. So we've been speaking to a wide variety of contacts all this still reauthorization. And the general theme is no bill is going backwards on funding. The house is -- what we're hearing is $550 billion, sounds like it fits pretty close to what you're also saying, but I think the important thing, too, just to clarify is how much of this is going to be true surface transportation versus the $350 billion from the prior bill that was for surface? And if you could further suss out how much of that is of surface is true highways and bridges versus other things that could potentially fall into that category?

Welcome. Thank you for the question. So I would say several things. We're totally aligned with what you're hearing, and that is nothing in this is going backward. I think it's really important to note that as we're looking at what's likely to come out of the house and the Senate. Neither committees of jurisdiction are planning to include broader infrastructure components like energy, broadband programs or others that made up more than half of the 2021 infrastructure law. So I think to your point, this is going to be a highway bridge Rodsand Street's core infrastructure bill, and we don't see anything that's changing that overall notion. As we're looking at it right now, from my understanding of the House is targeting May to mark up the legislative text, so we'll certainly know more than, but I think the numbers that you've indicated are certainly what I've heard from Chairman Graves and others who are on that committee.

I also think we're likely to see numbers notably ahead of that coming out of the Senate. So as this goes to a conference, I think we're going to see a nice solid, robust core surface transportation bill that's going to come out. I think they're still aiming to have this done in time so they don't have to have CR. I do think if they have to have a CR, it's likely going to be one. I think it's likely to be relatively short. And of course, Kathryn, as you know, if they do end up with a CR, what that means is the federal highway funds will continue to flow to the states in an uninterrupted fashion and will remain at the current levels that are actually very high and attractive.

The other thing that I think goes on here, but I think it's important to remember, is if we look at Martin Marietta state DOT budgets, those budgets, not in every instance, but in the vast majority of instances, are up year-over-year, which tells us that they're anticipating not seeing any interruptions from the federal side as well. So I've tried to address does timing look like. I've tried to address what it's looked like coming out of the house because I think that's going to lead. I try to address what we see coming out of the Senate. And I've tried to address a CR that if we have one, frankly, we're not the least bit concerned about. So Kathryn, again, I hope that helps.

And our next question comes from the line of Adam Thalhimer with Thompson Davis.

Three-part question on M&A. Can you give us any early thoughts? I know it's only been a couple of months on Quikrete. On New Frontier, are there any kind of unique synergy opportunities there? And then lastly, on the M&A pipeline and outlook for deals from here?

Now, you're hitting us with a hat-trick coming out of the box -- so I'd say several things. Quikrete has frankly exceeded expectations. And the integration has gone really well. The business is performing better than we expected. I mean we saw $17 million of EBITDA, which on an annualized basis is going to be well ahead of anything that we saw. The fact is we worked through and are continuing to work through very sensibly the markup in the inventory. I mean that's the purchase price accounting that we always have to manage. .

When we came out with that transaction, as you recall, we said we thought we'd have around $50 million of synergies. I don't think we see anything in that number that causes us any degree of heartache whatsoever. And hopefully, we can see more on that. Relative to New Frontier, we're really excited about that transaction. So if you think about what that's doing, again, the purchase of Quikrete, we bought very attractive assets in Virginia, attractive assets in Missouri and Kansas and attractive assets in British Columbia. And what New Frontier is doing is it's adding more assets in what for us is a very attractive market position in Missouri right now. And we're excited about the transaction, not just because of where it is. the really high-quality team that's coming with that as well. So we're excited to welcome them to Martin Marietta, hopefully sooner rather than later.

It's an interesting transaction because as we noted in the prepared remarks, this is about 8.5 million tons annualized of aggregates and about 1.5 million tons annualized of asphalt. But keep in mind, this business is a lot like the tiller business that we bought years ago, meaning. It's an FOB asphalt business. So we're not involved in lay down there. It's truly a materials business. And again, we think this is going to be nicely accretive to what we're doing in the middle part of the country. But as Michael called out in his commentary is really a differentiator for us. Relative to the pipeline, it's looking pretty attractive. Look, as we discussed at last year's Capital Markets Day, we've identified at least 300 million tons a year businesses that are in store-related markets that we think are compelling to us. As I indicated in my commentary as well, we continue to be focused largely on pure aggregate transactions. And I think New Frontier is a great example of that. I mean, 8.5 million tons is not a trifling acquisition. And we continue to see that opportunity for more, and we look forward to doing that very successfully this year and into next year and beyond. So Adam, I hope that hit the 3 parts.

And our next question comes from the line of Anthony Pettinari with Citi.

I look at the contract awards data that we can see, you've seen very strong contract awards growth in your states really for a number of years. And I think the last 12-month number looks good. But I think for some of the states, maybe we've seen a deceleration in some softer awards just looking at the last 3 to 6 months, if I look at the ARPT data. And understanding these awards are like very, very chunky, especially in the beginning of the year, and you've got a big lag between awards and revenue recognition. I'm just wondering if there's any states where you've been surprised on the contract awards data either positively or negatively? Or just kind of like how we should think about that flowing through as the year progresses?

Anthony, thanks for the question. I would say several things. One, if we look at the ARPA data, there's nothing that's been in that that's been surprising to me. I think the other thing that's worth noting is ARPA will typically say that value of contract awards can be particularly volatile in the first quarter. And that's really as state and local governments typically simply bid less work in the early parts of the year.

I think importantly, and I'm trying to give you a guide on how to think about it going forward, as your question indicated, I look at the spending authority. And I think that's really important to look at relative to our leading state. So if I'm looking at Texas, which matters disproportionately to us, that's up almost 15%. If I'm looking at Colorado, which is one of our leading states in the west, something nearly 7%. If I'm looking at Georgia, which is a critically important state to us. We're the largest aggregates producer in Georgia, that's up almost 7.5%. And then in California, it's been interesting to watch that. They're up almost 6.5%. So again, as we're looking at what's coming out of the federal government as we're thinking about timing and choppiness that's not unusual, particularly in Q1. And as we're looking at that level of spending authority, in our top DOT states on the public side, it actually gives me a great deal of confidence.

The other thing that helps in that respect is simply looking at what's happened so far this year. Now keep in mind, if we're looking at Q1, about 18% of our volume for the full year is going to go in Q1. So I mean, it's not necessarily a driver of anything that's going to happen for the rest of the year. which is why we never, for example, update our guidance at the end of Q1. You have a much better feel for it when you get to half year. But I do think this is notable. If I'm looking at tonnage that went to highways and streets in Q1 versus the prior year quarter, they're up 23%. So I mean I think that gives us a good sense of where it's heading right now and takes me back to some of the commentary that I gave early on if we're being conservative anywhere, it's probably on the volume outlook. And I think as we look at the volume outlook, we're very bullish on the way public is going to pull through. So Anthony, again, I hope that helps you as well.

No, that's extremely helpful. I'll turn it over.

And our next question comes from Tyler Brown with Raymond James.

Hey, first off, congratulations to everybody on their new roles. It sounds like some movement there, so that's great. But hey, big picture, there are a lot of moving pieces in the numbers this morning. I think pricing was maybe flat on a reported basis. Gross profit per ton was down. You had Quikrete, geo mix, purchase accounting, I mean, all of that's having a big impact. So Michael, is there just any way that we could cut through the clutter, just get some color kind of how ASP and gross profit are looking like on more of a like-to-like basis? Is that mid-single-digit pricing, high single-digit unit profitability algorithm still very much intact. I've just been getting some questions this morning. Just some color there would be helpful.

Yes. No, sure, Tyler. What I would say is, on an organic basis, our guide for the full year would still remain firmly intact, which would see a gross profit up, call it, double digits for the year. Now how that plays out through the balance of the year, as Ward mentioned, there's probably going to be more volume. So volume trending to the high end. In fact, I mean, as we sit here closing April, we're at the high end of a full year guide with how much volume we've already banked.

And with the pricing, it's just difficult to make up in a calendar year the pricing that we saw in Q1 given the geo mix over the balance of the next 3 quarters. So what we said is, look, we're seeing that broaden out with the East division, higher ASP leading the way in April. So we're starting to see that geo mix shift on ASP, which also flows through to the margin because it's not only higher ASP, it's lower cost to produce in the East as well. So we're going to see that come through here in Q2 and into the balance of the year. But making that up might be difficult. So we're saying, "Hey, look, organic pricing might be towards the 4% absent any mid-years, but we're going to be out, and in fact, we're already out with midyears pretty much across the entire country, where we expect to see a lot of that is also in the East and where we completed acquisitions this year. So there's nothing in the organic guide that gives us any pause. In fact, we feel pretty confident in that.

And then getting to the full year EBITDA guide, as Ward mentioned, Quikrete has actually come out of the gate much better than expected in just one month with $17 million of EBITDA, 42% EBITDA margin, so nicely accretive and their volume is actually exceeding expectations, but at a little bit lower reported ASP. But remember, we always said it was ASP dilutive but margin accretive. So what do we mean by that, is a relatively low cost of production operations. So we're going to start to see that flow through. Once we eat through the inventory markup, which, as Ward mentioned, there's about $44 million of that left to chew through in Q2. But of course, that's an add back to EBITDA, but it's going to be a hit to add gross profit in Q2 just for modeling purposes. But does that answer your question, Tyler? Or any more color you need?

Yes. Just -- no, just that the algorithm that you guys laid out at Capital Markets Day is firmly intact. That's kind of the takeaway.

Yes. On a price cost spread basis, absolutely. Yes. And think about that really over a 5-year period, not in a quarter or a year. So what we said is there's a long history in this industry -- Martin Marietta specifically of delivering 200 basis points of spread over a 5-year interval. And what we're saying is this year, given -- or this 5-year period, we expect to expand that by about 50 basis points. So look at that over a 5-year period and not in any particular quarter.

And Tyler, let me add one more thing to because I think this is more -- because you nailed it in that there are a lot of moving parts right now. So cutting through and trying to get to really clear numbers is important. And the cost performance is something that I want to make sure you have a clear look at too, because I'm looking at that through 2 different lenses. Number one, what does it look like organically? Number two, what does it look like on a consolidated basis? And here's what I would tell you. If we're looking at organic ags cost of goods, I would say several things. One, take out the external freight because that's simply a pass-through. We had some odd one-offs on rail maintenance and track repair expenses.

If we're really looking at it same on same, COGS per ton went up about 2.7% organically. If we're looking at it on a consolidated basis and again, taking out the fair market inventory markup, the external freight and just the acquired DD&A. COGS were up around 1.7%. So I think to mid point, that cost price spread that we anticipate seeing is fully intact. And part of what I'm taken by, as you may recall, we actually took our CapEx guide down very purposely coming into the year. because we felt like we had invested in the business really responsibly the last several years, and that really came through in what we're seeing in lower repairs and supply expenses as well. I wanted to come back and give you even more color relative to, okay, these are the things that we talked about at Capital Markets Day. These are the things that you built into a model over time and are they firmly intact. I don't think there's any question as we drilled in and look at these that they are.

Yes. No, very, very helpful and very much appreciate D&A disclosure.

And our next question comes from the line of Phil Ng with Jefferies.

It's Jesse on for Phil. Just on Quikrete, was there any disruption in them announcing pricing to start the year just with the pending transaction? And I know it kind of closed a little bit later than maybe you expected. Are you still able to announce kind of mid-years in some of those territories that you just acquired?

Thank you for the question. And the short answer is, we are expecting mid-years in those markets. We have already put our correspondence to our customers indicating as much. And obviously, we -- as we've indicated for the ASPs overall that Quikrete had in their business were not at the same level that Martin Marietta typically is. So our aim is to try to get that closer to something that looks normal across our enterprise. So yes, that is very specifically -- one of the areas in which we anticipate midyear price increases.

Okay. Great. And then just one quick follow-up. You've had specialties in the Premier business for a couple of quarters now. Anything that's kind of sticking out to you, either incremental opportunities or anything that you're kind of more convicted in having owned it for a couple of quarters?

What I would say that our conviction remains the same. It was a very attractive business. Now we have the synthetic and natural magnesia. It's a business that continues to have earned the right to grow. -- executing against their plan very, very well. It's not necessarily a seasonal business. So again, I think that's important to have within a seasonal business because it gives you such good stability all the way through portions of the year. So everything we look at in that we like, their safety culture is becoming more aligned with ours. Their margins still have room for improvement, and the core business is running very well. So nothing there to be concerned about from my perspective.

And our next question comes from the line of Angel Castillo with Morgan Stanley.

I just wanted to go back to the midyears. Just wanted to go back to the midyears conversation. I was hoping you could talk a little bit about what you're seeing perhaps in the asphalt markets versus ready mix. I think ready mix has seen some push out to April. I guess are you able to try to get mid-years in the ready-mix side as well? Or are those -- how do you kind of address the energy or inflation that you're seeing across those markets?

So I would say several things. As we think about hot mix for itself, several things that are worth noting. Number one, we can actually store a lot of liquid. So if we're looking at our fiscal position today, particularly in Minnesota because part of what we bought when we bought Tiller, a very significant tank farm. We use winter fill to go through that. I think from an energy perspective and otherwise, we're going to be in a very good position in our asphalt business. Equally, if we think about the asphalt business, it's not a huge portion of it that's in California, but California also has indexing that's basically there. So as it flows through, we're going to be in fine shape on that. And again, to keep in mind from an EBITDA or other perspective, these downstream businesses are not going to add huge amounts of EBITDA to it. It's really, in some respects, more to take the stone and push it through those markets. So I think we're going to be in a perfectly good spot there.

I think relative to concrete, again, if you're looking at where we have concrete now, it's really a pretty concise marketplace. It's really in Arizona. We're talking about a concrete business now that on an annualized basis is going to have, let's call it, about 1.2 million cubic yards. So if you go back several years, and remember, look, this used to be about a 10 million cubic yard business and now it's down to about 1.2 million cubic yards. Arizona is an attractive ready-mix market for us. We are seeing some price increases there. So we would anticipate that business performing very much in line with the way that we indicated. And again, given what we can do on asphalt and liquid storage, we don't feel like the energy component is going to be a threat to that business on the hot mix side either.

Very helpful. And then what I wanted to follow up on your comments that April is off to a very good start and pushing your shipment volumes perhaps to the higher end. I guess can you talk a little bit more, particularly on the -- I guess, on the private side, I think you've given a lot on the public side, that's really helpful. But just as it pertains to what you're seeing here in April and what you saw in sounds like weather a lot a little bit maybe of activity to start earlier on, but are you seeing projects that maybe weren't in the backlog move forward faster, just greater confidence? Or how do we kind of reconcile the strength in some of that volume what you might be seeing on the private side, just with some of the rising costs, rising interest rates and other factors that we're hearing?

Sure. I'll pivot nice the private side and say several things. One, if we're looking in the quarter on what we saw relative to warehousing. And warehousing was up 57%. If we're looking at what we saw relative to data centers. Data centers were up 62%. If we're looking at what we're seeing in degrees of different forms of energy, for example, LNG for us during the quarter was up 20%. If we go and take a look at what's going on in shale. I mean, shale was up on a percentage basis a ridiculous percentage amount simply because it's coming from such a low base. But part of what I think is important to remind people probably back in 2010 or '11, we were sending about 7.5 million tons of stone per annum to the different shale plays across the United States. So think about what that means. That's about 1 million tons less than the New Frontier business that we just bought. So again, as I'm looking at what's happening with warehousing. And so I look at what's happening with data centers. As I look at what's going on relative to energy. Those are the types of things that, as we look you said, at the private side that gives us that degree of confidence. But what I'm taking on the warehousing in particular, this isn't just an Amazon show anymore. It's much broader than that. We're seeing it with Walmart. We're seeing loss distribution centers. Dell Hays is building a nice distribution center in North Carolina right now. But -- to be even more specific, if we go through and look at the LNG project pipeline today, on projects that are currently supplied by Martin Marietta, they're going to consume about 10.6 million tons.

So if we look at projects we believe are potentially coming our way relative to LNG and otherwise. I mean, that's another 33 million tons. And I'm sorry, I that first number I gave you on projects was in fact, LNG, and that was on projects at 10.6 million. Data centers are right at 3.27 million tons that are estimated and well over 2 million just for this year. So again, if we're looking at the heavy side of non-res, there's nothing there that doesn't look pretty attractive to us.

Now to your point, on residential and like non-res you get the same story that we do and that is those are highly interest rate affected areas. They are not booming in any respect right now. So what I'm really taken by is we're putting up double-digit volume growth, and we've got those interest rate sensitive portions of our business that are, frankly, not doing anything right now. But here's what we know. If we're looking at the overall housing market in the United States generally in Martin Marietta states specifically, everything that I've seen indicates that it's going to require about 4 million additional homes simply to restore a balance. So as I'm looking at these areas that are more interest rate sensitive, to me, it's not a matter of whether they return, they're going to return. It's a matter of when they return. And then if we come back to this notion, do I think infrastructure is in a place that it's going to be steady for a while. And by that, I don't mean quarters and months, but years. I think it is.

If we look at the rate of growth in energy data centers, warehousing, et cetera, that, too, to me, looks like it's probably a multiyear run. And I think somewhere in there, you're going to see private decide they're -- they're going to stop being spectators and get in the game. So Angela, I hope that gives you some specifics around the areas of what you asked.

And our next question comes from the line of Steven Fisher with UBS.

Just wanted to follow up again on the midyear price increases. It sounds like you're pretty confident in them. Can you just remind us how much of that is sort of an automatic I think you mentioned California has indexing. So how much of that from a process perspective just flows through versus negotiated? And have you gotten any preliminary feedback from customers on this, are people just sort of resolved that this is going to happen because of all the inflationary pressures on fuel and everything. So that's one question. And then just a clarification on what you assume for the residential markets for your residential business in the second half of the year? .

So Steven, I would thank you for the question. I would say several things, Steven. One, let's make sure we're keeping buckets really clear. So when we're talking about the indexing of thing, that's really more relative to liquid and what's going on in asphalt and places like California. So really put that in the same bucket that I do midyear pricing in stone. So what I would say is this, we saw midyear pricing last year in aggregates. We saw it principally in areas where we had done new acquisitions. I think we will certainly see that again. But I think it's going to be more broad-based than that because of the inflationary trends that you've highlighted. So if you want to say, look, we're not going to about 1,000 on it. But if you say we've added 300 last year that would have put you in the hall of fame. Look, we're going to not be at 300 and we're not going to be at 1,000, but we'll be somewhere between those two. And I think it's going to be a really attractive percentage for all the reasons that you said. I think customers are seeing inflation in what they're trying to manage from their cost perspective. We are as well. And this is just something that if we're going to be responsible stewards of our business, we need to do this. So I wanted to break out and differentiate what you spoke specifically in California with really what we're talking about on midyear and give you a sense of what realization I think we're likely to see in that respect. Steve, I assume -- I hope that helped.

Yes. That was very helpful. And if you had a comment on the resi business expectation for the second half, that would be great as well.

Yes. We came into the year with very low expectations of resi, and I don't think it's going to disappoint us. I think it's going to continue to -- there's just not going to be anything that's going to be, at least in my view, a real pop on that. And that's exactly why we came into the year with it case the way that we did. So resi is moving exactly as we thought it would. And that's why I'm taking with the rest of it. You're seeing a nice volume pop with resi not yet at the party. At the same time, we go back to that notion that I shared before. Martin Marietta has built its business very purposefully in states that have significant population inflows coming in. And the housing markets in most of our MSAs is pretty tight. So I think it's a matter of time, but it's not going to be this year.

And our next question comes from the line of Rohit Seth with B. Riley Securities.

You started talking about the network optimization a couple of quarters ago. I want to get an update on how things are trending in the first quarter.

Thanks for the question. It continues to go quite well. And as you recall, we said at the time, we would probably come back at half year and give you a good sense of how that's working. But again, if we go back to the notion and the numbers that I went through a little while ago, really looking at organic costs up 2.7%. Looking at consolidated costs, the way that we look at them, up 1.7%, really looking at repairs, supplies. I mean if anything, frankly, those are, frankly, in the green for the quarter. So we continue to feel like the program itself is working. It still has some maturity to go through, and we look forward to having a more robust conversation with you about that at half year.

All right. And just to clarify on the guidance, in terms of the upside leverage that you guys have, it's the mid-year pricing that's not in the guidance, the network optimization that you're going to address at midyear is also not in the guidance and then the NFM acquisition as well, correct?

That's exactly right. So those are all -- I'm going to say, more than potential upsides to the guy. Those will all be, I think, meaningful upside to the guide.

And our next question comes from the line of Garik Shmois with Loop Capital Markets.

This is actually Zack Pacheco on for Garik today. Just a quick one on the bidding environment. Just curious, given oil inflation pressure, are you seeing any rebidding right now? Or is that not really something popping out?

Yes, it's a good question. And the short answer is no. We really haven't seen that. It's been pretty steady, pretty consistent. No real surprises there. If we see anything that's different in that, we'll obviously talk about it at half year. But as we're sitting here toward the end of April, it has largely been a nonevent, but it's a good question.

And our next question comes from the line of Mike Dudas with Vertical Research.

Maybe one from -- Michael, looking at the balance sheet and before you ended the quarter and on a pro forma basis, given the acquisition and any working capital or cash flow changes, will net levels of that be fairly similar? How should we think about that when we see the close of the transaction? On the acquisition and the capacity you have for further acquisitions, Ward, is the pipeline weighted and your thoughts weighted towards adding to some of your existing levels or maybe some of the levels that you just recently purchased -- or companies in look the last couple of years? Or is Martin Marietta really to step out in some other areas to put store into place outside of its current regions?

But let me take part two of that, and Michael will come back and take part one of that. So here's part of the glorious position that we find ourselves in today. With the coast-to-coast business now that we have, particularly after the transaction with Heidelberg that put us in California and Arizona, that's put us number one, coast-to-coast, number two, with a footprint now in every mega region. And now with things like the transaction that we did with Quikrete, for example, an even more significant footprint in the Northwestern United States as well. So I think what's going to happen is a practical matter, is transactions that we would do will all tend to have something of a bolt-on feel to it relative to the concept of how close is it to an overall Martin Marietta business. And I like that because the most dangerous transactions you do is when you go into a brand-new area of the country. You don't have a team there, you don't have a history there and you're having to go in and kind of reinvent yourself. I don't think we're in positions that we need to do that anymore.

Now does that mean the transactions financially on occasion won't look like a platform transaction? No, it doesn't mean that at all. So what I'm taken by and I continue to be taken by is the size and the scope of some of the potential transactions that we're looking at or that we may be looking at. So we may come to you at some point this year, next year or others, with transactions financially that you would say that looks and feels like a platform transaction. But when you look at it geographically, you're going to say, but it's going to act like a bolt-on transaction. I think that might be the best of both worlds. Now with that as an aim, Michael can come back and talk to you about where we sit financially.

Yes. From a balance sheet standpoint, these transactions, New Frontier pro forma specifically to your question, would not really move the needle on our leverage ratio because remember, we had the cash proceeds coming in from the Quikrete transaction, number one. And number two, we just sit here at the end of sort 2025, generating over $1 billion of free cash flow after dividends that we've said we'd back to work, primarily in aggregate led M&A. And so we -- the pipeline that we're talking about here, we think that fits right within that free cash flow generation redeployment.

And our next question comes from the line of David MacGregor with Longbow Research.

Ward, you were asked earlier about bidding. I guess I wanted to come back to that kind of bigger topic just -- and get your sense of how you're seeing state DOTs responding to project cost inflation. Are you seeing them skew the resources to larger or smaller projects? Maybe how much push forward to '27 are you seeing any cancellations as they focus limited resources on their top priority projects? And maybe how quickly they're revising engineers' estimates?

So great questions all there. No, we're not seeing anything pushed out, David, number one. Number two, we continue to see them trend toward larger as opposed to smaller projects, which I think underscores the view that I think going back to the IIJA conversation that we had, I don't think states tend to see any break in the funding and the way that they're going about this because I think they feel like is going to get done timely, if it doesn't be 1 CR, then we're into a new cycle. When I went through those numbers that I gave you before, just simply talking about what it looked like in Q1 when we said streets and highways were up 23%. If we think about the fact that we're sitting here today and still half of that money is still yet to be deployed. I think state DOTs want to get that in play and they want to get in place sooner rather than later. I think equally, when we come back and look at our state DOTs more specifically and think about what's Texas thinking? What's North Carolina thinking? What's Georgia thinking? What's Florida thinking? These are states that need to add capacity. And I think they're very focused on capacity, which again takes us to what I think will continue to be an increasingly aggregates intensive type of work. that are not seeing the same degree of population inflows that we're seeing tend to default to more maintenance and repair. And that's simply not as aggregates intensive as either building new roads or building new lanes. And I continue to think that's where our DOTs are largely to be focused right now. David, did I answer all your questions? Or is there another component I did not answer?

No, that was pretty good, Ward. Maybe just -- I wanted to get your temperature on midyear pricing as well and any features of how you're pursuing the increases this year that could make it more impactful to second half realizations than they would normally be -- post just the compounding benefit into the new year?

Well, I think we'll clearly see the compounding benefit into the new year. I mean that's always there. I think the question that you're asking is a good one to that is how much of it are you going to realize during the course of the year? History tells us, typically, we'd realize about 25% of it during the course of the year in which it was put in, then you'd have the compounding benefit going into the next year. If we continue to see this rate and pace of work on non-res and res, I think you could see a higher realization than that historic 25%. I'm not willing to get in over my skis on that at this point. So I would ask you not to model that in, but at least that's what it looks like historically. But again, if you go back to those numbers that we're seeing on the up, on infra, the up on warehouse, the up on data, the up on energy, I don't see that abating here over the next few months. So David, that's what makes me at least think there's a likelihood that you might see greater realization.

And then our final question comes from the line of Ivan Yi with Wolfe Research.

Last week, CSX on the earnings call highlighted a large expansion of a Martin aggregates loading facility in Florida. Can you just comment this on this a little more, how much are volumes increasing through this facility? And is this supporting data center growth in particular? And lastly, what are the cost advantages you're experiencing from shipping more rail versus truck?

Ivan, I'll take the front end that, Michael will take some of that as well. So we'll split this up a little bit. So if you go back and think about it, Ivan, we send more stone by rail than any other stone produced in the country. So we're going to ship about 30 million tons per annum by rail. Obviously, we'd like to do more of that because you have to have two things to make that work, a rail producing quarry in a rail yard in a market that needs the product. What we're primarily doing in Florida is, historically, it's been by rail, an infrastructure play for us. Because what we're doing is we're the largest importer of Granite into that marketplace. So we're coming in by granite by rail, which means we're coming in by CSX. So you mentioned we're coming in by Norfolk Southern. And we're also coming in by Panamax vessels out of Nova Scotia. So those are our vehicles literally to bring Granite into a granite starved state. So again, if we look at Florida DOT and the way it's going to continue to grow, asphalt producers in that state will prefer a granite product because it's not as absorptive of liquid asphalt. If we go back to the notion that liquid has moved pretty considerably in price, you're over $500 a tonne, usually on average if you can put an asphalt mix down and back off on the liquid, that's actually very helpful. The other thing is Granite tends not to polish the same way that Limestone does. So if you're looking at a top coat on asphalt, it's better. Now relative to other data center and related activity in Florida, number one, we have grown our overall presence in that market with what you've seen with Bluewater and what you're seeing with Younis Brothers as well. So we have the ability to hit more of that market by truck than we ever have before. We're ramping up our ability to continue to hit that market by rail. Michael, anything you want to add?

Yes, I would just say, given our rail network, not specifically in Florida, but more so in Texas and East Texas, in particular, one thing that we started seeing in Q1, and Ward mentioned it is the Haynesville shale coming back online. So that's the direct pipeline down to the LNG export facilities. So we have rail terminals in East Texas and West Louisiana that we can reach that others simply can't. So we saw an acceleration there. And then we also have now West Texas terminals where we can get down to Abilene and around Stargate, and we can get out to Amarillo, Texas all the way from Mill Creek, Oklahoma to serve a large data center project there. So what you'll start seeing is those projects start to come online over the balance of the year. You will actually see that ASP mix headwind that we had in Q1 start reversing into a tailwind as we sell those products, FOB, the terminal typically pretty attractive ASPs because you have the embedded rail freight in those. So I hope that answers your question there.

And that concludes our question-and-answer session. I will now turn the conference back over to Mr. Ward Nye for closing remarks.

Happy. Thank you, and thank you, all, for joining today's earnings conference call. We're very pleased with the company's strong start to 2026 marked by outstanding safety results, solid operational execution and resilient financial performance. The results reflect the strength of our strategy, the quality of our portfolio, and most importantly, the dedication of our employees across the organization. Heading into the year's busier construction months, Martin Marietta enters the remainder of 2026 in a position of strength. Our aggregates led portfolio concentrated in the nation's most attractive markets, supported by a differentiated Specialties business and a strong balance sheet provides us with the resilience and flexibility to perform consistently across cycles and continue compounding long-term value for our shareholders. We look forward to sharing our second quarter 2026 results in the summer. As always, we're available for any follow-up questions. Thank you again for your time and your continued support of Martin Marietta.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Ladies and gentlemen, welcome to Martin Marietta's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] 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 Vice President of Investor Relations. Jacklyn, you may begin.

Good morning. It's my pleasure to welcome you to Martin Marietta's Fourth Quarter and Full Year 2025 Earnings Call. With me today are Ward Nye, Chair, President and Chief Executive Officer; and Michael Petro. Senior Vice President and Chief Financial Officer.

As a reminder, today's discussion may include forward-looking statements as defined by United States securities laws. These statements relate to future events operating results or financial performance and are subject to risks and uncertainties that could cause actual results to differ materially. Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements except as legally required, whether due to new information, future developments or otherwise.

For additional details, 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 website. Supplemental information is available both during this webcast and in the Investors section of our website. It includes a summary of our financial results and trends with full year and fourth quarter bridges from continuing operations to consolidated results on Slides 5 and 6, respectively.

As a reminder, the company's Midlothian cement plant related cement terminals and Texas ready-mixed concrete operations are classified as assets held for sale as of December 31, 2025. Their associated financial results are reported as discontinued operations for all periods presented. Our full year 2026 guidance summary on Slide 7 reflects continuing operations unless otherwise noted. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the appendix to the supplemental information in our SEC filings and on our website.

Ward and I will begin today's earnings call with a discussion of our fourth quarter operating performance, 2026 outlook and supporting market trends. Michael Petro will then review our full year financial results. capital allocation and 2026 guidance details, after which Ward will provide closing remarks. Please note that all comparisons are to the prior year's corresponding period. A question-and-answer session will follow. Please limit your Q&A participation to one question.

I will now turn the call over to Ward.

Thank you Jacklyn. Good morning, and thank you for attending today's teleconference. 2025 was an outstanding year for Martin Marietta, marked by record financial, operational and safety performance. Our aggregates business delivered record profitability and meaningful margin expansion while our highly complementary specialties business achieved record revenues and gross profit, highlighting the strength and breadth of our portfolio.

We delivered these results even as the private construction environment remained challenging with single-family housing and nonresidential square footage starts still well below their most recent post-COVID peaks. These outcomes underscore the durability of our aggregates-led business model, reinforced by intentional portfolio shaping and our team's disciplined execution. In short, this is our Strategic Operating Analysis and Review or SOAR plan in action, thoughtful strategy, rigorous execution led by a high-performing team and a product portfolio engineered to outperform through macroeconomic samples. With that context, I'll briefly summarize the principal achievements of SOAR 2025. Over the 5-year period ended December 31, 2025, we delivered 208 basis point price cost spread, exceeding our 200 basis point SOAR 2025 target and achieved a compound annual growth rate of more than 13% in aggregates gross profit per ton.

From a capital allocation standpoint, we announced or executed approximately $16 billion portfolio-enhancing transactions, we invested $3.2 billion in sustaining and growth CapEx and returned $2.1 billion to shareholders through dividends and share repurchases. Of vital importance to our investors over the same time period, we delivered total shareholder returns of 126%, approximately 30 percentage points above the S&P 500 Index over the December 31, 2020, through December 31, 2025 period. We also paid special attention to maintaining our strong balance sheet. More specifically, we concluded SOAR 2025 period with our leverage ratio within our target range of 2 to 2.5x and strong free cash flow. Accordingly, we began SOAR 2030 in an enviable position with the ability to responsibly invest in our business and the flexibility and desire to make timely and prudent acquisitions. Indeed, by thoughtfully redeploying capital from cement and downstream asset divestitures into pure aggregates positions, we expanded our footprint coast to coast, increased the aggregates contribution percentage to consolidated gross profit and enhanced our margin profile, all nicely positioning Martin Marietta for durable and sustainable growth.

Before discussing our 2025 performance and 2026 outlook, I'll highlight some fourth quarter achievements, beginning with our core Aggregates business, which delivered record results across nearly every key metric. Year-over-year, aggregates revenues increased 8% to $1.2 billion. Gross profit rose 11% to $420 million. Gross profit per ton improved 9% to $8.59 and gross margin expanded 93 basis points to 34%. Our Specialties business also delivered record fourth quarter results, driven by solid organic momentum and contributions from Premier Magnesium. Our full year results were a testament to the resilience of our portfolio and the opportunities ahead. Aggregates delivered another year of outstanding performance, delivering records across nearly every financial measure, including gross profit per ton of $8.45, representing a year-over-year increase of 12%. Notably, our Specialties business also posted exceptional results, reinforcing the value of this highly complementary segment achieving record full year revenues and gross profit. I'm especially pleased to share that our strong financial performance was accompanied by record safe performance in our Heritage business as measured by total reportable incidents reflecting the depth of our world-class safety culture and operational discipline.

Looking ahead, our 2026 shipment guidance of 2% growth at the midpoint reflects a balanced macro environment in which we expect sustained infrastructure investment and accelerating momentum in data centers and energy to offset continued softness in private nonresidential and residential construction. In line with these assumptions, we're guiding to 2026 consolidated adjusted EBITDA of approximately $2.49 billion, inclusive of contributions from discontinued operations. Upon closing of the previously announced asset exchange with Quikrete will provide updated adjusted EBITDA guidance for 2026. With that outlook, we'll now turn to the end markets shaping these expectations. Infrastructure demand remains solid, driven by the bipartisan Infrastructure Investment and Jobs Act or IIJA and robust DOT budgets in Martin Marietta states underpinning a multiyear pipeline of projects. As of November 30, 2025, the American Road and Transportation Builders Association or ARTBA, reports that 71% of IIJA highway and bridge funds have been obligated. However, only 48% has been dispersed. The gap between obligations and disbursements reflects significant remaining reimbursements and an extended construction runway beyond this year with IIJA reimbursement is expected to peak in 2026. As enacted, the IIJA is scheduled to expire in September 2026. However, both congressional chambers have already begun shaping the next surface transportation bill.

The House Committee on Transportation and Infrastructure's fiscal year 2026 views and estimates affirmed bipartisan reauthorization intent ahead of the deadline, while federal leadership's focus on accelerated project delivery and funding stability reinforces the nation's commitment to sustained infrastructure investment. Equally important, state and local governments continue to strengthen their transportation funding frameworks by adopting new revenue measures designed to address long-term infrastructure needs undertakings that continue to garner broad bipartisan support. A notable example in our company's home state of North Carolina is in Mecklenburg County, where voters this past November approved a 1% local sales tax referendum, that referendum alone is expected to generate approximately $19.4 billion over the coming decades to fund transformative improvements to roadway infrastructure and public transit across the Charlotte metropolitan area. Given broad bipartisan support within the Congress as well as the administration favoring our nation's infrastructure, we remain confident in the timely passage of a new long-term surface transportation bill.

Heavy nonresidential demand continues to be driven by accelerating growth in data centers and the corresponding need for power generation. Spending on data center construction remains exceptionally healthy and continues trending upward with Goldman Sachs research estimating hyperscalers potentially deploying over $500 billion in capital in 2026, significantly increasing power demand and requiring new generation supported by an all of the above strategy. Whether this solution is natural gas, onshore wind, grid scale storage or nuclear, nearly all pathways require the essential aggregates we provide positioning Martin Marietta at the center of this long-term power generation growth opportunity. In addition, we see meaningful acceleration in gulf liquefied natural gas or LNG development, driven by strong export fundamentals and advancing project pipelines. As momentum builds in 2026, Martin Marietta's unmatched rail distribution network positions us to supply these large-scale projects with efficiency and reliability.

Turning to residential construction. Affordability remains the primary near-term constraint. There's no question regarding the need for more housing as demand continues to outpace supply, particularly in key Martin Marietta states. Freddie Mac estimates the U.S. requires approximately 4 million additional homes just to restore balance, underscoring a multiyear need for increased new single-family construction. Given our purpose-built business footprint, in many of the nation's most dynamic and faster-growing regions, we're well positioned to capture a disproportionate share of the housing recovery and light nonresidential construction that we follow. Moreover, the President's recent nomination of Kevin Warsh to succeed Jay Powell as Chair of the Federal Reserve is likely to be a positive development for a lowering of interest rates.

I'll now turn the call over to Michael Petro to discuss our full year financial results, capital allocation and our 2026 guidance. Michael?

Thank you, Ward, and good morning, everyone. Starting first with the full year 2025 results. The continuing operations Building Materials business posted revenues of $5.7 billion, a 7% increase and generated a gross profit of $1.8 billion an increase of 13% year-over-year. Gross margin expanded 173 basis points to 31%, driven by strong aggregates performance that more than offset softness in our downstream businesses. As Ward noted, our core aggregates business delivered record performance in 2025. Revenues increased 11% to $5 billion, driven by 6.9% pricing growth and volume growth of 3.8%.

Gross profit increased 16% to $1.7 billion, and gross margin expanded 143 basis points to 34%. The as strong pricing and shipment growth more than offset higher freight depreciation and general inflationary impacts, resulting in a price cost spread of 239 basis points. Other Building Materials revenues decreased 8% to $992 million and gross profit decreased 18% to $98 million, primarily driven by the Minnesota asphalt business and the impact of the April 2025 California paving divestiture. Our Specialties business delivered all-time records for revenues and gross profit of $441 million and $137 million, respectively. These outstanding results reflect strong organic performance, driven by pricing growth, increased shipments across all product lines, effective cost management and 5 months of contributions from Premier Magnesia following its July 25 closing.

Full year cash flow from operations increased 22% to a record of $1.8 billion, which we appropriately allocated across our long-standing priorities of targeted M&A, organic investments and returning cash to shareholders. Consistent with that framework, in 2025, we deployed $812 million on business and land acquisitions, reinvested $680 million into our plants and equipment, and returned $647 million to shareholders, representing a total cash yield of approximately 1.7%. As a result, we ended the year with a consolidated net debt to adjusted EBITDA ratio of 2.3x and total liquidity of $1.2 billion, providing meaningful capacity to execute our M&A first growth strategy.

Turning now to 2026 guidance. For aggregates, we expect low double-digit gross profit growth at the midpoint, supported by low single-digit shipment growth, mid-single-digit pricing improvement and cost per ton generally in line with inflation. Importantly, we are comprehensively reviewing our quarry and terminal networks to better align production with prevailing demand that remains approximately 14% below 2022 levels. While we expect these efforts to provide meaningful rationalization opportunities and operational efficiencies, our guidance reflects only the benefits from the pilot regions actions that were realized in 2025's fourth quarter and that will flow through the balance of 2026.

Turning now to other product lines. We expect high teens gross profit growth in specialties, inclusive of acquisition contributions, while gross profit from other building materials is expected to remain relatively flat. Taken together, these assumptions support our midpoint expectations of high single-digit growth in both revenues and adjusted EBITDA from continuing operations. As Ward noted, upon closing the asset exchange with Quikrete, we will provide updated 2026 guidance reflecting the difference between the $250 million of adjusted EBITDA from discontinued operations and the expected adjusted EBITDA contribution from the acquired assets. As we've indicated previously, planned capital spending of $575 million represents a 29% year-over-year reduction. This investment level is aligned with the business's ongoing needs and significantly increases free cash flow available for M&A and share repurchases.

With that, I will turn the call back over to Ward.

Thank you, Michael. 2025 capped another remarkable 5-year chapter from Martin Marietta, delivering exceptional safety, operational and financial results while achieving all the SOAR 2025 goals we outlined during our February 2021 Investor Day. We took decisive steps to streamline the portfolio, enhancing strategic focus on our core aggregates platform strengthened by a differentiated specialties business. .

Building on this success, we launched SOAR 2030 at our Capital Markets Day, charting a clear path for continued growth and shareholder value creation. If the operator now provides the required instructions, we'll turn our attention to addressing your questions.

[Operator Instructions] And our first question comes from the line of Kathryn Thompson with Thompson Research Group.

I have just a broad policy question, that's a 2 part. The first is obvious on IIJA expires at the end of September. Having recently spoken with TxDOT, we understand that they've modeled in multiple different scenarios addressing the new highway bill from funding increases to funding declines. The first part of my question is, can you share your latest intelligence on where Congress is on the new highway bill and what funding levels are most likely? And the second part is how critical is federal funding now with states and local municipalities. You have markets like Charlotte County, Kinberg County, just passed significant incremental funding over the past several years. Is the highway bill as important as it used to be for state DOTs and for Martin Marietta?

Kathryn, it's nice to hear your voice, and thanks for the question. So I would say several things. One, the highway bill continues to be important. It doesn't have the same overarching importance that it did, let's call it, 15 or 20 years ago because as you said, municipalities and states have clearly picked up their game, and I think they intend to continue doing that. That said, recognizing it is important, I would say several things. One, if we're looking at the bill structure today, I would say both the House and the Senate are intent on pursuing a 5-year reauthorization of highway public transportation programs.

Number two, I think they're both pretty committed to not having some of the broader components that were in the last bill structure. And what I mean by that, Kathryn, is in a $1.2 trillion bill. $350 billion went to highways, bridges, roads and streets. So I think we can anticipate a larger portion of that is going to highways, bridges, roads and streets this time. From my understanding, yes, and I've spoken to members of the Senate committee and the House Committee. They're targeting spring for a release of the text. And what that means is I think that schedule gives us ample time to complete the action by September 30. So at this point, at least from what I'm hearing, all the discussion is relative to an on-time multiyear reauthorization.

I think one thing that's worth noting is even if they didn't get it done exactly on September 30, we can look at the past practices and what that makes it clear. is that we're either going to get a multiyear highway bill or an interim measure. And even the interim measure would have to continue funding at the record that I think is moderately over $72 billion for right now. So I think that would be hugely attractive. But again, everything that I'm seeing is it's going to be on time. And at least what I've been told is I'm quoting, I won't be disciplined in when I see come out of that. So I'm going to take them at their word on that.

Now to your point though, what's going on at the local level. I did call out in my comments, what had happened, as you noted, in Mecklenburg County, which Charlotte is the County seat. That's North Carolina's largest cities, the largest city between Washington, D.C. and Atlanta. What that meant, Kathryn is, they put $19 billion out there over a couple of decades, so they can continue to grow their infrastructure needs in and around Charlotte because Charlotte has the high-class problem that Raleigh Durham has and that Atlanta has and that Dallas-Fort Worth has and Denver has and the Tampa has and that so many Martin Marietta markets do, and that is population inflows are so significant. And states have to pick up their game, which they've done. Municipalities have to pick up their game, which they've done. And notably, when those ballot measures are put out there, they pass in the high 80% of the time. So again, I think that underscores fly at the national level. We see this getting done on time because it does have broad bipartisan support. So thank you for the question, Kathryn. I hope that helped.

It does.

And our next question comes from the line of Adam Thalhimer with Thompson Davis Company.

Ward, can you provide some clarification on the guidance? What's in and what's out -- I'm specifically curious about Minnesota, the acquisition there. And then finally, should we assume a slow start to the year, given challenging weather?

Adam, thanks for the question. I'll do my best to clarify things. I hope it's out there, but I know it's a lot to read. So I would say several things. One, if we start with consolidated adjusted EBITDA and the midpoint of really -- let's call it, $4 billion, $9 billion. That is truly an all-in number relative to, in many respects, how we finished the year last year. So does it have our heritage aggregates and organic aggregates business in it? You bet. Doesn't have disc ops. In other words, the cement in North Texas and the concrete that goes with it, you bet. So that's how I would capture what's in the consolidated adjusted EBITDA.

Now if we go to adjusted EBITDA from continuing operations, this is when it's got a little bit of shimmy to it, and here's what I mean by that. It's got the organic business in that. And really, that's what it has solely and uniquely. So take out cement take out the ready mix that goes with cement and frankly, take out the Minnesota. So I think that comes back and answers your question. Part of what we intend to do when we close Quikrete is come back and reset the table. And the resetting of the table will have the Quikrete assets in it. You will also have the Minnesota business in it, and then we will give you a nice clean picture of what we believe the balance of 2026 will look like. But again, I hope that answers your question directly, Adam.

Great. And then just maybe on the slow start to the year potential.

Well, you know what potentially is a good word because actually, I'll talk more about Q1 when we report. What I'll tell you is this, I was not disappointed in what I saw in January. And it would have been easy looking from the outside in and seeing a lot of cold weather and seeing places like Texas having a deep freeze and the Southeast having a deep freeze and thinking, boy, that's got to be a slow start. Actually I saw a really resilient performance in January, which I was heartened by. And part of what that led me to think, Adam, is I'm reflecting really on last year. and the way that we gave you a guide to last year. As you recall, the words, I think I used almost 12 months ago today is I think we're giving you a nice measured guide, very thoughtful guide for the year. And you recall how the year played out last year. And I would like to see it play out that way again this year. And so far, I haven't seen anything in the early days that dissuade of that.

And our next question comes from the line of Trey Grooms with Stephens.

Just kind of sticking with the guidance here. Given what we've seen with contract awards in your markets and maybe what you're seeing from the field and hearing from your contractor customers maybe on both the public and prop side. Could you give us a little more color on how your end market assumptions and the mix there kind of built into your outlook for 1% to 3% volume growth this year? And then within that 1% to 3%, maybe where you see the most likely kind of swing factors within the range there?

We'll do, Trey, thanks for the question. I think that's a good one. Let me go through the big buckets and give you a snapshot of what I think that's going to look like. So if we start with infrastructure that if we look at it for last year, it was about 37% of our business. look, I see that up mid-single digits. So I think that's going to be a good, steady story this year. I think that story could actually be better this year than we're guiding right now. Keep in mind, we've said 2026 should see those peak IIJA funds come in. So again, if that peaks the way that we think that's going to be important. But keep in mind, you still got 50% of the funds that have yet to flow. So '26 should be an attractive year, but frankly, so should '27. So I think that's really a big piece of it.

I think the other piece that we spoke of before, if we're looking at our top 10 states, and I think this is an important thing to keep in mind, we're looking at their overall DOT budgets up about 7% from the prior year. So again, if we're looking broadly across Martin Marietta and you know those top 10 states tend to matter disproportionately again, their budgets look very, very good. I spoke in one of the earlier questions about what we've seen at the local level relative to referendums. A lot of those got passed last November, obviously, the one that we've spoken of in Mecklenburg County, which basically is Charlotte is an important one for us because that's a vital market to Martin Marietta. I mean that kind of takes me through at least the infrastructure piece of it. And I do think there's probably some modest upside there.

Nonres, if we back away from it, again, 35% of our business last year, it's interesting to me to look at it because if we're looking at total square footage starts, they're still 20% below the prior peak even with the holy trinity of data centers, energy and warehousing, all moving in the right direction. But the thing that I'm taken by is what I'm seeing right now, demand for data centers simply remains really strong. I mean we talked about what's going on with Stargate in Abilene, we've talked about Google and their investments in South Carolina. Meta has recently reaffirmed their $65 billion CapEx investments in Louisiana. I mean, these are big numbers. But then -- but I like our stories like this. I mean, Project J, which is a large data center that really just got underway in Laramie County, Wyoming in December. That's going to be an enormous project. And we've got the closest proximate quarry of size to that. So I think all that's going to be impressive for a while.

But what we're seeing is what you would have imagined. And I think this may supply more upside as well. What we're seeing in energy and its needs are pretty significant. So the U.S. power demand is expected to rise 25% by 2030. And then these are all compared with 2023 levels. If we're saying from 2023 to 2050, it's going to have to go up by 80%. So again, if you're looking at something that can be a lever in this, that's certainly one of them. As we're thinking about data centers and we're thinking about energy, Texas, which is an important state for us, where we're the largest aggregates producer is clearly a leader in that. But importantly -- and Trey, you'll remember when we were talking about BC Sumner, 15 and -- 10 and 15 years ago as far as the nuclear plant in South Carolina. Now you've got Brookfield Asset Management who's come in there basically in a public-private partnership with Westinghouse, and they're basically looking to build large-scale nuclear reactors to support the growing demand in that state and beyond.

The other thing that we're seeing, and frankly, this is overdue from my perspective, is we're seeing LNG projects coming back as well. So you're getting closer to the Gulf, Port Arthur LNG is starting to move. So again, do I think there's upside on data centers? Yes, I do. Do I think there's upside on energy? I do. But here's the other piece of it that's very different than I would have speaking to you about last year at the same time. And that is what's going on with distribution and warehousing. So again, we continue to see in a number of our markets. Amazon is growing. We've seen good examples of Walmart distribution centers coming in, Ross distribution centers. Dell Hays, which is the owner of Food Lion in our part of the world is building a nice distribution center as well. And we're seeing big pharma making nice moves, in Novo Nordisk, J&J, Eli Lilly.

So again, as I'm looking at public I've seen nice momentum and potential upside as I'm looking at heavy nonres, I'm seeing nice momentum, and I'm seeing upside. If I'm seeing places that frankly, will be relatively flat. I mean, that's where residential comes to the top of the pole, right? Look, you heard me say that I think we're likely to see declining interest rates. I think that's going to be helpful on res. I think that's going to be helpful, most importantly, on single-family res. At the same time, you saw the latest starts. They're really not very heavy at all. But the need is acute. And I think one thing to watch is what's going to happen with adjustable mortgage rates? And how popular do those become, again, even ahead of watching interest rates decline. So do I think there's upside in public? Yes. Do I think there's upside in data? Yes. And do I think housing is likely to be relatively flattish with likely upside moving into next year? Yes, I do. And I think as we think longer term, when you see that last turn really come to res, I think that really puts some accelerant to pricing as well. So Trey, I'll try to take you through the 3 big end uses and try to give you the ups and downs in some of the lives.

And our next question comes from the line of Anthony Pettinari with Citi.

This is [indiscernible] on for Anthony. Just based on the guide you put out, it looks like the 250 basis points price cost spread guide is kind of still intact. I was hoping you could walk us through what you expect for your key cost buckets in 2026 like labor, raw materials, energy, maintenance or et cetera. But I guess also really, what gives you confidence that you think to keep costs down? Is it that you're seeing lower inflation or maybe there's some other levers you're pulling?

Thanks for the question. I would say several things. One, look, we're seeing inflation running, let's call it, 3.5%-ish. I mean if we think about the things that will be involved in that, clearly, labor is going to be a piece of that. we actually feel like supplies and some of those things will continue to move a bit. But at the same time, we don't see a lot of significant tariff activity in our space because so much of what we're buying and our markets tend to be uniquely in the United States, all by themselves. If we're looking at the quarter itself, I would say several things were moving around in the quarter. One, we just had a degree of higher external freight costs. And what I mean by that is we had increased yard activity. And so if we're just looking at the transfer activity to yard locations themselves, that actually took up costs in ways that, in many respects, are more optical than real.

And the other issues that we had in the quarter all by itself, we did have, as we're going out to California and some parts in the West and restructuring some of our business. we had some onetime inventory write-offs that will not recur. And so if we're looking at the overall cost environment, I think it's actually in a pretty good place. That said, as Michael commented in his regard -- in his remarks, we want to make sure that we're looking at all of our divisions and all of our districts through a really clear eye fashion to make sure that we're lining up costs with what the market demands are today. So keep in mind, since 2022, volumes have been flattish to certainly not up in any notable way since 2022. He mentioned that we had a pilot project that we had gone through one division late last year. The results of that were really very significant and helpful and we're looking at that more broadly across the portfolio. So again, I hope that answers your question.

And our next question comes from the line of Philip Ng with Jefferies.

It's Jesse on for Phil. Just on the specialty side, it looks like, obviously, Premier has had a bit of a mix impact. Can you just talk about some of the initiatives you can kind of do to get the profitability back to kind of legacy levels there and kind of a time line associated with that?

Yes. No, what I would say on Premier are just specialties as a whole, Premier is a margin-dilutive acquisition to the specialties organic business. But what you're seeing in the guide for next year, the $160 million of gross profit that's the organic business that has run so well and so hard over the last 3 years. Again, we're taking a measured guide there. We're assuming that consolidates a bit. So a lot of the contribution in gross profit growth coming into the specialty segment is coming from the 7 months of contribution from the Premier acquisition that wasn't in 2025.

And just in terms of cadence on specialties, there's really not a whole lot of seasonality in that business. So you can assume each quarter is roughly the same split for that $160 million of gross profit. But I think that margin level that's implied is a consistent margin level now for a full year with the pro forma business, including Premier.

And our next question comes from the line of Angel Castillo with Morgan Stanley.

Just wanted to ask, I guess, a 2-part question. First, could you just comment on the kind of, I guess, quote to order conversion rates and how that has been evolving as you think about fourth quarter and really in the first couple of months here of the year, whether you're seeing any shifts of projects or the quoting to conversion to orders improving in any material way? And then or you gave very good helpful color across all the kind of key end markets and the pockets where we might be seeing some potential for improvement. So I was just curious, could you size how much data centers is of your backlog or your orders today? And then also maybe comment on manufacturing, in particular, I think -- that's one area where we've been seeing -- on your slide, it's listed as more of a yellow or I guess, orange. And then I think in the U.S. census data, it's one of the pockets that seems to be actually seeing accelerating declines. I'm just curious what you're seeing on your side?

Angel, thanks for the question. I would say several things. One, obviously, part of what we're doing right now is using Precise IQ largely in the East. You'll see that rolled out across the company and pretty much in place by year. We think that's important because part of what we've seen as we've used Precise IQ is it does several things. One, it clearly gives our sales team the ability to respond in a very quick, very agile, but very accurate way to our customers. The other thing that we've seen is our win rate utilizing that has ramped up pretty nicely. So I think answering your question directly, is the quoting and the yield looking attractive from where we sit right now? Yes. And do I think it's going to be more attractive as Precise IQ rolls out across the enterprise? I think you've got a double yes on that.

As we go to data centers and look at that tonnage, look, that tonnage is right now, frankly a few million tons a year. I mean -- and we're talking about a business that's going to be at least if we're going on last year's numbers, let's call it, close to $200 million, obviously, notably larger than that. when we come back with Quikrete. That said, it's growing at a very fast rate. I mean so it's growing at a multi-double-digit rate right now. And we anticipate that that's likely to persist. And equally, if we go to some of the other nonres areas that I spoke to, we continue to see, at least in our markets, manufacturing moving in the right direction. I mean, that's not going to be an immediate switch that's going to go. But if we're looking at it overall, I think that's the trend that we're seeing. And Michael, anything you want to add to any of that?

Yes. I think just to give you some color on Q4, the categories that we call the 3s because they all represent about 3% of our overall shipments or data centers now distribution centers and warehouses, which is down from a peak of closer to 7% or 8% and manufacturing and power gen. Of those categories, data centers were growing at about a 60% clip. Warehouses themselves coming off the inflection point, we're growing at about 40%. So that just gives you a sense for those 2 categories that are 3% of our overall shipments, the growth rates. And manufacturing, given some of what we're seeing in pharma that's taking over for some of the decline in large semiconductor and battery facilities. The rate of decline in Q4 was the lowest rate of decline for the year. So we're hopeful that manufacturing starts to inflect here in 2026 similar to what we saw in warehouses in 2025. Hope that helps, Angel.

And our next question comes from the line of Tyler Brown with Raymond James.

There's been a lot of chatter out in the market about pricing. You talked a little bit about it, but can you just kind of give us your thoughts about the state of pricing as you see it? Are you seeing anything geographically dispersion wise, just any bigger picture thoughts about hitting that 5.5% ASP growth through 2030, which I think is what you laid out at the Analyst Day.

Tyler, thanks for the question. And I would say several things. One, no surprises from where I'm sitting. I mean I think everything that we talked about at the Capital Markets Day is pretty consistent with what we put in our documents today. If I look just at the quarter just ended, I mean, all divisions posted mid-single-digit price increases. It was interesting in Q4 because actually we had a few project delays in and around, for example, Charlotte and Greensboro. And those are actually, from a pricing perspective, pretty attractive markets. So we actually saw volume growth in the East in modestly below the rest of the company. So that actually gives us an optical headwind if you think about what that means. And if you think about the guide, I mean, look at it in these terms, we're basically talking to 5-ish on price. We're talking to 2-ish on volume, and that's exactly what Q4 looked like in Q4 was just a record. So as I think about taking that and really casting that forward. I don't see anything in that, that gives me degrees of pause. So again, I think we've got a nice rhythm and cadence on where we're going.

And the other piece that strike me relative to your question on pricing in particular, Tyler. If we go back to the conversation that I had relative to end users. So look, in first is looking good and may look a little better. Non-res is looking good and may look a little better, at least on the heavy side. And we said housing, not so much at least this year. once that housing starts coming through, Tyler, I think you and I know that it will. And I think when it does, it's going to particularly shine in Martin Marietta markets simply because of the way we built this business. Again, I think pricing looking at the way that we talked about it last September and today, relative to 2026 looks very steady. And I think if we see private start to move the way that I think private is going to move, I think that's actually very helpful to pricing even going forward. So again, I hope that responded to your question, Tyler.

Yes. No, that's very helpful. .

And our next question comes from the line of Garik Shmois with Loop Capital.

I just wanted to piggyback on the last question, but ask it from a gross profit per ton perspective. I think you're guiding to 8% growth at the midpoint of guidance this year. I think relative to SOAR 2030, I think that was closer to go double digits. So just wondering if the variance there is on the volume side, is it related to housing coming back? And any thoughts on gross profit per ton and the level of conservatism in the guidance this year.

Yes. Happy to take that question. I think you're saying the implied gross profit per ton is around 9% versus double digits. What I would say is a gross profit dollars are at the midpoint, up 11%. And what Ward said is we were taking a measured approach to the guide in terms of not only probably volume, but the other place where we're feeling a bit measured is on the cost side. So underlying inflation, as Ward mentioned, it was running at about 3.5%. Our implied COGS per ton guide is 3%, but that's only given about 50 bps of operating leverage to the 2% volume. So we would expect to have more operating leverage than that and to put it in perspective with some sensitivities, each 1% reduction in COGS per ton inflation holding everything else constant in our guide, so about another $35 million to add gross profit. So if there's upside, it's likely on the COGS side as we continue to take some of the lessons learned from our pilot regions network optimization efforts and roll that out across the company. But that is not contemplated in our guide here in February.

And our next question comes from the line of Ivan Yi with Wolfe Research.

I just want to go back to the price cost you talked about -- can you just comment on that trajectory going forward. You price expected to be flat at plus 5% in '26, is the price/cost spread didn't narrow this year when can it reaccelerate?

You're welcome. Thank you for the question. Look, as Michael and I both said, I think we've taken a very measured view of what that's going to look like this year. I think what we're seeing -- what we talked about was seeing it more than that as we went through the SOAR 2030 period. So we didn't necessarily think we're going to come out of the gate at that level. We think it's going to continue to build. And we believe, given the cost profile that we have and where I think we'll actually drive that. And what I believe is likely to happen to volumes over the coming years as private construction has a degree of recovery. We don't look at that price/cost spread that we discussed in September and have any concerns about that. We feel very confident in our ability to hit that. And I think if we're doing what we're doing in this year and it builds into next year in the way that we think and have a highway of confidence that it will, Ivan, I'm not losing any sleep over what that's going to look like.

And our next question comes from the line of Keith Hughes with Truist Securities.

I just sit back to the IIJA. You had talked about temporary measures. I think you maybe continuing resolutions. We've seen a lot of those on these highway bills expiring. If we go down that path and we don't get a new plan, what is the continuing resolution due to your business, either positive or negative?

Keith, that's a good question. I don't think it does anything negative to the business at all because, again, if we ended up with a CR. It's going to continue funding at the record level of $72.1 billion. So it would continue basically at a record level. And again, as we discussed, as important as the highway billers, so is the state DOT posture. So if we're looking at a very healthy stick DOT posture to set up 7% on average on our states as we head into the new year. And in a worst scenario, again, that I don't believe we're going to be confronted with that we end up with a CR, we just end up at the same level that we are. So if you go back to the notion that I said, look, I think there's upside in what we're going to see in public this year.

I think you're going to see another really strong year in public next year simply because you've still got 50% of the funds that need to work their way through. So again, I'm not looking at September 30 with any form of voting. That, that's going to be something that's going to be significant, pretty bad at all to our business. I think we'll have a new build. I think the new bill will have more highways, bridges, roads and streets. I think it will be on time. And if we don't, I think the beat goes on.

I hear you. One of the things investors, I think the ones that have really studied us to get fearful of. There's not so much the spending fall off dramatically in '27. But the ARTBA projection shows falling infrastructure spending in '27. If you get a CR, would the market not be flat to up in '27 in that scenario?

I think if you got a CR, it would probably be relatively flat to modestly up again because you'd have the same degree of funding and you're going to have state DOTs picking up again. So I think the biggest piece of our business, as I said, there was not quite 40% of our business this year would continue to be ballast in the boat.

And our next question comes from the line of Brian Brophy with Stifel.

You referenced the network optimization initiative a few times I guess any color on the pilot that you referenced and how that unfolded. And any feedback on what this could mean for the cost profile or margin profile for the total business as it's fully rolled out through the enterprise? And how should we be thinking about the timing of some of the benefits?

Let me talk to you broadly about what it was, and Michael can come back and add some color on what it might mean. I think that's probably a good way to do it. So if we think about what it was, what it means is if we've got networks of quarries, servicing our customers, but in some instances, because volume is not running at particularly peaky levels today, we can look at idle or not run aside as hard and run another site much harder getting leverage on the volume that's going through there and taking a look at which ones may be the simply the most efficient in any given market. That's what we're talking about doing. And of course, when we do that, we do it the customer top of mind because we have to make sure we're in a position to take care of their business needs and make sure we're in a position to do that without creating degrees of supply disruption or additional costs in their world from more transportation. So what we found, and we looked at this in the West, in particular, is where we had degrees of market presence that allowed us to do that, and we could temporarily do something with the site and make sure we're using other sites more productively. It helped in multiple different ways. So with that, I'll ask Michael to speak to what it could potentially mean. And obviously, we're going to talk to you more about this as the year goes on.

Yes. No. I think starting with the pilot is important. So like we said, we saw that flow through in Q4, so measures implemented in Q3 of last year. And that meant COGS per ton declining year-over-year in that pilot market. So we had the benefit of that. That was overcoming the restructuring charges that are in our adjusted EBITDA not the full amount, but some of that was hitting a gross profit in that pilot region where they still had declining COGS per ton to put it in perspective without pulling that out. So the opportunity set is rather large. We want to complete our assessment across the entire footprint before we come back and quantify it, and we expect to have that quantification done by midyear, and that's when we will revisit the guide and update our tax per ton assumption accordingly.

But I think it's important to note, we're guiding the 3% COGS per ton and the implied guide. If you exclude the external freight, which has just passed through freight to the customer, so not gross profit impacting. And if you exclude those restructuring charges that hit at gross profit, our underlying COGS per ton fully loaded with depreciation and otherwise was growing at a 2.7% rate in Q4. So we're guiding modestly above that, but that will give you a sense of some of the conservatism that we feel we've included in this early guide.

And our next question comes from the line of Timna Tanners with Wells Fargo.

Wanted to just ask if you could share anything with us about the timing of the Quick REIT transfer closing? And any updated thoughts on the pipeline would be great. .

So thank you, Timna, and I to hear your voice. I would say several things. One, we had put out release at the end of the year saying we anticipated closing in Q1. We still do. The long pole in the tent is real estate. And it was interesting, Timna, because we went through the regulatory piece of it probably quicker than we or anybody else would have anticipated. So right now -- and of course, the agreement itself is publicly filed, so you have an opportunity to read that. And what you'll see in the agreement is there a series of closing conditions and many of them evolve around the real estate. Because if you think about what a big 1031 exchanges to get the tax deferred treatment, you're having the lineup assets. And of course, on the quick rate side and on our side, there are certain sites that would simply be more material than others. So we're going through the process of land use and surveying and getting title insurance. and that simply takes some time. But again, our anticipation continues to be that we will get that closed here in the first quarter. I think the other part of your question was relative -- as Timna was it relative to pricing? .

No. It's about anything updated on your pipeline or how you're seeing the opportunities and acquisitions.

Just on that outlook. Look, it's -- the short answer is that's going to continue to be a nice attractive driver for Martin Marietta. We have been and continue to be engaged in a number of significant conversations, as I think I indicated at our Investor Day or Capital Markets Day, people should expect us to be in the world of doing about $1 billion worth of transactions a year, and that's never going to be linear, Timna. So look, is it going to be $1 billion 1 year? Yes. Could it be $4 million the next? The answer is it could be depending opportunistically on what comes along. But the pipeline continues to be very attractive, and it's obviously something that I think we're good at, and we've added a lot of value with and we'll continue to pursue.

And our next question comes from the line of Michael Dudas with Vertical Research.

Ward, you've given great insight on outlook for the business and the industry. But is it a macro? Is it regulatory? Is there sentiment concerns? Because there are some people who are thinking the macro is not as right as others. What's the thing -- 1 or 2 things that you are concerned about that would maybe impact how the year flows out, anything top of mind or anything specific?

Mike, thanks for the question. Look, take if you could put me on mute, that would help. I'm hearing an echo. Look, I think of the year through several different lenses. When I think of it through end users, which we've spoken through. And again, I think we've taken a really measured view on the end users. I look at it through the lens of commercial. And again, I think commercially, where this business is performing is right in line with what we had indicated at the Capital Markets Day. I look at it through the lens of cost and through the lens of inflation. And as Michael just took you through, when we really go through and look at it from a granular basis and look at Q4, how that performed and what we think can happen actually with that as we go through degrees of really looking at where we're operating, why, I don't see anything on the cost side that causes me concern. .

Regulatorily, I think actually, the nation and the industry is in one of the better places that I've seen in my career. So I don't see something there that causes me any concern. Look, I know there's a lot out there that people look at from a macro perspective, that they can become cautious about. The thing that I'm taken by is this is a business even in the worst of times, and we're not in the worst of times, so I don't anticipate them. We've always been profitable. We've always -- we've never cut or suspended the dividend. And we're in a place that we're producing and selling this past year, about 200 million tons of stone. And that's about where we were in 2005 and 2006, except we've added, let's call it, 50 million, 55 million tons of business. So what we have ahead of us from a capacity perspective is impressive and what we're doing with free cash flow right now is impressive. And I think if we're doing that in a relatively muted volume environment, what that tells me is if we're right on what's coming ahead of us, it can be really impressive. So I'm not seeing a lot right now that's causing me any degree of angst.

And our next question comes from the line of David MacGregor with Longbow Research.

What I just wanted to ask you about your value over volume strategy. And just, I guess, to the extent to which that may be put to a test this year, there's been a lot of weakness downstream ready-mix business, it's a pretty difficult business these days. And I'm just wondering about the risk of price pressure from below just due to weak profitability in that segment of your market and consolidation amongst those players and just how that could potentially manifest into your business?

Yes. Thanks for the question, David. Look, the way it's working right now, if you think about it, asphalt in most of those businesses are getting January 1 price increases. Degrees of concrete businesses are getting January 1 price increases. And some of them are getting April 1 increases. So if you think about what that means, it's pretty similar to last year. And -- and of course, the conversations have already been had. People know where we are going into the new year. We have not baked midyears into what we've done. If I'm right on what could happen relative to public and degrees of heavy nonres, there may be some opportunities from the years.

Keep in mind, too, David, after we've closed -- well, after we close Quikrete and then give you the forecast on Minnesota, both those businesses tend to have lower ASPs than Martin Marietta. So that's going to give you an optical headwind when we put those into our forecast going forward. But again, my view if we go back to the Capital Markets Day is we're not going to stay chronically at double digits. We're not going to go back in my view to where we were a decade ago from a percentage perspective, we're going to land somewhere in the middle. And the swing factor on that is going to be what happens with volume. So I think what we're guiding to is very consistent with that. And again, I think there's probably upside risk to it relative to what could happen with midyears and what can happen is volume returns to it. So I hope that answers your question. We're pretty resilient around assuring that we're getting appropriate value for our products. It's hard to buy these businesses. It's hard to permit these businesses. It's hard to put a spec product on the ground. And I want to make sure we're getting appropriate value when we do.

And our next question comes from the line of Brent Thielman with D.A. Davidson.

Ward, it seems to me housing could be one of the more dynamic markets for you in the next year or 2. So you sort of think back on the business over time. How should we think about sort of this lag from permits and starts to having some noticeable sort of impact to your business?

I've always looked at that historically as having probably a 3- or 4-month lag I'm not sure it's going to be that long, this time, Brent. So again, part of what you're not seeing is what the square footage look like in those numbers. And again, as we continue to see big square footage in nonres rollout at pretty big numbers, I think that's going to be a consumer of stone. And again, I think the public side of this is going to be healthy and it's going to be healthy for a while yet. So I'm not seeing -- I wouldn't let those numbers and any purported delays drive my model in either particular direction, Brent?

And our final question comes from the line of Judah Aronovitz with UBS.

Can you just talk about your confidence level in the 5% pricing for '26? Is that based on pricing already in place? Or is there maybe some more work to do to achieve that maybe based on bid work? And then if you could comment on if there's any mix headwind from base or any other puts and makes.

Thank you for the question. That's largely for what's in place. I mean we've had the conversations with our customers that started last year. So I think we've got a pretty good feel for what that is. as I indicated before, this is more of an optical issue than a real issue. But obviously, if we do M&A, and they come in at a lower average selling price than our heritage selling price, that can cause an optical issue. .

The other thing that you just never have a sense for, and it's almost quarter quarter-by-quarter issue, and you saw indicated that the East region in Q4 actually because of what had happened with a couple of project delays and weather, actually saw less tonnage go in Q4 than our other divisions. And that obviously gave us a mix headwind from a geographic mix perspective. It's certainly possible that we could continue having degrees of a mix headwind as well because if you're thinking about some of these big data centers and the fact that they're going to need, oftentimes an enormous amount of base stone is they're going in and building the facilities. Base is going to go out typically and let's call it, a 30% ASP lower than Cleanstone. Now the nice thing is when you put down Baston at some point, you're going to put Cleanstone on top of it. So it's nothing that's dislocating in any respect.

And I think it's going to be incumbent on us to make sure we're talking with you very carefully each quarter about what geographic mix looks like and what product looks like because if you don't understand those 2 stories and they are 2 different ones. It does not give you an accurate view of how well the business is performing in all instances. So yes, we believe the pricing is there. We think there can always be some mix issues but we think that's more optical than real.

And that concludes our question-and-answer session. I will now turn the conference back to Mr. Ward Nye for closing remarks.

Abby, thank you for that, and thank you all for attending today's earnings conference call. Over the past 5 years, deliberate portfolio shaping strengthened our presence in key markets, optimized our product mix and enhanced our earnings profile. As we transition from the achievements of SOAR 2025 to the disciplined execution of SOAR 2030, which is already underway, we see a one defined platform for advancing our growth ambitions and delivering enduring shareholder value. Our aggregates-led foundation, complemented by our high-performing specialties business provides a durable platform uniquely suited to achieve the objectives of our next strategic plan. With this resilient foundation and a culture built on safety and commercial and operational excellence, we enter the next chapter of SOAR with confidence and clarity of purpose, focused on compounding returns and delivering superior sustainable results for our shareholders in 2026 and beyond.

We look forward to sharing our first quarter 2026 results in the coming months. As always, we're available for any follow-up questions. We thank you for your time and continued support of Martin Marietta.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Ladies and gentlemen, welcome to Martin Marietta's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 Vice President of Investor Relations. Jacklyn, you may begin.

Good morning. And thank you for joining Martin Marietta's Third Quarter 2025 Earnings Call. With me today are Ward Nye, Chair and Chief Executive Officer; and Michael Petro, Senior Vice President and Chief Financial Officer.

As a reminder, today's discussion may include forward-looking statements as defined by United States securities laws. These statements relate to future events, operating results or financial performance, and are subject to risks and uncertainties that could cause actual results to differ materially.

Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements, except as legally required, whether due to new information, future developments or otherwise. For additional details, 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 website.

Supplemental information is available both during this webcast and in the Investors section of our website. It includes a summary of our financial results and trends with third quarter and year-to-date bridges from continuing operations to consolidated results on Slides 4 and 5, respectively.

As a reminder, the company's Midlothian cement plant related cement terminals and Texas ready-mixed concrete plants are classified as assets held for sale as of September 30, 2025. Their associated financial results are reported as discontinued operations for all periods presented.

Our full year 2025 guidance summary on Slide 8 reflects continuing operations unless otherwise noted. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measure are provided in the appendix to the supplemental information in our SEC filings and on our website.

Today's earnings call will begin with Ward Nye, who will discuss our third quarter operating performance and our preliminary view for 2026, supported by key market trends. Michael Petro will then review our financial results and capital allocation. Ward will return with closing remarks.

Please note that all comparisons are to the prior year's corresponding period. A question-and-answer session will follow. Please limit your Q&A participation to 1 question. I will now turn the call over to Ward.

Thank you, Jacklyn. Good morning, and thank you for joining today's teleconference. Martin Marietta delivered an exceptional third quarter, achieving record performance across both our aggregates and Specialties businesses. These accomplishments reflect the enduring strength of our aggregates-led business model, the disciplined execution of our strategic priorities and our steadfast commitment to safety.

As detailed in this morning's release, third quarter highlights include several all-time quarterly records in our core aggregates product line, reflecting strong year-over-year improvement. Aggregates revenues of $1.5 billion, a 17% increase. Aggregates gross profit of $531 million, a 21% increase. Aggregates gross profit per ton of $9.17, a 12% increase and aggregates gross margin of 36%, an increase of 142 basis points.

Our Specialties business also delivered outstanding performance, achieving record quarterly revenues of $131 million, a 60% increase and third quarter record gross profit of $34 million, a 20% increase.

As announced at our Capital Markets Day, we've rebranded the former Magnesia Specialties business to Specialties, a name that better reflects the broader portfolio of specialty products we provide within that segment, all of which are rooted in our core competencies, mining, crushing and processing rock. These strong results reflect robust organic growth complemented by contributions from [ Premier ] Magnesia acquired at the end of July.

Importantly, and I'm extremely proud to report this outstanding financial performance coincided with our teams delivering the best year-to-date safety performance in our company's history as measured by both total and lost time incident rates a testament to our culture of world-class safety and operational excellence.

Looking at the quarter holistically, compared with the prior year, revenues from continuing operations were $1.8 billion, a 12% increase. Revenues inclusive of discontinued operations were $2.1 billion, a 10% increase. Adjusted EBITDA from continuing operations was up 22% to $667 million. Consolidated adjusted EBITDA, inclusive of discontinued operations was up 15% to $743 million.

Our earnings per diluted share from continuing operations were $5.97, an increase of 23% and total earnings per diluted share, inclusive of discontinued operations or $6.85, an increase of 16%.

Building on this momentum, we're raising our full year 2025 consolidated adjusted EBITDA guidance to $2.32 billion at the midpoint driven by strong performance in our core Aggregates product line and October daily shipment trends. As outlined in today's earnings release, the revised consolidated adjusted EBITDA guidance includes results from both continuing operations and discontinued operations.

On August 3, we entered into a definitive agreement with QUIKRETE Holdings, Inc. or QUIKRETE for the exchange of certain assets. As part of the transaction, which is expected to close in the fourth quarter of 2025, Martin Marietta would receive aggregate operations producing approximately 20 million tons annually in Virginia, Missouri, Kansas and Vancouver, British Columbia and cash proceeds.

In exchange, QUIKRETE would receive the company's Midlothian cement plant related cement terminals and certain Texas ready-mixed concrete assets. Following the close of this portfolio shaping transaction, we will be optimally positioned to accelerate into our next phase of growth under [ SOAR ] 2030. Looking ahead to 2026, we expect continued resilience in our aggregates business, supported by sustained infrastructure investment, solid heavy nonresidential demand, particularly from accelerating data center development and an eventual recovery in residential construction.

Our preliminary 2026 outlook reflects low single-digit aggregates volume growth and mid-single-digit pricing gains. As always, Martin Marietta's industry-leading teams remain focused on what we can control, executing our strategic plan, which includes upholding world-class safety standards, and delivering attractive price cost spread economics regardless of underlying demand trends.

Turning to end market trends. Infrastructure continues to benefit from sustained federal and state investment. According to the American Road and Transportation Builders Association or ARTBA, the value of state and local government, highway, bridge and tonne contract awards, a leading indicator of future product demand, increased 10% year-over-year, reaching $128 billion for the 12-month period ended September 30, 2025.

While the Infrastructure Investment and Jobs Act or IIJA, is scheduled to expire in September 2026, over 50% of highway and bridge funding is still to be invested, providing meaningful tailwinds as reauthorization discussions begin.

Moreover, at July's Infrastructure Conference, U.S. Transportation Secretary, [ Sean Duffy ] reaffirmed the administration's commitment to long-term planning, funding stability and accelerated project delivery. These priorities, combined with the bipartisan legislative support and healthy department of transportation budgets across our top states, reinforce our confidence in the durability of product demand within our most aggregates-intensive countercyclical end market.

While intermittent government shutdowns or their immediate aftermath, may delay certain administrative functions, core highway, street, bridge and road construction activities typically proceed uninterrupted, supported by stable funding from the Highway Trust Fund and advanced appropriations. Heavy nonresidential construction demand remained steady across our key geographies, underpinned by sector-specific dynamics, ranging from rapid expansion in data centers to a recovery in warehousing and distribution and early-stage momentum in energy and advanced manufacturing.

Data center development continues to accelerate with Texas emerging as a national leader in hyperscaler activity highlighted by more than 100 data centers currently under construction. Meanwhile, warehouse and distribution activity is rebounding from a cyclical bottom as vacancy rates normalize. Investment in the energy sector is gaining traction, particularly along the Gulf Coast, where aggregates-intensive liquefied natural gas or LNG projects that were previously paused are advancing following the resumption of federal permitting. Additionally, the reshoring of pharmaceutical manufacturing is another emerging bright spot bolstered by the reconciliation bills enhanced investment and R&D tax credits.

A few notable examples within Martin Marietta's footprint include Eli Lilly's $6.5 billion facility in Houston and 2 large projects in Raleigh, including Novo Nordisk's $4.1 billion expansion and Johnson & Johnson's $2 billion expansion. Land availability, proximity highways, ports and rail infrastructure and business-friendly regulatory environments remain key factors influencing the location of large-scale, well-funded heavy nonresidential construction projects.

As shown on Slide 12 of our supplemental information, Martin Marietta's leading presence along major transportation corridors in high-growth markets, positions us to deliver the right products at the right time in the right places. While affordability constraints continue to hinder near-term residential construction activity, moderating mortgage rates suggest a gradual path toward normalization. Encouragingly, in October, the National Association of Homebuilders Wells Fargo Housing Market Index, or HMI, a key indicator of homebuilder competence and overall health of the housing market rose to its highest level since April driven by a 9-point increase in the indexes measure of expected single-family home sales over the next 6 months, the strongest reading since January.

Historically, light nonresidential construction demands tend to follow residential development. And although more sensitive to interest rates, this activity has demonstrated relative resilience during this most recent housing cycle due to significant population inflows into our key Sunbelt markets. That said, we fully expect light nonresidential activity to accelerate as single-family housing recovers.

I'll now turn the call over to Michael Petro to discuss our third quarter financial results. Michael?

Thank you, Ward, and good morning, everyone.

The continuing operations building materials business, which is now comprised of aggregates, asphalt and paving and our Arizona ready-mix product lines posted revenues of $1.7 billion, a 10% increase while gross profit increased 16% to $585 million.

Gross margins improved 191 basis points to 34% as strong outperformance in aggregates more than offset weakness in downstream products which are now classified as other building materials. As Ward noted, our core aggregates business achieved records across most financial metrics in the third quarter.

Revenues increased 17% to $1.5 billion, driven by a balanced mix of 8% price and 8% volume growth. Gross profit increased 21% to $531 million, while gross margins expanded 142 basis points to 36%, a strong pricing and a normalized weather shipment cadence in the Southeastern Texas more than offset higher freight, depreciation and general inflationary impacts.

As implied in our revised full year aggregates gross profit guidance, we expect cost per ton growth to moderate in the fourth quarter, a trend that we expect to continue in 2026 as cost flexing measures implemented earlier this year take effect. Other Building Materials revenues decreased 10% to $351 million and gross profit decreased 17% to $54 million primarily the result of reduced asphalt and paving revenues.

Our Specialties business delivered all-time quarterly record revenues of $131 million and gross profit increased 20% to $34 million, inclusive of a nonrecurring $5 million purchase accounting headwind. This strong performance was driven by higher pricing, increased shipments across all product lines and effective cost management. Additionally, the results benefited from approximately 2 months of contributions from the Premier Magnesia acquisition.

Turning now to capital allocation. At our September Capital Markets Day, we reaffirmed our disciplined approach to M&A, emphasizing efficient synergy delivery and the importance of maintaining a strong balance sheet with an investment-grade credit rating.

The QUIKRETE asset exchange would serve as a compelling example. By leveraging Section 1031 of the Internal Revenue Code and capitalizing on recently enacted bonus depreciation provisions, we thoughtfully structured this transaction to minimize cash tax leakage. Importantly, our $1.1 billion in total liquidity as of September 30 provides enhanced balance sheet flexibility to pursue M&A opportunities within what remains an active pipeline.

Our commitment to financial discipline extends to capital spending, where we remain focused on balancing growth investments with free cash flow conversion. Following several years of elevated capital expenditures, we expect an approximate 30% reduction in 2026 capital investments as compared to the 2025 guidance midpoint which reflects a sustainable level aligned with the ongoing needs of the business.

Lastly, and consistent with our capital allocation priorities, we remain committed to returning capital to shareholders. During the third quarter, our Board of Directors approved a 5% increase to our quarterly cash dividend paid in September, demonstrating confidence in the durability and sustainability of our company's future growth and free cash flow generation.

We have now returned $597 million year-to-date and $3.9 billion since the announcement of our share repurchase program in 2015 through both dividends and share repurchases. With that, I will turn the call back over to Ward.

Thank you, Michael. We're extremely proud of the company's exceptional safety, operational and financial performance through the first 9 months of 2025. This momentum, combined with portfolio enhancements throughout SOAR 2025 and the launch of SOAR 2030 at our Capital Markets Day reflects our unwavering commitment to disciplined growth, operational excellence and sustainable value creation.

With a streamlined portfolio, a resilient aggregates-led platform, a complementary specialties business and a strong financial foundation, we're well positioned to deliver our updated full year 2025 consolidated adjusted EBITDA guidance. More importantly, we remain focused on building a business that consistently outperforms across cycles and delivers compounding value for our shareholders over the near, medium and long term. If the operator will now provide the required instructions, we'll turn our attention to addressing your questions.

[Operator Instructions]. And our first question comes from the line of Kathryn Thompson with Thompson Research Group.

Wanted to focus on the balance of your aggregate pricing and volumes. Your ASP was up solid. You're able to maintain for the year. Could you sort -- and also for volumes also had optimistic into the year? Could you sold -- could you sort out the difference between total and organic pricing for the quarter? And could you do the same for volumes and how we should think about both going forward with the balance of organic versus total?

Kathryn, thanks for the question. Nice to hear your voice, and thank you for being with us today.

Yes, I can break that down for you. I mean, look, I was really pleased with the overall pricing and volume. I mean it's one of those quarters where it's kind of a square mill, right? It's 8 and 8. So those are easy numbers to remember. Look, here's what I'm enthusiastic about. Pricing, as reported, was up 8% and organic was up 7.9%. And I think what a lot of people would have thought looking at it was -- look, the 8% had to be helped a lot by the acquisition activity.

The fact is we're seeing very good solid organic activity as well. And if I break it down and look at the East Group and the West Group, both of those performed extraordinarily well. So it wasn't as if it was being captured just in one part of our geography.

The other thing that I'll share with you is if we look also at the mix of product going out, this was actually a pretty heavy base quarter. So if you think about it, that really should have been a product mix headwind to what we were doing. I've long said when I see base going out it gives me a lot of confidence in the future because what I know is if we're putting base rock down, at some point, somebody is putting clean stone on top of it in the form of either ready-mix concrete or asphalt and paving.

Now relative to the shipments themselves, again, they were up 8% for the quarter. Organic was up 5.5%. So again, I think broadly in the realm that we would have thought. The fact is we had I wouldn't say favorable weather, I would just think we had more normalized weather in the quarter and the business did exactly what we thought it would. But Kathryn, thank you for the question. I hope that was responsive.

And our question comes from the line of Trey Grooms with Stephens.

If we could maybe look at the cost side of things. You mentioned a few things that were going on in but it looks like you're expecting an improvement in price costs in the fourth quarter. If maybe you could talk about some of the drivers there here in the fourth quarter.

And then, Michael, you mentioned that you expect this trend to continue going forward? Is there any early thoughts on how you're thinking about the price cost side of the equation as we look into next year?

So let me take the first part of that, Trey, and Michael will come back and talk a little bit about the spread notion for next year. So if we look at the overall cost performance for the quarter, what I would say is the pricing performance is really good.

I would say the cost performance was okay. I mean, I'm not disappointed in the cost performance. The fact is it can get better. And if you look at what we're implying for the rest of the year, what you're going to see is really an implied Q4 cost performance of around 2% versus what you saw this quarter.

Now the fact is if we take a look at this quarter and start breaking it down, what the drivers -- were the drivers were large threefold. What was happening with personnel. Obviously, what's happening to agree with DD&A is simply due to the investments we've made. And then a component that we have that's going to be different than many is the freight portion of it because, as you know, we've got more long haul in our profile than anybody else does.

In fact, we're shipping by rail, probably 2x our largest competitor in that dimension. So again, if we just pulled the rail piece out of it all by itself, it would probably take that cost profile down to about 4%. But again, the Q4 implied gives you a sense of have we put in some cost containment measures, yes. Do we intend to see that come through for the balance of the year? Yes. And do we think that's going to dribble over into next year in a meaningful way? The answer again is yes. And with that, let me go back to Michael for the portion of your question relative to price/cost spread.

Yes. Thanks, Ward. And Trey, thanks for the question. I think the best way to get your arms around 2026 and really over the next 5 years is consistent with what we said at our Capital Markets Day, where we expect to be able to deliver a price cost spread in excess of 250 basis points. We certainly believe that, that would be the case next year. We don't see anything either on the price or the cost side that would give us concern there.

In fact, what I would say is that deceleration in Q4 and the kind of 2.5% cost per ton growth range. That's probably a good number to pencil in for next year as a starting point. And we have our mid-single-digit pricing guide out there. So that should put you in that 250 basis point [ ZIP ] code coming out of the gate and so we're 2030.

And our next question comes from the line of Anthony Pettinari with Citigroup.

I was wondering if you could talk a little bit more about maybe the volume cadence for the 3 months of the quarter. And then maybe into October, November, you've seen any impact from government shutdown or anticipated any impact if it keeps going. And I'll leave it there.

Anthony, sure. I'll give you some broad strokes on it, Michael, who can come back and give you a little bit more detail. But what I would say to you overall is we saw just a good, steady, solid performance as we went all the way through the quarter.

What's worth remembering, and I think this is really important. Last year was a monster October for us. And it was a monster October because as you will recall, we had a lot of weather in Q3 last year. And in particular, we had 4 hurricanes and we simply didn't have that this year. And what I would have thought was given what October was last year, that was a big mountain to climb in October this year.

And obviously, we'll talk more about October with specificity when we report Q4, but I'll put it this way. We were not at all disappointed in October this year. So again, if you want to get a sense of what the overall quarter look like, Michael can give you a little bit more detail as we look at month by month.

Yes. So as we said, I believe, last quarter, we expected it to be the tale of weather comps as we march through the months. We thought July was an easy weather comp we thought August was going to be a little bit more difficult given some of the carryover work and '24 from that July weather impacted month, provided a pretty difficult comp in August.

And then we said September was an even easier weather comp July. We saw that play out fairly consistent with our expectations. That being said, I think what's important is the highest daily shipment trend of all 3 months was in September. So that gives you a little bit of a sense of the momentum that we saw carrying over in October.

Great. And any impact from [indiscernible]?

I'm sorry, yes, you did ask that. The fact is this portion of our business from a shutdown perspective, performs hugely resiliently. So if you think about federal DOT, how they're going to work, highways, bridges, roads and streets because of the way funding flows through on that typically is not impacted by shutdowns.

And of course, the states continue to be in a really attractive place, at least in the geographies in which we're operating. So while I do age for the different businesses that are struggling mildly as they go through the shutdown, it's one more factor of the resilience that we tend to have in this business.

And our next question comes from the line of Phil Ng with Jefferies.

Congrats on the strong quarter. Ward, I'm curious about what you're seeing on the bookings and backlog, how's that as they progress over the course of the year? I'm particularly interested on nonres as we look out to 2026. Heavy has been really strong. [ Light's ] been a little weaker, but you sound a little more constructive on commercial. So -- I'm sorry, warehouse -- is that enough to kind of flip things positive? And how has momentum on the infrastructure side progress as well?

Phil, thanks for the question. I would say several things. One, the infrastructure piece that you mentioned last should continue to be really constructive going into next year. I mean if we think about the notion that we still got 66% of total highway and bridges, cumulative obligations to go, half of the dollars is still are yet to be invested on the public side, that should be really constructive for a while.

The other piece of it that I think is worth noting, if we're looking at our top 10 states and you're looking at state DOTs, year-over-year, as we go into 20 they're up between 6% and 7%. So if we look at California, that's up 6%. Texas is up double digits. Minnesota, which is an important state for us, is nicely up double digits. Georgia, up 7%. So again, what we're seeing on public is attractive.

But I would draw your attention to Slide 12 today in the supplemental slides because I think that really gives you a good visceral take of what we see going on relative to nonres activity, particularly on the heavy side. And we listed out in there across geographies what we're seeing relative to data centers, what we're seeing relative to warehouses and distribution and what we're seeing relative to manufacturing.

I will tell you this, I've always asked my team, "Hey, do me a favor, call me with good news." Because typically, I hear from people when things are more challenging that occur. I'm getting more text and more e-mails than I ever would have thought at this time of year on the type of bidding activity that they're seeing right now in geographies that matter a lot to us and on projects that I think can be very impactful going to next year.

So I'm trying to give you anecdotally and factually, Phil, what you were talking about relative to what's going on with public what's going on with heavy nonres. And again, part of what I've been taken by is actually how well light non-res has held up through the cycle despite the fact that housing has not been in a particularly good place.

Look, if we continue to see constructive activity relative to interest rates, et cetera, in housing, I think when we get into half 2 next year, it's not that I think housing is going to be on fire. It's going to start to recover. And as we see that combined with what I think is a very attractive public sector, a good heavy nonres, I think that's going to be awfully constructive number one, to single-family housing. And number two, even bolster up what has been a more resilient like nonres than I would have thought.

And our next question comes from the line of Angel Castillo with Morgan Stanley.

This is [ Aster Osna ] on for Angel. My question is, what's driving the stronger seasonal norm quarter? And given that, does that suggest that the exit rate into next year is stronger than the preliminary guide implies?

You talking about the exit rate in aggregates pricing or gross profit?

We're talking about pricing or both. You can -- yes.

Yes. So I think a few things. On the cost side and gross profit, in particular, we are seeing a nice sequential change that's better than the sequential change we saw last year from Q3 to Q4 and a lot of that is driven by those cost measures that we've said in the prepared remarks that we implemented in Q2 and Q3.

We're going to see those start to bear fruit really in Q4 in earnest, you see that flowing through. So that's number one. And then on the pricing side, that's just consistent with remaining disciplined in that regard. So the exit rate that you see there, we feel pretty confident about that. We still think as far as pricing guide for next year, the mid-single digits is the right way to think about it. So some of that will be a little bit of carryover, but by and large, there's going to be a lot of what we do relative to January 1 increases.

And our next question comes from the line of Adam Thalhimer with Thompson Davis.

Great quarter partially on the pricing growth. I wanted to ask you -- sorry if this has been covered, but I was hoping you could comment more on what you're seeing in the public sector and specifically [ DOT ] work, how confident you are in 2026. And curious if the DOTs are relatively consistent and growing next year if there's some variability.

Adam, thanks for the question. No, it's relatively consistent across our DOTs. So keep in mind, when we began our store process back in 2009 and 2010, 1 of the areas in which we are most focused is building our businesses in states that were in a really good fiscal condition because we felt like that was going to be vital for them to be able to match what the federal government is putting out.

Another big driver for us was population trends and places where we could have leading positions. And so if you think about that as being the architecture, around which we try to build the business. Again, if we go back and take a look at these top 10 states, I think I've indicated in top 10 total are up about 6.8% year-over-year. That's a really attractive number.

There's nothing that we're seeing in our leading states right now that gives us any concerns about where they're going to be. Equally, as I mentioned, the highway bridge and tunnel contract awards basic increased to $128 billion for the 12-month period ending September 30, 2025. So the work continues on the projects supported by the federal investment and the state funding increases. If we take a look at equally what's happened in a number of our states in North Carolina is a good example over the last several years, they've come up with additional funding programs as well.

So if we go back and look at what the NCFs commission did several years ago basically saying, look, to get our roads from mediocre to good, which doesn't sound like it was a stretch. We recognized there was a multibillion-dollar investment that needed to be made over time. And part of what our general assembly did in this state, and by the way, other states have done the same thing, is started dedicating portions of sales tax to transportation because the notion was nothing ends up on a store shelf by -- if it's not using infrastructure in that state.

So Adam, as we look at what I think is happening federally, clearly, IIJA is going to be strong going into next year. But I equally think , and I think this is important, I believe we will continue to see a nice successor bill come behind IIA before it expires by its own terms next September.

And again, I mentioned the dialogue that Secretary Duffy had shared a couple of months ago relative to what their continuing priorities are going to be. So if you look at this quarter, part of what you'll see is infrastructure was around 37% of the product that went out of our games. And if you look over time, that's continuing to build up to that, let's call it, 40% number that I think feels like a pretty good percentage for infrastructure to be.

Now that said, we also saw growth in heavy nonres. So that went up to 35%. But again, if we're looking for what literally is going to be the balance in the boat Adam. I think it's going to continue to be public. I think that's going to be a constructive show federally. And I think it's going to be a compelling show relative to Martin Marietta states.

And our next question comes from the line of Garik Shmois with Loop Capital.

I have a follow-up question on pricing. Can you speak to if you're seeing any mix impact on pricing either product or geographic? And also, we heard from a competitor recently saying that year, the pricing in the backlog is accelerating. I was wondering if you're seeing something similar.

Garik, thanks for the question. I would not say that we had any tailwinds relative to product mix, for example, I did mention earlier that if we're looking at the single largest growth of the products, it was going to be in base one. And as you know, it's not unusual for baton to be 20%, 25%, 30% lower an ASP than a clean stone.

And the reason that I called that out is the base stone is going down, 2 things are happening, Garik. Number one, it's relatively new construction, which we're excited by. It also means that at some point, the clean stone will come on top of that because you're going to have either [ as Water Concrete ] going on top of the base stone.

So I think if anything, we would have had a headwind relative to what was going out. Relative to geographic mix, really, there was not a significant headwind on that either. I mentioned that overall pricing was 8%. Organic was still 7.9%. The East Group had healthy pricing actually the West Group had healthier pricing than the East which makes some sense to me because historically, West Group pricing has been lower, at least overall. So there's some catch-up that needs to come from that. But I think those are the primary moving parts that we've seen, Garik. But did that answer your question specifically?

No, it did. And just anything to call out on the backlog and how pricing looks there?

What -- again, we'll talk more about next year when we get into it. But as I mentioned before, I'm seeing much more activity right now than I've seen for a while in energy. I'm seeing continued attractive activity relative to data centers.

And much of those are going to be location driven. And the fact is we've built our business along these major corridors, whether it's road, rail or port. And I think if you think about the momentum that should give us going into next year, more to come, but I think it should be -- I don't think you'll be disappointed, Garik.

And our next question comes from the line of Keith Hughes with Truist.

A specific question. But once you complete the deal with [ QuikTrip] -- sorry with QUIKRETE, will that change in SG&A spending, does any of the SG&A costs go with the business?

Yes. No, it's almost a pretty clean carve-out in that regard. So there will be some retained SG&A that used to support that business. But the EBITDA that we're showing in discontinued operations, that assumes we're retaining the corporate SG&A that supported that business.

And will there be any mix impact within aggregates next year just based on what you're getting?

The fact is there probably will be some mix impacts. You'll have a couple of things. If you think about it, Keith, there'll be some geographic mix because we're picking up some businesses in the central. And that tends to be, for example, a little bit lower than businesses are in the East. We're picking up some businesses in Virginia. But overall, it will be an optical headwind, but we also think that provides organizational opportunity.

Okay. And the guidance you gave or the preliminary guide [indiscernible], I think those are organic numbers, excluding mix and volume?

That's correct.

And our next question comes from the line of Brian Brophy with Stifel.

This is Andrew on for Brian. I'm wondering if you could provide an update on how you're thinking about the timing of the rollout of the [ Precision IQ ] pricing tool next year? And to what extent benefits from that may be captured in the mid-single-digit pricing guidance or if that's more of a 2027 story?

Yes. No. So we should have precise IQ, the quoting tool and all of our sales team's hands by midyear next year. It's already effectively rolled out here in the East. But underlying the Precise IQ is really the pricing algorithm, and that engine has been built. That supports both fixed based and quoted pricing.

So we are in our mid-single-digit guide incorporating that for what we ultimately go out with January 1 relative to fixed base. We expect more upside from [ Precise IQ ] really on the quoting side to flow through more in 2027.

And our next question comes from the line of David MacGregor with Longbow Research.

Congratulations Ward on a great quarter.

David, thanks so much. Good to hear your voice.

I guess I wanted to just get your thoughts around midyear aggregates pricing. And what did you take away from this year that was maybe a little bit different from the midyear experience last year or in prior years?

And also just given all the pressures in downstream markets right now, is there any sort of pushback on pricing that -- I mean are these downstream problems constraining your pricing at all?

David, thanks for the question. I would say several things. I'm not sure I was terribly surprised by midyear pricing this year. But we're putting up really good results, but we're not really in a robust volume environment. We saw pretty reasonable volume growth, but it was on a pretty weather-challenged quarter last year.

So what I would tell you is this is what we're able to do in a relatively static volume environment that I think is, number one, going to improve. So did that surprise me on what we saw in midyear this year? Not really because what I anticipated as we would see it primarily and by the way, we did in areas where we had new M&A, where we were trying to bring businesses at least on a trajectory basis up to what we would have expected in our heritage business.

Now as we look into the new year, and again, I think going about some of the dialogue we've had early in the call, I think public is going to continue to grow into next year. What I'm seeing on heavy nonres is actually pretty attractive right now, David. And if we're right that we start seeing more activity in single-family in the second half of next year, I think that actually [ portends ] pretty well for what midyears could look like next year.

Obviously, we will talk more about that when we get into the year. And of course, part of what we're getting ready for will be the price increases that we'll put out in January. But if you just look at foundationally what happened this year and what I anticipate broadly happening next year, I think from a midyear perspective, it's going to be pretty constructive.

Keep in mind, if we really think about most of our customers in these respects, they're most focused on making sure that everybody is treated fundamentally fairly on what's going on. And we assure ourselves that that's exactly where they are. So I don't think we're going to have undue pressure in that dimension.

And on the downstream markets, any pressure there that you're feeling?

Not particular markets. I mean this has been an interesting year. Minnesota had a much more constrained budget this year, and they had an extended winter. So really, if I'm looking at our asphalt business this year. And Minnesota is odd for us because part of it -- that's an FOB business for us, really, David. We're not doing a laydown in that state.

And if you look at their budget next year compared to this year, it's a fundamentally different budget. And if you think about the downstream business for us, they're really pretty narrow. I mean, it's going to be what are we doing with FOB asphalt in Minnesota. What are we doing with lay down really in Colorado? And what are we doing with degrees of ready-mix in Arizona? In many respects, that's the show.

And of course, we had sold some asphalt businesses in California earlier in the year. And if you're just looking year-over-year, that's a big swing in the delta. So if you didn't take that into account, you would have a sense that the downstream businesses are actually suffering more than they are. So that actually buffers it pretty nicely.

And our next question comes from the line of Mike Dudas with Vertical Research Partners.

Michael mentioned in his prepared remarks, CapEx trending next year. I mean if you could shed a little bit more light on that. How -- you talked a lot at your Investor Day about automation and the investment there, how that jives with that type of spending comment.

And then just as you -- and to follow up on the balance sheet, when you -- on a pro forma basis, if this transaction closes in Q4, what -- any meaningful changes to the balance sheet we should be thinking about?

Yes. I guess, first on CapEx. What we said is the last 2 years for various reasons have been at elevated levels. So really, we just believe in 2026, we're returning to what we would say is more normalized levels, which is roughly 25% of EBITDA for next year or maybe modestly below that. This year had some opportunistic land purchases and prior year had the acquisition that was treated as CapEx for accounting purposes.

So really no fundamental change in how we're investing in the business. It's just coming off of 2 years of a relatively elevated comp. We don't think we do any harm to the business in terms of pulling it back to that level. In fact, if we needed to, we could flex CapEx further if necessary. Relative to the balance sheet, the transaction is relatively balance sheet neutral. So no real change in leverage or otherwise once it closes.

And our next question comes from the line of Ivan Yi with Wolfe Research.

Just wanted to go back to aggregate pricing, which was up double digits in '22, '23 and '24, can return to those levels. I guess what needs to happen for you to raise your mid-single-digit pricing increase guidance for 2026.

Ivan, thank you for the question. I guess I would say several things. Obviously, there was a lot of inflation and a very price-sensitive world that we were in for a period of time when we were seeing double digits. Part of what we anticipated is we would be exactly where we are now when we returned to what we think was a more normalized time relative to inflation and otherwise.

I think to your point, look, if volumes really start taking off in notable ways, at least based on history, tends to follow that. So that's how I would think about that. But again, we tried to lay a lot of that out with degrees of clarity at our Capital Markets Day, talking about what we thought the drivers had been over the last several years, what they thought -- what we believe they are today and what we think they can be going into the future, we obviously do believe that the overall commercial aspects of the business have changed pretty considerably over time.

And that really is taken up into what we gave as the guide for this year and the preliminary guide for next year. And I think your swing factor is going to be what happens with volume. And if volume is moving, if you've got products that tend to be tight in geographies, that's traditional economics at play. So that's how I think to it, Ivan.

And our final question comes from the line of [ Judah Aronavitz ] with UBS.

As you sit here today, just thinking about '26, I guess what are the biggest uncertainties you have? And how do those questions or uncertainties compared to last year at this time? And then what's your confidence in sustained growth in gross profit per ton on aggregate, is double-digit growth, I guess, reasonable at this point?

I would say several things. One, I think is -- I'm thinking about '26 versus '25. I actually feel better going into '26 than it did '25. And I would say that for several reasons. One, we're seeing the work continue to pull through on IIJA, number one. So that should continue to be very attractive.

Number two, we're seeing where the state [ DOT ] budgets are coming in. And again, they're coming in at very attractive levels in most instances, up nicely. And again, that's going to be high 30% of our volume right there by itself. If we're also looking at what I continue to think is a constructive and growing segment that we talked about in nonresidential, particularly on the heavy side.

And one piece of it, we haven't spoken on today's call that I think is really important will be what we will watch on the emerging energy plays that we think are almost destined to come through. If I'm looking at what Texas is saying they're going to have to do to meet this incredible AI explosion that's occurring in that state and Michael talked about that really becoming a landing spot for so many hyperscalers today.

In fact, as we look in our backyard in North Carolina, there are 91 data centers in the state. Duke Energy is already talking about on a percentage basis, what they're going to see have to change in North Carolina. But the fact is North Carolina and Texas are not alone in that respect. So again, if I think about public, very constructive. If I think about nonres on the heavy side, it continues to grow.

And again, I'll take you back to Slide 12 in the supplemental slides. And then what we're doing today in this business is doing it on the back of a non -- excuse me, on a residential market that is very, very muted. And if you go back over time and you really want to track volumes and if there's one single thing that you can tend to track it with, it's what's happening relative to single-family housing, not that, that's a huge consumer of stone but it's everything else that brings along with it, including the light nonres.

So we came into this year with very low expectations of housing. And by the way, those low expectations were fully met this year. I think we're going to go into next year and have a much more constructive housing market in half 2, probably building into 2027.

So again, [indiscernible] in what you're asking is coming into the year, how did it feel exiting the year? How does it feel? And what does that look like on a comparative basis on what we think '26 is going to be, I feel better about '26 than I did '25 coming into the year. So I hope that's responsive.

Okay. And just on the gross profit per ton on aggregate, I guess, how do you -- double-digit growth reasonable to expect at this point?

Yes. I would encourage you to think about the price/cost spread that we talked about at 250 basis points. That kind of almost gets you there, but that's more how I would encourage you to model it.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the conference back over to Mr. Ward Nye for closing remarks.

[ Habbi], thank you so much, and thank you all for joining today's earnings conference call. Martin Marietta's resilient aggregate lab platform bolstered by our high-performing specialties business and portfolio enhancements positions us to drive sustainable earnings growth and respond with agility to evolving market dynamics.

Through the disciplined execution of SOAR 2025, we've strengthened our presence in economically vibrant markets with compelling long-term demand drivers while enhancing our product mix, earnings profile and growth trajectory.

As we embark on SOAR 2030, the next phase of our 5-year strategic plan, our strong financial foundation and enduring commitment to long-term value creation, reinforce our confidence in delivering superior results for our shareholders now and into the future.

As always, we're available for any follow-up questions, and thank you again for your time and continued support of Martin Marietta.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Good morning. Please welcome Jacklyn Rooker.

Good morning, and welcome to Martin Marietta's 2025 Capital Markets Day. It's great to be with all of you in person in New York and have those join us virtually for our live webcast as well. As you've heard, my name is Jacklyn Rooker, and I'm the Vice President of Investor Relations. I have been with Martin Marietta over 11 years with experience spanning across district and regional finance, FP&A compliance and over the past two years, leading our Investor Relations efforts.

It has been an exciting journey thus far, and we believe Martin Marietta is exceptionally well positioned for continued growth. An outlook, we're excited to share with all of you today. Before we proceed, we'd like to take a few moments to review some important items. Some of the remarks made today may include forward-looking statements which are subject to various risks and uncertainties.

The slide currently displayed outlines these risks and provides information on where you can access additional information about our risk factors. A full replay of today's presentation, including the accompanying slide deck will be made available on our website following today's events. In addition, given safety is the utmost importance at Martin Marietta. We'd like to take a few moments to review some safety protocols.

In the event, we need to dial 911. Katherine Pierce will be our designated caller. If we need to administer CPR, Bob Cardin, our Chief Accounting Officer, is certified. If we need to access an AED machine, there is one located in the fitness center, which is located on the same floor as this ballroom to the left of the elevators on the left-hand side. In the event we need to evacuate the building, we will take the double doors in the back of this ballroom, head towards the left side of the elevators pass the fitness center and take stairwell A and B on the left-hand side.

Now that we've reviewed safety together, let's take a look at our agenda.

Today's program offers a clear view into our strategy. As we launch SOAR 2030. To begin, Ward Nye, our Chair, President and CEO, will provide an overview of the business, highlighting our proven track record, offering an update on our SOAR strategy, and describing the long-term strong demand fundamentals that underpin our long-term growth. Ward will then introduce SOAR 2030, outlining how we're codifying our Martin operating system to further accelerate organic growth through greater alignment between our go-to-market strategy and operational excellence initiatives.

Following that, our division presidents will join us for a fireside chat, sharing how they are driving organic growth across our divisions. After a brief break, Michael Petro, our CFO, will walk through how our capital allocation and M&A execution drive long-term value creation. To close, Ward will return to offer final remarks before Michael joins us back on stage for our Q&A session.

With that, please join me in welcoming Ward Nye, as he shares how we're compounding returns across a rock-solid foundation.

Jacklyn, thank you very much. Good morning to all of you. We are so pleased to have you here in New York, and we're pleased to be here in New York. It's not lost on us that the last time we did this was five years ago. And when we did it five years ago, we were doing this very much remotely. We enjoy being here. We enjoy being with our shareholders and our owners, we enjoy being with our analyst group. So thank you so much for that.

The other thing is, as we all went through COVID together, we got a lot better at technology. So we do have people joining us today virtually from around the world. Unfortunately, we can engage with you directly on Q&A if you're attending virtually today. We do look forward to coming back with you and speaking with you at some point in the not-too-distant future. I'm going to do a few things today as we go through today's slides. Before we jump in to it, just to give you a sense of how this build is going to work. I'm going to spend some time talking about SOAR and what it's meant to our company.

In many respects, going back to 2010 when we started this process and taking a look at what it's done for our company and our shareholders over this extended period of time. And then after we've gone through that and really set a foundation, we'll talk more about what SOAR 2030 is going to look like.

So with that said, let's take a minute to talk about what Jacklyn just said, compounding returns on what we call a rock solid foundation. So as we jump into the slide deck today, here are some takeaways that I would like for you to keep top of mind, who are we? At the end of the day, we're exactly what we've long told you that we are. We're a leading aggregate supplier. That's who we are. That's what you should expect us to be. And you should expect us to be even more of that.

But what do we also have? We have this wonderful complementary specialties business that has been a true differentiator for Martin Marietta for 30 years. We're going to talk about that business in a bit more detail today. But here's what we've also done. If you look at unit profitability growth, we have offered you something in that dimension that no other player in our sector has unit profitability growth.

We think we're going to continue to lead the pack in that over the coming five years. We'll talk about exactly how we're going to do it. Much of it's going to be driven by the strategy that we've long had in place that hasn't moved around.

Let's face it, SOAR has been something that has worked really well for our company, our strategic operating analysis and review. We started this in late 2009, put it in place in 2010, and we spent nearly 30,000 man hours inside Martin Marietta honing that. And how has it worked over the innovating periods of time? We've doubled our market cap every five years. Again, that's not by accident. That's good planning. Much of that's been driven by M&A and where we've chosen to grow and how we've chosen to grow.

We're really picky about the where. My view is there are three things in this industry that are disproportionately important, the team you put on the floor, where you choose to grow and the culture that you have in your business. We'll talk more about that today. But if we pause for a second and just kind of set the stage on where is Martin Marietta, what does this company look like after 15 years of SOAR?

This gives you a pretty good snapshot of what we look like, a $37 billion market cap, nearly 10,000 employees coast-to-coast. If we're looking at the midpoint of our guide, which we continue to feel very good about, $7 billion of revenue, $2.3 billion in adjusted EBITDA and 400 aggregate locations coast-to-coast across the United States.

But take a look at those circle charts on this slide and think about what that's telling us. You see equally where revenues and gross profits come from in our business relative to aggregates, relative to cement and downstream and relative to specialty. What I'd call out to you is if you look at the aggregates piece of it, you see that 66% of the revenues are coming from aggregates. But take a look at how the gross profit lines up.

If you've ever wondered why we're an aggregates-led company, that's a really good quick depiction of exactly why. We're taking less revenues, turning that in a percentage of more profits. I would ask you to keep that 79% in your mind because in just a few slides, I'm going to show you what that number moves to upon the completion of the Quikrete transaction that we announced early last month.

But equally, -- when we're doing that, you heard from Jacklyn and you hear from us. Safety is at the forefront of what we do. My view has long been if we run a safe operation, a lot of goodness follows from that. And during this entire period of time, and particularly in 2024, which was, in many respects, a record year for us, and that's what you see on the slide, we have continued to perform at world-class levels relative to safety, both on lost time incident rates and importantly, on total case incident rates. But think about this. We've been doing that while last year, we brought in $6 billion worth of transactions.

That's a lot of new people coming into Martin Marietta. People who need to understand our culture and understand this is a non-negotiable for us. And the fact is we do a good job in training our people, they understand our culture and they work safely. It's a very powerful story. As that rolls up, what does the business look like? Oh, here it is. It's a coast-to-coast aggregates business, again, with a complementary Magnesia Specialties business. If we just look at the left-hand side of the slide, looking at the building materials business, you see several things. We're one or two in 90% of our markets.

Let's go back to the very beginning of SOAR. We were one or two at that time and somewhere between 60% and 65% of our markets in a big heavy industry, moving at those degrees of percentages over that period of time is a big deal. Here's the other thing that's a big deal. And think about this. If you're in the business of mining, you're naturally in the business of depleting reserves.

You can't help it. You're drilling, you're blasting, you're crushing, you're selling, it's going at the gates. While it's a diminishing resource, we actually have 85 years of that diminishing resource at current extraction rates. We've been very careful to think about our business long term. We're not a monthly business. We're not a quarterly business. I don't think we're an annual business. We're a business that if you want to invest and see nice returns over a long time, we're a wonderful place to be.

Now part of what we said to you very purposely over the years is we're an aggregates-led company, we have strategic cement, we have targeted downstream. And if you look at the bottom portion of that slide, you're going to see some change there. And again, this change for us this year is very purposeful because part of what you see, if we're going back to 2024, we had about 2 million tons of cement. We had about 5 million cubic yards of ready-mix and 9 million tons of hot mix a year. At the completion of the Quikrete transaction -- This is what we look like. The cement portion of our business goes away. Our ready-mix skinnies down considerably, which means as a practical matter, the largest ready-mix business we'll have left will be in Arizona. And we continue to have around 9 million tons of hot mix asphalt. You should consider that to persist. We'll talk more about that.

But equally, if you switch to the other side of the slide and you think about the Specialty Products business, that, in my view, has never gotten the airtime that it serves. Several things to remember. One, we've grown it recently; two, it starts with mining. You've got a large mine in Woodville, Ohio. We've got a large mining gaps Nevada. That business and our core business have nice correlations between the two of them.

But if you look at that business all by itself, we're the largest producer of dolomitic lime in North America, and we're the largest producer of magnesia products in the United States. That's not a bad place to begin. But if we want to think about the building materials business, remember, I ask you to keep in mind that 79% of gross profit before, take a look at what it looks like following Quikrete.

At 79% goes to 86%. Why are we doing that? It's the most durable product we have. It's the best priced product that we have. It's the best margin in heavy side building materials. And at the end of the day, that's our core. It's what we do. It's what we're best at. This is the business we know. It's durable, and you've seen it go through cycle after cycle and continue to outperform. What we're building and our team is convinced of this. We're building a business that's more durable and will perform better in the future than it ever has in the past.

And by the way, has performed pretty well in the past. Now are we running away from downstream businesses? Not at all. And you can see from this slide exactly why. At the end of the day, they are hugely valuable distribution channels for us in select markets.

We don't want to be vertically integrated everywhere. Frankly, we don't want to be in the coring business everywhere. We're very picky about the where. Remember what I said, geography matters, your team matters, your culture matters. We're going to choose where we want to be vertically integrated. And by the way, if we start vertically integrated, it doesn't mean that we're going to end vertically integrated.

We can talk more about that. But if you're looking to see what that type of strategy has done and what it's built. Here you go. Here's your coast-to-coast aggregates business, literally from Atlantic to Pacific, from the Gulf into Canada. And importantly, you can look at these states and you can see again very purposely where we built our business. I would say several things.

One, imagine this chart next year in the aftermath of Quikrete, what's that going to mean? It means, that we are going to have a much bigger business in Virginia. Virginia is a very attractive aggregates market. We've long wanted to grow our business there. What does it mean? We're going to have a much bigger business in the central part of the United States.

If we think about those states, they tend to be some of our most stable positions year in and year out. Remember when we've gone through the financial crisis, and we're seeing very difficult business circumstances across the United States. That was never the case in the central part of the U.S. What else happens we build our business pretty considerably in the Pacific Northwest, an area in which we've long desired to get, this gave us a very sensible entry point to get there.

What else changes? You can see Texas is our single largest market by revenue. You know what? It still will be very much by design. We're just changing the makeup so instead of being 30%, it's still going to be 17%, but here's the difference. It's going to be 17%, and it's going to be a pure aggregates business.

And if we think about what that business looked like in 2010 before we started SOAR and what it's going to look like at the end of this transaction, it's a fundamentally changed business. But here are some other components of this slide that I would ask you to keep in mind. In many respects, in most respects, we're in business in states where we can operate year-round. We think that's really important.

And the other thing that's important is we've chosen our states really carefully and that is we're in states with really attractive department of transportation budgets. If we think about our single largest end use, it's infrastructure. That's coming from the federal government, but you had to have a good part in the state level. We've chosen states where we can do that.

But importantly, look at the right-hand side of the slide. That tells you the story. The single largest driver of what's happening with aggregate going out of gate is when people are coming into a state. We have chosen very much by design for over 15 years, where we want to be, and you can see that the population growth in our states compared to the rest of the country is 2x. That's not an accident. This is good planning. This is really purposeful.

How does that translate? I talked about the fact that if you're looking at cash gross profit per ton growth we're unparalleled in the industry and what we've offered over an 8-year period. So we've actually gone modestly beyond even the SOAR period to give you a snapshot of what we have looked like in two different dimensions.

Because when we were here with you or virtually with you. In February of 2021, one of the promises that we made, which you would see at least a 200 basis point difference between price and cost during that relevant time period. If you look at the left-hand part of the slide, it tells you promise made, promise delivered. But if you look at what those two things have done and then what they've done relative to cash gross profit per ton over that time period, a double-digit CAGR. And you can see over that time period, it's up 96%.

How do you do it? Geography matters, so does team. This is the team that we put on the floor. But you would expect me to say this, but I believe it. This is the best team in the industry. It just is. But what I would ask you to look at too is several things, not just these pictures. Think about the people behind these photographs and the culture that you are evidencing here today and that you've seen in performance over the last 10 to 15 years.

It starts with our Board of Directors. Jack Koraleski is here today. He is our Lead Independent Director. He has been a superb Director and Lead Director from Martin Marietta. You may recall that Jack retired years ago as the Chairman and CEO of Union Pacific. He understands big, heavy industries. He understands culture. He understands moving products, and he's been invaluable to us. He and the Board are very focused on several things. They're focused on oversight. They're focused on governance and they're also focused as they should be on succession.

And this slide is a perfect example of how succession has worked and continues to work in this company. Because if you think about what we looked like five years ago when we were meeting with you virtually, Michael Petro was not in the CFO position. We've had a CFO change. We promoted from inside, and it's been seamless.

Equally, Oliver Brooks was not running at the East division. Ron Kopplin retired. Oliver's come into that role from inside, it's been seamless. Bill Gahan retired in the Midwest or the Central division after nearly 40 years Bill Podrazik came behind him from inside, it's been seamless. John Harman retired at Magnesia Specialties, also with 40 years. Chris Samborski came behind him and Abbott Lawrence in the West also seamlessly.

So the two people you're seeing today, who you saw five years ago are Kirk Light and me. But again, it tells you that the team is deep, it tells you that the team is talented, it gives you a sense of what we care deeply about, as we look at this team, we prepare for the President, always mindful of what the future needs to be. Geography, people and culture.

These are our core values, and they haven't changed, safety, integrity, excellence, community and stewardship. I'm going to talk more about safety in another slide. I'm sure you're terribly surprised that we're going to talk about safety here today. But two things that I'll focus on, on this slide, community and stewardship.

Look, this is not an easy business to get into. It's not an easy business to stay in either I have to have a mining permit. We have to have the right zoning. We have to have a special use permit. We have to have a water quality permit. We have to have an air quality permit. It goes on and on. It's highly regulated. Here's what people hope to think about. We have to have a social license in nearly 500 communities across the United States to do what we do.

We're somebody's neighbor. We're drilling, we're blasting. We're crushing. We're putting stone on trucks and it's going out our gates. It's important for us to be a positive role model in the nearly 500 communities in which we operate, and we do that really well. And I'm proud of the way that our team does that. We're building communities. Our neighbors know that.

But at the end of the day, someday, we'll be gone as well. We have to leave that community better than we thought. That's what stewardship is about. And I think one thing that people don't think about enough in our business is what we do with land when we're done with it. We're not just leaving a scar on the earth someplace. We're leaving something that can be good for the community in which we've been operating for 50, 60, 70 or 80 years.

We'll talk more about that. This is all core. This is what we do. These are our values. How do they translate? Here you know it. Look at Martin Marietta's safety record versus our largest peers and relative to the overall industry. What I'm proud to say is we're the only company that has consistently performed at world-class levels relative to safety. This does not have to be a dangerous business. It can be if you don't do it well. We do it really well. We have sites that have gone 20 and 30 years without an incident.

I'm not talking about a lost time incident. I'm talking about someone who's got a flock of sand in their eye. It was a little bit irritated and because they have to get some prescription drops for a couple of days. To be clear, in our world, that's an incident. If that happens in your office, Nobody knows at [indiscernible] in our world, they know. We have sites that have gone 20 years without enhancement. This is core to us. We talk about it on our earnings calls. We speak to it in our sustainability report.

We talk about it in our proxy. You heard it from Jacklyn, the first thing when she came on the stage today. This is core to us. It doesn't change. What else doesn't change? This doesn't change. These are the pillars that have driven SOAR for the last 15 years. And by the way, a little bit of a spoiler alert. They're going to drive it for the next five as well. I'm going to talk to you about organic growth. I'm going to talk to you about portfolio optimization.

Michael is going to spend more time talking to you today about what we're going to do relative to inorganic growth. But I'm going to be focused on what we're doing in commercial excellence. What we're doing in operational excellence. How we're going to invest in this business from a capital perspective that makes good sense for us as operators and good sense for you as owners.

I'm going to talk about what we've done and what we're going to do relative to asset swaps and divestitures and what we're going to do with land that we continue to own. But with that, let's talk about how these pillars have allowed us to grow this business over the last 15 years. This is what we look like in 2010 at the very beginning of SOAR. And what I'll tell you, we're pretty proud of that business in 2010. 131 million tons, $1.8 billion from revenue and $375 million in EBITDA. That's a long time ago. And several things happened.

And again, this is not necessarily opportunistic. This is being thoughtful and planning well because since we began SOAR, we put markets in five different buckets: expand, protect, hold, exit and target. We have long wanted to find our way into Colorado. And you can tell from the slide that just popped up, we did the largest asset exchange in the industry's history, River for the Rockies and took down a platform position in Colorado. It's important to remember, that's typically what we do when we go into a new geography. We take down a platform position and then we come behind it with bolt-ons. You're seeing more evidence of that in just a second.

Next, TXI in Texas. This was a huge deal for us. At the time, this was the single largest transaction we've ever done. Denver was a target market for us. Texas was an expand market for us. This did several things. It made us the largest aggregates producer in Texas. It made us the largest cement producer in Texas.

It made us the largest ready-mix producer in Texas. And importantly, it really bulked us up in North Texas, in Dallas-Fort Worth, our division headquarters used to be in San Antonio because that's where most of our gravity was. But our sense was most of the activity in Texas was going to be in North Texas. We wanted to find a way in there. That's what TXI did for us. If you're taking a look at what's next, suddenly, you see several things happen. One, Bluegrass Materials, what did it do? It made us the leader in Georgia.

Georgia is a hugely attractive state from our perspective. It made us the leader in Maryland overnight. We had no meaningful presence in Maryland, two small locations at the time. The day after this transaction, we were the largest producer in Maryland. And it also gave us some nice toehold in Kentucky. Again, nice steady transactions. What was next after that? Minnesota with Tiller.

I told you early on the central part of the United States doesn't get the fanfare like specialty products that it deserves. This is a good, steady market for us and Minnesota is a very attractive market with a very attractive Department of Transportation. We had long said we want to be a coast-to-coast business, and that's what Lehigh Hanson in the transaction we did offered us. We had told you we wanted to be in the Arizona Sun Corridor.

We had told you we wanted to be in the Southern California mega region. We told you we wanted to be in the Northern California megaregion. That's exactly what that transaction did for us. But remember, I told you when we took down that position in Colorado and River for the Rockies, what we typically did was we took down a platform transaction and then we came back and bolted on. Look at Colorado.

And we came behind with Albert Frei. Again, adding generational reserves in a hugely important market along the I-25 corridor where 85% of population Colorado lives. We're the largest single player in that marketplace. Following that transaction, what was next?

More blue, not Bluegrass this time, but Blue Water. It put us in Tennessee, a state that we had told you last time we wanted to be in. Bulked up our presence in South Carolina, bulked up our presence in Alabama, but equally bulked up our presence in South Florida. Another market in February of 2021 that we told we wanted to grow.

Then lastly, RE Janes in West Texas and Youngquist Brothers in Florida. It was a busy five years. But if you take a look at what the tail of the tape says after five years, there you have it. 196 million tons, $7 billion in revenue and $2.3 billion in adjusted EBITDA. And you know what that doesn't take into account, what we're doing with Quikrete? You can come back and see very visually what's happened with that map across the United States over the last five years, but even 10 and even 15 years.

It's been a journey that we've really been proud of, but this isn't just about getting bigger. It's about getting better and just making sure we put ourselves in a position that we can continue giving you compounding financial returns. And that's what this slide says too. And by the way you should expect us in five years to put up another slide, it's very complimentary to what this one says. You look across this slide, in every dimension, every dimension, you see at least double-digit CAGRs. And that's fine.

Double-digit compound annual growth rates pretty heady numbers. But here's what I like about that slide. Look at the build. Revenues were up 10%. That's great. Adjusted EBITDA is up 13%. And Diluted EPS is up 16%. This is why this is an aggregates-led business. We're not just growing the top line. We're growing the quality of this business. And you can see it in that adjusted EBITDA margin up 1,200 basis points.

This is why this is an aggregates-led business. And this is why having the white space ahead of us that we'll talk about in just a few slides, is so important to this company's present and so important to this company's future. But what have we done for shareholders during that time frame as well? I mean here are your TSR numbers. So if you look at the TSR numbers under almost any time frame that you want to, relative to SOAR launch, 10 years, 5 years, 3 years or year-to-date.

And you said, "Look, how's Martin done relative to the S&P 500 or relative to the S&P 500 Materials index?" We've outperformed. Are we a nationwide aggregates company? Yes. With the complementary Specialties business? Absolutely. But have we chosen our geographies in such a way and build our team in such a way that we've consistently outperformed? Yes, I think so.

And do I feel like we're going to continue to outperform. I feel very strongly that we will. Does it happen by accident -- Not at all. As I said, we're planners. It's easy to look at what we announced last month and say, "Okay. Well, look, another deal. Martin has done a lot of deals. You told us about these before. There's nothing terribly new about this." The fact is if we start thinking about how all of this has happened, a lot of it started with this course that we started charting with the purchase of TXI.

I remember talking to you a lot of you on that day, and you're surprised by that. You're surprised because you didn't see that pitch coming because it was an aggregates leader but it had cement and it had downstream.

And he thought, "Well, Ward, that's a little bit different." I said it is different but it's giving us geography that we need. It's aggregates led was 18 million tons. So until Quikrete, keep in mind, TXI was the largest aggregate transactions company ever done. But what did we do after we get that business? Number one, as I said, it made us a beast in Texas. If you're going to be a beast someplace, let's be a beast in Texas.

It put us into the S&P 500. It gave us that footprint in North Texas. But importantly, we also said to you what we were going to do with that business. We told you that we were going to come back and invest in the aggregates business. We're going to invest in the cement business to make it all fundamentally better.

And we, Martin Marietta had a plant at Chico and TXI had a plant at Bridgeport and they literally shared a fence line. We tore up the fence line, put those two sites together. We make more money at the Bridgeport Enterprise quarry operation in Texas today than TXI was making when we acquired TXI.

Think about that. We did the same thing in Oklahoma. We had a quarry in Mill Creek, TXI had a quarry in Mill Creek. The reserve base was so vast that a portion of it was granted and a portion of it was limestone.

We put the defense. We've got an enterprise in Mill Creek today. But equally, there were found synergies that were created from that.

And you see Hunterston on there. I want to clarify one thing for all of you today because I think it's been a point of confusion. We sold 100 cement. We didn't sell Hunter Stone. So did we open an aggregate location adjacent to the cement plant, you bet. Did we sell the cement plant to CRH? We did. Have we maintained Hunterston,? We did.

But what's important is as we shaped that portfolio, particularly over the last couple of years. We've taken the cement portfolio that we had in Texas. It's been translated into 35 million tons of pure stone businesses. Again, that's our core. And if we think about what that build looks like. Think about it.

First was taking down Albert Frei in Colorado. Second was coming back and taking down Blue Water in the Southeast. And most recently, was taking down the middle part of the United States and the Pacific Northwest with what we've done in Quikrete. So what does that mean as we tallied up? I mean if we go back in time, and we think about our time virtually in February of 2021. We told you we're going to do several things.

I'm proud of the fact that we have a really bad habit of doing exactly what we tell you we're going to do. We told you we were going to have a price cost spread of 200 basis points. We've had 228 basis points during the intervening period of time. We told you exactly where we were going to put most of our growth CapEx and most of it was in Texas with Kirk Light.

And you're going to hear Kirk talk about his business more today. But something that we also did and I will confess, I didn't know if it was gutsy or foolish at the time. But we told you where we were going to grow. We put up a map and we put circles on the map. And we said we want to be big in Virginia.

We want to be bigger in Tennessee. We want to be bigger in South Florida. We want to grow in and around Austin, we want to get in Arizona. We want to be in Southern California. We want to be in Northern California, and we want to be in the Pacific Northwest. I'm happy to tell you that during the intervening period of time, we put a check in every one of those boxes.

So how has the business been transformed over that period of time? Here's a great snapshot. What did we look like in 2020 relative to gross profits? What do we look like in 2025 relative to gross profits and how have we changed what we're doing in what's most core to us in our aggregates business. And you can see an 11,00-point basis point improvement relative to what we're doing in aggregates.

But if you look at the right-hand side of it, there's the tale of the tape. What have we done relative to revenues over that period of time? What have we done relative to adjusted EBITDA? And what have we done relative to our adjusted EBITDA margin?

That's been a nice run. And what I'll tell you, that's been an impressive run in what I would generally describe to you as a ragingly okay economy. This has not been a volume robust period of time. Housing has broadly been on its backside. And that's why now as we start thinking about what we've done over the last five years and what we can do over the ensuing five years, if I'm you, I'm thinking, yes, nice run, good 5-year run, actually good 10-, 15-year run. At some point, they got to stop running. I don't think so. I don't think we're anywhere near stopping running. And what these next series of slides will do is give you a good sense of what the investment highlights look like and why I think this is so sustainable.

And the first one is going to the slide and looking at 64% EPS growth built on that notion that I just shared with you. This has not been an economy in all end uses for us over the last cycle that's been hitting. We'll talk about how we see these end users evolving in a series of slides but in the circumstance that I've just described to you, we've had a 64% growth in EPS.

But you can look at the left-hand side of the slide, you can get a very clear sense of exactly why. Consistent earnings growth through demand cycles. Why? Largely because we're an aggregates-led business. We have a really flexible cost structure. People don't think about this. Aggregates is not a 24/7 business. We can turn it on, we can turn it off. You can't do that in a lot of other heavy industries. You can do that in ours.

But importantly, think about the fact that we don't have a single customer who's more than 5% of our revenue. That's how diversified our customer base is. But importantly, and we've seen it from the data. We've been largely insulated through the cycles of private construction, and we still put up those numbers. And then we've also got that nice differentiator in specialty products. That's the business that allows me to stand before you and say we have never cut we're never suspended a dividend since we've been a public company.

If you can find another public company in our space who can say that over that same period of time, I'd like to know who it is because I haven't seen that yet. But aggregates driven is what allows that to happen. And what does aggregates driven look like? What are the drivers of an aggregates business. You can see on the left-hand side of the slide, what the big drivers are. We've talked about diminishing natural resources.

I won't spend a lot of time on that. We talked about the difficulties of getting in this business and staying in this business. That's the permitting piece of it that's so important. We haven't talked about limited substitute products. I don't worry about the guy in a garage in Palo Alto coming up with an aggregate substitute. I just don't see it happening. Not in the next 5, not in the next 10, not in the next 15.

The other thing that's so important about our business is the cost to weight ratio. Let's face it. The vast majority of stone leaves our quarry on somebody else's truck, not ours, that's actually really important to remember that because that means risk of loss is gone. Once that person's truck rolls over our scales. But once they type that project -- project 50 miles, the cost of the haul is as much as the cost of the product.

It gives you a sense it's not going very far. But we also have a flexible cost structure because we can turn these plants on and turn them off, they're not 24/7. But importantly, we're a small piece of the overall cost of construction. So when they repay Park Avenue out here someday, we're going to be 10% of that cost. If you build a home in The Hamptons or any place else, we're 2% of the cost.

If you're putting in a nonres project, we're somewhere between the 2% and 10%. I've yet to see the project go, not go because somebody has said, we're not taking this project forward because the stone is just too expensive. It hasn't happened. I don't think it's going to happen in the next five or the next 10 or the next 15. People, geography, culture. This is where people and culture fuse. And you can see it on the slide because it gives you a great sense of what we look like relative to EBITDA per employee and SG&A as a percentage of revenue.

We're picky about the people we led into this company. Culture matters to us. It matters to us a lot. And you know what? If you can't do more than one job in Martin Marietta, you probably need to think about a career someplace else.

And if you take a look at these two components, it gives you a sense of why can we continue to have that price cost spread that's been so helpful. The single largest cost component that we have in our business is people. If we get the right people and we manage them well and we have a team that's cohesive and all going in the same direction that demonstrates a lot of agility, and that's what this slide shows.

You have something that's really special. This is something special too. As I indicated, this business doesn't get the airtime it deserves. This is a great business. Look at the slide on gross margin consolidated from Martin Marietta and look carefully at consolidated margins for Specialty products. Now keep in mind, I just said Specialty products. I didn't say Magnesia Specialties. We're rebranding this. When? As of right now. So you're on the cutting edge of the rebranding of this part of our business. But several things are worth noting.

You've heard us say for probably almost a year that this business had earned the right to grow. Again, we're very purposeful in what we do. We're purposeful in what we say. If we surprise you, it's going to be by accident. If you listen to us, we're going to do exactly what we tell you we're going to do. We've grown this business. This is never going to be a huge part of Martin Marietta.

Let me be really clear. We're going to be an aggregates-led company. But we're going to have this [ MAG ] business that's truly special. It's a real differentiator and again, gives us a buffer going through cycles that nobody else in our space has. This is a special business. You'll hear more from Chris Samborski on this.

So did it earn the right to grow? Sure. Have we grown it. You bet. Where's the growth going to be? This is where it's going to be. This is the show. This has been the show. It's going to continue to be the show. This number, I'm about to give you it on the slide, but please remember it, 4,400. There are 4,400 aggregate operation mines across the United States.

And 33% of them, about 1/3 are in the hands of public entities. That means nearly 70% of them are in closely held corporations. Therein lies the opportunity. Okay. I've said geography is really important. People are really important. Culture is really important. Back to the notion, we don't want to be everywhere. As we've looked at that total addressable market that you see is 2.7 billion tons, our view is we don't even want half of that.

We don't want 1/3 of that. We'd like about 12% of that. Those are in the markets that we've identified through various SOAR periods looking at deeper search on areas that we want to be. And what does that mean is we skinny it down?

It means in markets where we want to grow in businesses that we can afford, in businesses that can go through a regulatory review and come at the other end. They're about business, there are about 300 million tons per annum of businesses that we can buy. Let's juxtapose that to the slide I showed you on what we built and what will look like at the end of this year. 200 million tons versus 300 million that are out there tells you very tangibly that there's another Martin Marietta plus in these markets where we want to grow that I believe we're well positioned to buy.

It's easy to look at this business and hear that video at the very beginning and hear people say they've done over 100 transactions and think we're somewhere near the end of that road, but we're not. That's what we're going to be building. But this is something else that we're doing as we're building that.

If you think about what we have to be good at. We have to be good at buying land. We had to be good at taking care of land. We had to be good at getting the right zoning. We had to be good at getting the right permitting. We're also good at making sure we're fulfilling that core value of ours that stewardship where we're leaving the land better than we found it. We own 170,000 acres in major MSAs across the United States, Canada and the Caribbean.

That's an enormous opportunity because when we're done with those properties, what can happen, they can be big mega sites. They can be water reserves for communities that are very tight on water. They can be subdivisions for homes that can be used for commercial applications as well. And we've had all of those things happen. And again, it's just the planning that we've had, none of this is by accident.

Think about what you see on the right-hand side of the slide. When we bought TXI, there's a 1,200-acre depleted sand and gravel operation in Central Texas. It would be easy to look at that and say, well, there's a sand and gravel operation. We've got a reclamation reserve on there for a few million dollars. Let's go sell it for a few million dollars and just type the reclamation liability and the purchase price wash out.

We did what we do. We took it. We rezoned it, and we started planning for that to be an industrial site. So what happened? We ended up with a gigafactory there, we sold the property for $97 million, and we took a supply agreement back for all the stone and all the concrete that went into that project. And by the way, that project continues to go on in different phases. These are the types of opportunities in Martin Marietta that I'm convinced people don't think about, but they're real. And when you've got 170,000 acres, they're really real.

Let's talk about what demand drivers are because, again, I think this is a powerful story over the next five years. And I think it's probably a nice growing story over the next five years. So for those of you who have long watched our company, you know three things that we typically talk about, end uses on infrastructure, nonres and housing. Infrastructures are single largest end use, and it's about almost 40% of what we do.

Nonres is at 35% and res is at, let's call it mid-20s. We'll talk more about each one of these in just a minute. But keep in mind, if we're looking at Dodge is indicating for nonres going forward, they see that growing 21% over the next several years during the next SOAR period. If they're looking at res, they're seeing that growing about 20% over that same SOAR period. But let's start with the single largest one that we have relative to infrastructure. Investment jobs at came in, 2021, $1.2 trillion bill, but only $350 billion of it was relative to highways, bridges, roads and streets, only $350 billion.

And as we stand here today, only about 40% of that has found its way into commerce. It tells us at '25, '26 into '27 from IIJA ought to be very attractive. But here's what's worth noting. We have an administration today that's led by a builder. We have someone who ran for President for the first time wanting to build more infrastructure. And my sense is we're going to see a successor bill that's likely to have a larger piece attributed to highways, bridges, roads and streets when that comes out.

We believe that we're likely to see that successor bill before this Congress is adjourned. We think that's important. That's a federal piece of it. But that's half the story on infrastructure. The other half of the story is what's happening with the states. I mentioned to you before when we're deciding where we want to be, we decided back in 2009, one of the clear criteria was going to be states with really good DOTs.

These are our top 10 states. Look at what that stat says, the average DOT budget -- the average DOT budget in Martin's top 10 states is 2x the remaining 40, get your geography right, get your team right, get your culture right, it shows. That's the single largest end use we have. What's going to happen in the more cyclical side.

Let's look at house because a lot of have seen this cycle work. The blue bars show housing starts in the United States for an extended period of time. The green bar shows what's happened with aggregates tonnage through that same period of time.

What we see is peaks and troughs in res, but we always see the aggregates tonnage following what's happening with res. So if we go back in res and say, look, the absolute peak that we saw was back in 2005. But you can see actually where we ran into a peak on aggregates a year or so after that.

Equally, you can look and see when housing starts peaked again during COVID, but when aggregates peaked on that. Here are the big numbers to me. We're 4.7 million homes short in the United States today. That's a U.S. number. Most people have been moving to those states where you've seen that we built our business. So the housing shortages in Martin Marietta's states is more acute than it is nationally.

But you can also look at these numbers and say, look, it's still 45% below peak. Well, I think that last peak was really peaky. But here's your number. We're 17% below where we were at a post COVID peak. There's a lot of run to come in housing. But what happens behind housing is this. What comes in nonres as it follows housing, on retail, on hospitals, on schools? And you know what's not on that slide? Energy. Because as I think about what's going on in data today and what's going on in data warehousing today, we're going to have to think about energy in this nation fundamentally differently.

You're seeing some of the same data that I've seen. Texas is going to have to think about almost doubling their energy capacity by the time we get to 2030. You can't build big energy in this country without crush stone, so what are your takeaways? Exactly what we talked about at the beginning. You know who we are. We're a leading aggregate supplier. We're going to continue being that. We're going to give you better growth on unit profitability going forward than our peers will because that's exactly what we've done over the last five years.

We have a proven track record of doing exactly what we're telling you we're going to do. We've done it for 15 years. We're going to do it again. We're going to go into white space. In that narrow band of that 1.7 billion tons that's out there and take down our share of that, and we'll continue to do it in leading markets.

Now let's talk about SOAR 2030 for a few minutes. This is going to be important because I'm going to give you a sense today of how we codify what we refer to as the Martin operating system to drive further organic growth. So keep in mind, Michael is going to talk to you about inorganic. I'm going to be focused on organic, we're three key messages. One, we're going to have greater alignment than you've ever seen before relative to our go-to-market strategy and what we do with production.

Those two are going to fuse in a really powerful way. But equally, we're going to use data. And we're going to use analytics in ways that you've never seen us use before to hone both of those to make sure that they work extraordinarily well. And the end result is going to be, we're going to continue to give you unit profitability growth that we think is going to be unparalleled.

So how are we going to talk through this? Again, Michael is going to hit the inorganic. I'm going to hit these two relative to organic on commercial excellence and operational excellence geared primarily toward pricing and its precision and the customer experience as well as cost management and strategic procurement. So what does that mean? Where are those two Olympic rings come together? On commercial excellence and operational excellence is the Martin operating system based on a foundation of safety, as you've heard today.

What do we think we can do in the future? We told you last time we do a 200 basis point spread between price and cost. We're going to do better than that at this time. We're looking at, at least 250 basis points. That's an important place to start. And how are we going to do it? We're going to do it by utilizing data and analytics with this team of people that we have behind us to put ourselves into position that we can make real-time decisions on sales, real-time decisions in operations to drive our business and move those levers relative to cost and price in greater dimensions and with greater agility than ever before.

And what's one of the ways we're going to do it? PrecisIQ. That's probably one to remember, PrecisIQ, precision, real-time engine for customer information, strategic and intelligent quoting. What does it mean? It means that we're putting a tool in the hands of our sales team that when they're talking to a customer, where is the job? Where is our closest quarry? What do our inventories look like? What's our closest competitor?

If we're looking at the history on bidding on public jobs where the bidding is apparent and the world can see it, what does our bidding history look like relative to our competitors? What has been our win rate with this customer? It puts the power of that in that salesperson's hands with immediacy. I'll tell you a story that you'll enjoy. We had a young salesperson come in and take our board through this some time ago. He didn't know what we're going to do.

We called him literally the day before he came in and he was getting a question, and they said, how agile is this machine? He said, "Well, I'll tell you a story. I went to Nordstrom Rack and bought a tie today before I came into this session and actually sent out two quotes, while I was in Nordstom Rack today. " That's the type of agility that this is going to bring.

So if you think about what it does to our salesperson, it's powerful. But think about what it does for our customers as well. It takes our responses and gets it back very, very quickly. It gives them a more consistent experience, and it makes the relationship all the stickier. That's something that I think has long been misunderstood in our industry and that is how much relationships matter in what we do.

This actually makes the relationships better. But AI, machine learning and technology isn't just going to affect what we're doing on the sales side. It's going to drive what we're doing operationally as well. We've got really big plants. You could see it in the video that you saw as you were coming in today. Big plants and about 40% of them are automated. In fairness, we're not ever going to get the 100% because some of our plants are so small going into small plants with automation doesn't make good sense.

But you probably got an 80-20 rule. So should we have probably 80% of them automated? Probably so. And will you see us going through that? And what would the automation do? It enhances our ability to run them. It runs them more efficiently. It takes cost out of the system. That's big, fixed plants. What are we doing relative to our rolling fleet using telematics in our fleet today to give us a sense of how many hours are on that machine? When was the last time that machine was serviced? How productive is that machine? How many turns is it making?

This is a business where nickels and quarters in operation mean a lot. You take those two things together and put them together, you have the ability to flex costs in an aggregates business, again, that's unlike most big heavy industries in any respect. But the other thing that we're doing and M&A continues to make us better at this.

Look at what we've done relative to procurement just since 2002. We took 48% of our contracts under some form of a national contract is 60% today. Now again, will that ever be 100%? It won't be. Because again, if you've got 500 operations, some of them very remote, you have to have a local contact to do that. But we can continue to drive it. What do these things do together? This is what it does. It gives us plenty of space relative to what we can do on aggregates unit profitability across our districts. You can see what that average number looks like. You can see how many of our businesses are above it. And frankly, how many are below it.

We can bring the ones that are above it up, and we can bring the ones that are below it along. So what does it mean? It means this is what we're telling you today. We set for a while on earnings calls and the meetings with you. Look, we think historical ASPs in this industry, in our company that you have long admired. We think they're going to look considerably better going forward than they have in the past.

So if you look over history, 4%, we think mid-single digits probably in the high end of that is mostly what we're thinking about going forward. If we think about what we can do with operational excellence using these tools that we have, that's what's going to drive the spread. So as I sit here today, am I confident that we can give you a 250 basis point spread price cost? Absolutely. How do I feel about low double-digit unit profitability growth? Really good. Really good because that's what we've been giving you in a ragingly okay economic environment. So again, what are your key takeaways from here? Several. We're going back to the beginning.

We're going to have a strategy relative to go-to-market and production that's more aligned than it's ever been. We're going to be using data and analytics in ways that we haven't before and that we think will be industry-leading and we think the combination of those two things will give us degrees of growth per unit that you've seen from us that will continue to outperform.

We're going to talk to you more specifically about how we're going to do that because in just a minute, you're going to have what I think is going to be the best part of this day and that is you're going to have a chance to hear from this extraordinarily talented group of division presence. Before we do that, we've got a quick video and this video will give you a good snapshot of what our -- what our divisions look like east to west. So with that, if we can roll the video please.

[Presentation]

That will make you feel pretty good about industrial light. With that said, I'll ask the division presidents, please come up and join me. A couple of things before we start this fireside chat. This is primarily going to be geared towards what we're doing organically. Again, Michael Petro is going to come back and talk a lot about what we're going to do inorganically -- but as you've seen from the slides, and as you've seen from the performance over the last 5, 10, 15 years, what we've done organically has never been by accident.

We look very carefully at what we're doing relative to our commercial activities. Very carefully at what we're doing relative to our operational activities and how we can do it better and now how we're introducing different degrees of outside help relative to AI, machine learning and otherwise.

And for that, you'll hear from Oliver, you'll hear from Kirk, you'll hear from Bill, and you'll hear from Chris here today. But first, what I'd like for them to do because some of you know them, some of you don't, I'd like for them each to give you a brief introduction of who they are, what they're doing, and then we'll jump into our dialogue today.

Thank you, Ward. My name is Oliver Brooks, and I'm President of our East division based in Raleigh, North Carolina. I joined the company in 2013, and since then have held a series of operational and corporate roles. I've now had the great privilege of working across three of our divisions, the West, the Southwest and the East and I've also held enterprise responsibilities for certain corporate functions like safety and health, operational excellence and commercial excellence. My undergraduate business degree is from North Carolina State University and I also have an MBA from Harvard Business School.

All right. Good morning. My name is Kirk Light. I'm the Southwest Division President. I've been with Martin Marietta for six years in that capacity. Prior to joining Martin Marietta, I spent 20 years with another large building material supplier, roles ranging from operations to business development and finally, to P&L management. I have an undergraduate degree in chemical engineering from the Colorado School of Mines, and I have a business degree masters in MBA in Michigan.

Good morning. I'm Bill Podrazik, President of our Central Division, which is based in Indianapolis, Indiana. I am 23 years with Martin Marietta, I started as a plant manager in our East division. I've been very fortunate to have roles of increasing responsibility across the company working in the Southwest, Central and East divisions. Most recently, I was a Regional Vice President in South Texas been in Indianapolis for about 3.5 years and really proud to lead that group of miners and individuals we have working in the Central division. I have my undergraduate degree in mining engineering from Missouri S&T and an MBA from the University of Missouri.

Good morning, everyone. My name is Chris Samborski. I'm the President of our West and Specialties division. I've been at Martin Marietta for seven years prior to my division responsibilities. I was the Vice President of Corporate Finance, Procurement and Supply Chain. My undergraduate degree is in industrial engineering from the University of Wisconsin, and I have an MBA from the University of Michigan.

So for an ACC guy, I've got a whole lot of big 10 up here. I struggle with that a little bit. So that said, I've spent a lot of time talking to most of you in this room. And I'm not going to say all of your questions tend to be around commercial excellence, but I think a lot of your questions tend to be around commercial excellence. So Oliver, let's start with that. The team has seen today the rollout of PrecisIQ. Talk a little bit about PrecisIQ and what that has meant to you and your team and how you see that working in the future?

Of course, happy to. PrecisIQ presents another important step forward as part of our broader commercial excellence journey, and we're all excited about it because it's just beginning to make an impact in our businesses. But to your question, what we're doing with PrecisIQ is wholly aligned with our business and two fundamentals of our business really illustrate why.

One is how we price our products is a disproportionate lever of our earnings growth. We've said that. This is wholly aligned with it. Another is our aggregates business is inherently a local one. And what I mean by that is we serve thousands of customers across the country but local market dynamics can vary substantially even within a 50-mile radius. That's where PrecisIQ comes in and equips our teams with localized data-driven pricing recommendations. But let me give you more of a sense of what this really is and what it does.

At its core, it's a mobile quoting app powered by bid-specific commercial analytics. So it pulls in variables that you would expect, like location, transportation and inventory to generate pricing guidance for our teams. It also, though, has reporting and intelligence capabilities. So as we use it more over time, it will give us better insights into sales trends, into commercial performance, and we believe that should help better demand forecasting to. And all of this is important as we consider what it offers to our business and to our team because it does a couple of things.

One, it empowers our sales teams with a mobile-first intuitive quoting platform very importantly available in the palm of their hand where they do a lot of their business. And also, it leverages the vast amounts of high-quality data that we have across our company for better decision-making. So as a result, our sales reps spend more time with our customers and less time behind a desk.

So when we add all of that up, we think about PrecisIQ and how it gives us better responsiveness to our customers. It gives us better information overall that absolutely supports the customer relationships you spoke to. It absolutely enhances the value of our long-standing reserves that you spoke to and it absolutely reinforces our locally led teams who are executing our pricing efforts every day.

So if you go back to it Oliver, I mean we've gone through several slides that we try to say, what are key takeaways as we've done. As you just look at it and try to verbalize your key takeaways from this would be what?

Well, there are several key takeaways so far and they speak to both the design and the impact of the tool. First, in the East Division and specifically the Raleigh district sales team helped design this tool. And that's a meaningful takeaway on its own because from day 1, all of us agreed that local sales teams should help shape this tool's capabilities.

And that's important because our local sales teams own their local pricing results. And candidly, I see that playing out every day. Because every day when I walk out of my office, I passed by our Raleigh district sales team. And they've gotten very used to me stopping by and asking how this tool is performing and how pricing is going generally.

Their feedback has been consistent. It's intuitive, it's fast, it's built for how they work, but it's also built for where they work as well. Another takeaway has been around a significant reduction in administrative time. The amount of time it takes to generate a quote has been cut in half. But certainly a win for internal efficiency, but that's a win for customer responsiveness too.

And notably, our customers are seeing benefits here as well. Recently, we used a third party to survey our customers, and we surveyed them around their top buying criteria when selecting an aggregate provider. And alongside things that you would expect, like availability and quality and price, they also ranked highly things like proactive communication and problem-solving and strong relationships with their sales professionals.

PrecisIQ directly supports all of those customer priorities, too. Because, again, it gives our teams the agility to respond quickly, effectively and with better information, which is exactly what our customers are telling us, makes the difference in their business.

Let's do this. Let's shift for a second. That's a piece of it commercially. Let's go to operations. I mean, Bill, you're seeing automation. You mentioned in your intro you started as a plant operator in this industry and you're division president today. As you're looking at automation and how that's rolling out? How is that changing the way you operate and the degrees of efficiency that you see in your business? .

Well, thank you, Ward. Yes, you're correct. I've spent time with planned automation and really think there's so much benefit to our business. So you had mentioned before, about 40% of our aggregate sites are fully automated. So what does that mean? You saw in the video, there's crushers, there's conveyors, there's screens, there's pumps, there's all kinds of associated assets that go with making our finished product. Well, those are all controlled by what we call a programmable logic controller. And it's a centralized ruggedized computer that really controls that plant.

So we design these things with variability and efficiency in mind. So if you got a plant that's designed at 500 tonnes an hour, you want to run it at 500 tonnes an hour for as much of that shift as you possibly can. So it's about every second of every minute of every hour of every shift taking full advantage of it. You want to take that human element out of the control of it. And we're doing that, and we're seeing benefits from it. But there's other things that will go along with it.

Field managers can watch conveyor performance, crusher performance, and they can make decisions on when they adjust crushers, when they need to make a change in product mix, when they need to plan for maintenance. And all those things are so important as we try to maintain our cost flex and really manage our variable costs.

All of these things provide vast amounts of data, but with this PLCs, a lot of it has been when it's just localized at a plant level. So we're trying to get that and we've been very successful at getting it out on a cloud-based platform, which I'll talk about here in a minute. That data is really going to go to empower our managers and we're going to take it a step further.

So Bill, as we think about that you said and I said both that we've got plants with, let's call it, 40% degrees of automation. How do we scale? I mean what does that mean? What does that pay look like?

It's a great question. So we're really in the early innings of all of this, as I said, we were-- 40% is a good number. We've got elements of automation and other operations, and I'll touch on that here in just a moment. But over the next six months, we're looking at some license technology to take that data that we are gathered -- gathering and provide real-time input, real-time alerts. So if I'm sitting here and we've got a plant that is supposed to be running at x tons per hour, it will alert me if it's got below that and then I can figure out why and dive into it.

If there's -- if there's a potential maintenance issue going on, temperatures are running high, there's a certain conveyor that's giving us problems. We'll be able to get those alerts and it has also provided a real-time dashboarding. I think it's very exciting because it will give our field managers that opportunity to be out ahead of this instead of waiting for it to tell us when we need to do maintenance.

After that, we're going to work on some playbook information. So the success stories we've had at our existing sites where we've implemented this, we're going to take best practices and put it together and share it amongst our automated sites. I think that's where there's going to be a lot of benefit that comes to this. Any new plant that we build going forward, we're going to have it with full automation capabilities. I think that's very important that we understand that, we design it. We have it in mind that we're going to be taking care of that. So that's on the operating side.

Oliver touched on the commercial side. Now I'll hit, where automation is helping us on the commercial side. So why do you think that's important? Well, if you look at every one of our locations, Ward mentioned the 400-plus aggregate sites, there's a scale at every one of those that's weighing a customer truck, printing a ticket and out at the door it goes.

Well, what we've done in certain areas is we've taken that scale operator and put them in strategic central locations. In one region, in particular, we're able to manage over 30 locations with less than 10 people. So automation is not only helping us on the operations side. But when you look at commercially, it's doing some real beneficial things for us as well. And I think it's very important as we look towards SOAR 2030.

Switch and go to the Central division -- I'm sorry, Southwest for a second and turn our attention to Kirk because as I mentioned in the early slides, you'd hear more from him today particularly relative to what we've done at Bridgeport. I mentioned that we had a historic site at Chico. TXI had one at Bridgeport. We tore the fence line, we put those sites together.

And when we were with you and Kirk and I were here with you five years ago, we said that we were going to put significant investment there to expand it and to make it more automated. And that's been an impressive journey. But Kirk, do you want to talk about what that has looked like?

Absolutely, Ward. I'd love to talk about Bridgeport. We have a great team there, and we have a great asset. So our North Bridgeport plant is fully automated from the primary crusher, all the way to customer load out. What does that mean in practical terms? Well, what it means is when a haul truck dumps its load from there, it's crushed, cleaned and screened and moved all the way into a customer truck. There's no other mobile equipment that interacts with it. There's no manual process. It's all run by an operator in the control room.

Now to do this, we need a lot of equipment, similar to what Bill was talking about. So we have conveyor motion sensors. We have shoot plug detectors. We have programming interlocks that protect upstream and downstream equipment if there's an issue. We even have intelligent crushers. These crushers adjust the feeders to allow just the right-sized rock at maximum efficiency. Since inception, our team at Bridgeport has done a fantastic job of keeping the integrity of what we installed at that plant in place. We've also added a number of improvements in this discipline and this integrity has allowed us to operate at peak efficiency without interruption.

You mentioned efficiencies a couple of times, Kirk, I know that's important to you and your team because you talked to me about that a lot, and you talk to your team about a lot. I mean, elaborate, if you will, for a group of people who don't live in a quarry every day, what do those efficiency gains look like pragmatically?

Absolutely. Well, when I think about this, I typically think of it in three different areas. Think about it on the production side, what we're doing with maintenance and how we're making our customers more efficient. So if we start with the production side at North Bridgeport, the plant we installed can produce the same tonnage and 44% less hours. That's because of the equipment size, the equipment choices we made but also the automation that I already referenced.

Recently, we've also been adding more technology at North Bridgeport. A good example of this is an AI system that has electronic eyes or cameras that look down on the primary feeder feed. It's looking for large rock or rock that's shaped just right that it might plug the throat of the crusher.

Now when a plug like this happens, it's a pretty significant event. It can be 50, 100, 200 tonnes of material that backs up. So as you can imagine, that takes a long time to dig out and it's a difficult process. Well, the system we've installed has eliminated 80% of those plugs since we put it in. It does this by shutting down the feeder, alerting the operator and that way we can address it long before there's a bigger impact. We've also begun working more on the maintenance side relative to efficiencies.

So today, our mechanics all have handhelds. That's where they get their PMs, that's where they get all of the equipment that they need to know what they have to take out into the field. This makes them more efficient day to day, thereby making the plant more reliable.

We began to enter into technology that helps us with machine health. We have literally hundreds, if not thousands of data feeds that come into the control room, things like temperature pressure, vibration. We now have an AI system that can look at all of these and look for my new changes in concert with others to help us identify if there's going to be a problem with a machine before it happens.

That way we can take it down, address it quickly, cheaply and before there's any damage. So that's a bit what we're doing on the production side, a little bit about maintenance, but my favorite is what we're doing for customers. I mentioned that we had an automated customer load-out system.

How this works is we have material and overhead bins, customers come in, position their truck. They select the material they want. They're loaded ticketed and out the gate. This has led to a tremendous improvement in efficiencies in cycle time.

It's about 70% quicker than it previously was. So the customer is getting loaded today in 10 minutes Previously, that was 30 to 40 minutes. That puts us in the leading position in North Texas in terms of how we provide product to our customers. But it's not just that it's efficient, it's also cheaper because we're not using loaders. We don't have to maintain them. And it's a little bit safer, too, because you no longer have the loader and the truck interaction.

So that's a combination that we can always get behind. And when we combine all of these efficiencies, the best way I can underscore the success at North Bridgeport is to tell you that our gross profit per ton today is equivalent to what our selling price was just 3.5 years ago when we started the plan. And that's not even the best thing. The best thing is we're learning a lot. We're setting up a lot of best practices that we can take to other facilities across the division and across the enterprise.

Well, that is a lot of goodness and I'll take the pricing to it. Let's do this. Let's talk with Chris Samborski a little bit about the newly rebranded Specialties division as well because part of what his team have done forever is they have really managed costs with extraordinary skill. In the last several years, they've taken that cost management and put real commercial expertise to it. So in a time where broadly chemical markets aren't booming, his business is seeing record years. So Chris, talk a little bit about how your team manages costs and how you're using technology to do that.

Sure. Happy to, Ward. So aligning our cost structure with fluctuating demand has been a real challenge for the Specialties division over the past few years. We've had to intentionally build both cost efficiency and cost flexibility into our operating system, and those efforts are really now starting to bear fruit.

So in the first half of 2025, we had roughly $1 million less in total cost of sales than in the same period in 2024, more than fully offsetting the impact of inflation. So to achieve that type of cost performance, we prioritize and focus our efforts on our most significant production cost drivers including labour, energy and maintenance spending.

So on the labor side of things, we rightsized our workforce for current market demand, and we in-source contract services work that was previously done by third parties at a cost premium to drive energy efficiency, we invested in low cost and clean wind energy technology at our Woodville, Ohio line facility. We also leveraged heat exchanger technology at our Manistee, Michigan Chemicals facility to capture and reuse and process heat and given our end markets have been on the south side of ragingly okay, Ward, we were able to consolidate production onto fewer assets, and therefore, idle some energy-intensive equipment.

Finally, on the maintenance side of things, we invested in a reliability program. These operations are 24/7, 365 operations. So downtime is expensive that technology that we invested in, which includes sensors to monitor both equipment vibrations and temperatures has allowed us to dramatically reduce our unplanned equipment downtime and thereby improve our maintenance cost efficiency. So where these are just a few ways that we and specialties are investing in technology and leveraging process improvement to drive a more lean and flexible cost structure.

Part of what Chris said, and it's really important to tease it out, his businesses in specialties are 24/7 businesses. The quarries really aren't. So he's talking about what he's doing to flex costs in a 24/7 business. Kirk, I want to come back to you on cost flexing because if you're looking at your aggregates business, it's not a 24/7 business. Talk to the group a little bit about how you flex costs in the Southwest in that big aggregates division.

Absolutely, Ward. It really is a pleasure to get a chance to talk about this because the team has done a tremendous job over the last few years on managing costs. We've done this starting with robust processes. So we have a number of robust management processes, ranges from demand planning all the way to continuous improvement exercises that we deploy on an as-needed basis.

When you combine those processes with technology like I already spoke about, and with talented people, it leads to great outcomes. Now if I was sitting in the audience today, I would say, okay, that sounds interesting on the process side, but talk to me about something tangible.

Talk to me about some of the real cost buckets. So we're going to talk about cost buckets, labor is one of the largest. In my division, it's about 20% of our variable cost structure. And as you already mentioned, Ward, aggregates is not a 24/7 operation.

That means we have a lot of flexibility in terms of how we schedule production to meet demand. Now in a scenario like a short-term downturn, we're able to pull back on overtime quite easily. We can substitute contract labor for Martin Marietta employees. We can even let natural attrition run its course to help us manage headcount, more prolonged downturn, we can idle adjacent facilities. We can change how we distribute to our leading aggregate terminal network.

We have a number of levers that we can pull, and we have been pulling to help us address labor costs and to help those match very well with what we're selling. But beyond labor, we have other large cost buckets like repairs, parts, services. We manage these again with a series of very robust processes. As I mentioned, we do demand planning, we do cost planning. We don't look at these annually, monthly, weekly, sometimes we're looking at these daily to ensure that we maneuver with weather or that we make all the appropriate changes in what we're spending, again, to match with what we're producing.

We make smart capital choices. We bring the newest equipment into the best places where it can be the most productive and the equipment is higher in ours. We're putting those into terminals or places where it doesn't have to work quite as hard. This leads to a very linear cost profile on repairs. And we have excellent mining engineers that do a great job with mine planning.

That helps us with things like stripping costs, explosive costs, even the distance to the primary crusher. We're thinking about these over very long periods of time to ensure that there are no surprises. And again, we get that linear cost profile. So our variable cost per ton now in the division over the last four years, it's only gone up about 10% and as you know, that's when we've had generational inflation. And if you look at our ASP over the same period, it's grown more than 40%. So a pretty dramatic achievement in results there.

But again, one of the best things about all of this is we have a tremendous amount of available flexible capacity. There's a tremendous amount of operating leverage available to us since we're running only one or two shifts at all of our facilities as demand picks up, that cost structure is only going to get better and better.

So if you think about the dialogue we've had so far, and we've talked about putting technology in the hands of salespeople. We're talking about what we're doing relative to technology in these big plants in which we operate across the country. Let's talk about what we're seeing in rolling stock as well because if you think about really what we have throughout our facilities, loaders, haul trucks, et cetera. Bill, if you can talk to us a little bit about what you're seeing with technology in our mobile fleet and the benefits that we're seeing from that?

Sure. Absolutely. So I hit on the plant piece before in a really critical part to our operations is the mobile equipment. And we've got over 5,500 pieces of rolling stock that provide production and production support for our aggregate facilities. About 4,000 of those are what we call yellow iron. That's our core fleet.

So it's the key stuff that loads, hauls, delivers and ends up providing material into customer trucks so we can actually get it off of our property. So you got 4,000 of those. How do you manage all of that? And so years ago, we developed an internal system called CORE comprehensive operations resource environment. And CORE at the time was a good idea because it tracked a lot of the things that are important that when things go down, how much production, fuel consumption, availability, utilization of our mobile fleet.

But with that came a lot of manual entry. A lot of countless hours doing what we can automate now. So last year, we went to a connected platform called Samsara. And across that 50 tonne, 500 piece of equipment fleet, we've deployed that. So what is that? It's a connected device that provides GPS location, it watches metrics, it watches various things that are going on with that piece of mobile equipment.

It can provide safety alerts. It can provide potential alerts with maintenance, so on and so forth and field managers can use that to make decisions. But really, the most important thing is it takes away those countless hours of data input. There are some other things that we're seeing from a benefit perspective.

First, I'll talk about are all these assets gainfully employed? You think about that. If we've got assets that aren't gainfully employed, we're looking at reports and dashboards that we can identify underutilized assets, and can we move those and stretch our capital dollars and potentially just replace a really inefficient piece of machinery.

Secondly, across the platform, we've incorporated what we call geofences. So what is the geofence? It's really an area that you set aside for historical tracking and historically, it's just based on a stationary object. Well, we've incorporated it on mobile equipment, so it moves. So how is that important? Ward talked about it a little while ago, but when you've got a loader that's feeding a number of trucks and a fleet delivering rock to a primary crushing station, that's time.

That's productivity. So if you've got excess equipment, you've got underutilized equipment, we can determine that through this geofence technology. In one of our locations where we've tested this, we actually saw an increase of 15% in daily productivity and a run rate improvement of about 10%. That's at one site. That was a frustrated manager going, how can this tool help me? So that's one of the benefits.

It also -- and I mentioned the alerts, but we can look at fuel use and fuel consumption and idle time. And what does that mean? So if we've got assets that are sitting there idle, they're not being utilized to the fullest ability that they are, so we can make decisions to do that. I think one of the things that we're just scratching the surface with and I'll close it out is we've hit on safety. I think safety is of utmost importance to what we do. And we've got new miners and new people that we're training constantly.

Well, all of these devices or most of these devices have a forward-facing camera. So what does that do? You can use it as a training opportunity. I can go on my phone right now and every one of the assets that are in the Central division. I can see what's going on with that asset.

And if there's something concerning to myself or one of our field managers a plant manager, they can go back and review that and it's a training opportunity for those miners and just go through -- and so those are the things, I think, from an efficiency and a safety perspective that we are just really scratching the surface. It's going to go a long way in terms of improving our cost as we move towards 2030.

A lot of what Bill just spoke about is what technology is doing if he's watching it from outside or if you got a driver in that mobile equipment. Some of the questions I get from you is where is the industry and where is the company relative to autonomy. What happens just there was not a driver in that facility? Oliver do you want to turn some attention to that?

Happy to. We're engaging actively on that front, and I'll start this one with a personal example because recently, I took a ride in a 70-ton rigid frame haul truck that drove itself. And so that gave me a very tangible sense the technology is here.

And more to your question, from a strategic standpoint, this represents an important innovation in our industry, and it's starting to move faster. It's already been deployed in larger scale mining environments for quite some time. And what I mean by a larger scale are massive metal mines often several times the size of aggregates operations.

But we're starting to see meaningful progress in quarry sized applications as well. As we think about autonomy, we know it offers several advantages. It offers advantages across safety across productivity, across operating hours and certainly across other areas, too. And that's why we're in a series of conversations with OEMs.

We're also in a series of conversations with technology providers in this space. In one case right now, we're actively working with one of the OEMs to help them test their prototype autonomous truck at some of our facilities. We have similar opportunities under evaluation as well.

So Ward, if I come back to your question, are we staying close to autonomy as it comes into our industry? I would say yes, we are. Are we engaging directly in many cases to understand this deployment? Yes, we're absolutely doing that, too. And are we starting to look at the potential returns and its fit with our business over time, there's no doubt we're doing that, too.

One of the values that we talked about today, I think it's important is stewardship. And I think an area in which we've been particularly good and we'll continue to be leading is in ESG, and we're very sensitive to emissions. We've talked about autonomy. We talked about technology. Let's talk about electrification, Oliver. I mean how is that evolving in today's world?

Of course, battery electric for our industry is on a longer time line. Again, here, there is some early adoption in that larger scale mining environment, but it's not yet economical and it's not yet near term, in our industry. All that said, though, the potential is real. Recently, I was at a live side-by-side demonstration, and I watched an electric haul truck notably outperform a traditional diesel truck fully loaded, going up a haul road. So my takeaway from that was pretty clear. Beyond the sustainability benefits that you would expect like fuel and emissions reductions we're going to see real performance gains here, too.

But the good news on the sustainability front, too, is as this technology comes about, it's going to make an already relatively clean aggregates business even cleaner from an emission standpoint. Now while this technology advances and while the OEMs continue to develop it, we are doing a few things in the meantime.

One is we've been increasing the number of hybrid loaders in our fleets. These hybrid loaders have electric drive systems rather than traditional transmissions and we've been seeing strong performance with notably lower fuel usage from these units. We've also joined a multiyear educational program led by one of the OEMs.

And this educational program is exclusively focused on the energy transition relative to mobile equipment. So what that means is we have a front row seat to capabilities like battery electric as they continue to evolve. It's just a longer arc for R&D here.

It's a longer arc for commercialization. But Ward I would tell you, we have the right relationships. We're in the right conversations, and this is one that we'll stay close to as it matures.

That's helpful. But I want to do one more thing before we open it up for your questions. Then I've said Michael is going to talk a lot about M&A. But obviously, we've just done some M&A, and we've done it in specialties. And we've also rebranded it. So Chris, do you want to talk a little bit about the ply on both of those, why rebrand and what does the M&A look like?

Sure. I'd be happy to. So let's start with the strategic rationale behind the rebranding from Magnesia Specialties to Specialties. For those of you who aren't familiar with the business, there's a lot more to the Specialties division than just Magnesia. It all starts with a large limestone quarry in Woodville, Ohio at roughly 4 million tonnes per annum.

It's 1 of the 10 largest quarries in the enterprise. From there, two distinct businesses emerge. The first is dolomitic lime business. Again, that's the largest dolomitic lime operation in North America. And it's a fantastic business in its own right, with aggregates like characteristics high barriers to entry in an attractive marketplace.

Then we have the namesake Magnesia business. It starts at the same place in Woodville, Ohio with Lime. That lime is transported up to our chemicals facility in Manistee, Michigan, where it's chemically reacted with naturally occurring brine and further process to produce over 60 unique products that are sold into a variety of industries and to customers all over the world.

So as you can see, independent of the Premier transaction, Specialties is a more accurate and holistic representation of the legacy Magnesia Specialties business. Now let's shift gears to the Premier acquisition. Premier operationally, looks very much like our Heritage specialties business. It again starts with a large aggregate mining operation in Gabbs Nevada. The material from that operation is processed into derivative magnesia products in Nevada, Pennsylvania, North Carolina and Indiana. Commercially, that acquisition broadens our marketplace that broadens our product offering.

It really solidifies us as the leading producer of magnesia-based products in the United States. We're early in the integration process, but I do anticipate significant operational and commercial synergies to come from that transaction. And then finally, as we look forward in terms of potential growth opportunities, I see them both organically and inorganically.

On the organic side, we've got a robust R&D pipeline, where we're looking at other applications for our lime and other products within lime, An example is Mill dolomitic lime for use in the glass industry. On the magnesia chemical side, similarly, we're looking at different products and applications, including derivative products that could be used in pharmaceuticals, nutraceuticals and in food additives to take advantage of long-term health trends and increasing demands for magnesium.

So just to wrap it up, Ward. We're always going to be an aggregates-led company. the Specialties division will continue to be a high margin and durable differentiator for the enterprise, and I'm very excited about the potential growth prospects moving forward.

Chris, thanks for that. And the category of -- I just can't help it. I mean we have to go back for a second to Texas, and we have to go back for a moment to TXI, that transaction that I think changed everything. And Kirk, I wanted you to talk a little bit about what does Texas look like post Quikrete? But importantly, how different does North Texas look today than it looked 15 years ago?

Absolutely, Ward. Well, let's take the first question first, which -- how do things change after the Quikrete transaction. Well, it is important to note that there will be no change to our leading aggregates position across the State of Texas and certainly not in North Texas. And so if we shift to the TXI transaction, it really was truly transformative for Martin Marietta. It provided an enhanced geographic scope, and it really provided a platform for growth in Texas and importantly, in Dallas-Fort Worth, which is one of the leading construction markets in the U.S. It also gave us opportunities for synergies operationally as well as commercially.

So the synergies on the operations side, things we've already talked about, Bridgeport, the combination of those two facilities fully enabled by the TXI transaction. You mentioned Mill Creek earlier. Same story, fully enabled by the TXI transaction. And both of those facilities today support our leading aggregates rail network in the state.

So that's some of the things that happened on the operating side in terms of synergies, but the biggest impacts were on the commercial side, where we really changed the philosophical approach to sales. And that's when we move to value over volume. That led to tremendous power in terms of pricing. That has been 10 years of double-digit price increases since we made that change.

So when you combine the operational synergies, what we're getting. On the commercial side and a lot of cost discipline for the aggregates business, it's been a 13-fold increase in EBITDA since the transaction. So that's the impact in Texas. But as you were talking about before, it's also had a very important impact to the enterprise as a whole and what we can do in terms of how we've shaped the asset base. So it's essentially a swap of our cement and ready-mix businesses for 35 million tons of pure-play aggregates businesses.

So that's the Albert Frei transaction, the Blue Water Industries transaction and, of course, the Quikrete transaction. But again, 35 million tons. Think about the power of that when you think about the 13-fold increase in EBITDA that we had with the TXI transaction. So this really exemplifies the type of value-generating execution that our aggregates-led strategy can lead us to throughout SOAR 2030 and well beyond.

Kirk, thank you. You all have been very patient in allowing me to ask some questions that I thought you would want to hear answers to. But I know from personal experience, you're not shy with your own questions.

So here's what we're going to do. We have some people going around the room now who have microphones. Keep in mind, we've got an audience that's also attending this virtually. So if you have a question, please raise your hand. We'll get you a microphone because we want to hear you, and we want to make sure our guests can hear us.

One Trey Grooms right here in the front.

Thank you, Ward. Thank you, everyone. This is pretty exciting stuff, especially on the tech side of things. Where would you say we are if you look across the enterprise and the rollout of tech here, both on -- with the pricing side of things and operationally? And I know Michael is going to get into M&A later on. With that, what could this bring to the table as far as additional synergies as you look at M&A going forward, just rolling out this and leveraging the tech side of things?

That's a great point, Trey. So I'd say several things. Relative to technology and what we're doing operationally, if you've got 40% of your plants that have degrees of good automation in them, that's a nice head start on that. I think what will happen is our ability to continue to roll it out will nicely accelerate. I think what's going to happen relative to technology commercially, it's going to roll really quickly. I think we're in a very attractive place with that. We have worked with very constructive partners to get us to the place that we are very, very quickly. What's going to be fascinating is to watch how machine learning works in that.

So it's good now. It's going to be better in a year. It's going to be better in 18 months, it's going to be better than 24 months. Now to your question, is that going to put us in a position that I think we can do even better in synergy realization on M&A? I think the answer is unquestionably that it will. But the other piece of it that I'm excited about. We've talked about the fact that sometimes the toughest part about M&A integration is getting the other team to understand how you think about items commercially and operationally. I think these tools take that learning curve, and it takes that down considerably.

The other thing that I think it does is it allows us to move people more fluidly across Martin Marietta, particularly those in -- on the commercial side of the business. I mean if you're in the crushing business, cushion granted in North Carolina looks a lot like crushing granted someplace else or crushing limestone in Texas, looks a lot the crushing limestone in Ohio. But the markets can be decidedly different. And I think this technology is going to put us in a place that we're going to have the prospect of having much more fluidity with very talented salespeople going forward. Then we've got a question right there.

Ward at the last Investor Day, you outlined the opportunity to close the pricing gap between maybe lower-priced regions and the company average price regions. And I'm just wondering how that has kind of gone relative to your expectations? I mean, you bought Lehigh, you bought Blue Water. And I think Slide 44, you have the kind of pricing curve. How steep was that 5 years ago? How has it gone relative to expectations?

Well, I mean I think if you look at the pricing curve from 2020 it's 1 number. I think if you look over the last 5, it's clearly been different. And I think a lot of that is a very different philosophy that we brought to it. Now to answer your question very directly, I think it's worked about the way that we thought it would. In fact, I'm not going to steal Michael's thunder because he's going to take you through a few market snapshots and give you some very granular views of exactly what you're asking. What's it look like in some markets where we've gone in and taken a different philosophy. And as it worked the way that we thought it would. I think the answer is yes. But I think it's got a lot of legs ahead of it.

We've got a question right back here. I'm sorry, we got questions here, too. We've got questions everywhere. Hello Kathryn.

Two-part question. One is going to be easier and one maybe not as easy. But the first one is on specialty. You had talked about some services that are brought in-house versus outsourced. So maybe give a few examples of those. So that's the easy question. The harder question is in going through the slides, Ward, I didn't see anything about you and kind of where you see yourself 5 years from now?

I'll let Chris talk first.

I'll take the easy one. So I think the question was around the contract services work that we've in-sourced versus outsourced previously, things like maintenance, electrician work, in some cases, stripping those types of either trade services or periodic expenses that we have to contract out. Given the cost environment, given the lower inflation, given the fact that these are 24/7,365 environments, and we have to maintain the workforce, we were able to bring that work in and do it at a lower cost than we're paying people to do it previously.

And with respect to me, I mean, look, the fact is I've got the best job in the country, and I know it. Now part of what we spoke about in the early slides is how focused the Board is on succession and we've seen succession at division president level and otherwise at CFO, go seamlessly. The other fact is I'm 62, I intend to work for a while. I've always said, I sit on a stool literally with 4 legs. I have to want to do it. The Board has to want me to do it. I can't be blocking somebody else who's ready and my health has to permit it.

Right now, I'm in good health. I enjoy doing what I'm doing. I think the Board seems to be relatively happy with what I'm doing. I think the challenge is going to be, at some point, we have such a gifted group of matures. I need to make sure that I'm really mindful of that. So the short answer is if you're good with it, you're stuck with me for a while yet. But I think what's important, if you think about Martin Marietta, we've had 2 CEOs in 31 years. And what that allows us to do is plan. We get to plan well and we get to execute against the plan. And I think that has allowed us to outperform. And my aim is at whatever time succession is appropriate, it needs to go smoothly for the next guy as it did for this guy.

Back to your left. To the left.

Ward, Mike Dudas at Vertical Research. You sound great, by the way, even though you're helpful, sounds terrific. So you talk about the 40% product targets that you've had for operational productivity gains and on automation. What's the target through SOAR 2030? Are you targeting the newer companies that have come into the organization? How do you assess where that might be? And is there a benchmark on these automations that you can drive throughout the organization? Is it a certain percentage of productivity tonnes per hour cost savings? How does that flow through? And where you start to do that?

Yes, I think several things. One, I think if you think about synergy realization on M&A, the primary thing that the early years we'll see on that will be more commercially oriented than operationally oriented because what happens, if you think about it, you need to live with a plant for a little while to really get a sense of where the bottlenecks are and what you can do most cost effectively and most capably to get the efficiencies out of it. So I would tell you that if we're really thinking about the plants that we know best, it's -- a lot of it's going to be in heritage Martin Marietta.

The other thing that I would say is aggregate plants can last a long time. So we've got some plants that were built in the 60s, 70s, 80s, et cetera. So if we're looking at those plants, and we're looking at degrees of automation, that's probably where our early wins will be. The thing that you have to think about is these aren't easy projects. You can't just go out and say, we're going to do 25 of these projects in any given year because they do have scale, they do have scope to them. So what you'll see us do is just be very methodical in taking that 40% and continue to drive that up in a fairly linear fashion.

So when we're here next time, I haven't put a specific target out there because I think it's tough to do that. But you'll see something that's going to be notably ahead of 40%. Some more based on heritage locations than new locations, commercial synergies more focused on new locations versus heritage. I hope that answered your question.

Two questions. First, we see a lot of international cement companies listing in the U.S. or if they're not listing in the U.S. express their interest to grow and improve the U.S. aggregate business. What does it mean for Martin Marietta? Is it going to be more difficult to buy assets because there is more competition to buy aggregate queries. Do you see better pricing discipline? And second question, when we look at the growth in the south, a lot of it has been driven by population growth and a large part of this population growth come from immigration. When you look at the current administration policies, do you see a structural risk to housing recovery, if immigration is coming down?

So thank you for your questions. I appreciate it very much. I'd say several things. Yes, there are some very good companies that have recently listed in the United States with the aims to grow their business here. I think in many respects, they look at what we've done with our business and I think they like our shareholders, like what we've done with our business. It's very difficult to build what we've built. It's very difficult to have a platform like we have and to now be in a position that if you think of it through these lenses with a coast-to-coast business today, most of the transactions we do financially, they may look and feel like a platform transaction. But geographically, they're likely to feel more like a bolt-on transaction. That's a very different place than most who are newer entrants to the United States are sitting today.

So our ability to go and close on transactions, I think, is very attractive. The other piece of it that I think is important, and I mentioned it on the customer relationship, but it's important on M&A, too. Relationships matter. I think we've got good relationships with family-owned businesses who may be looking to do something at some point in the future or maybe not. What you want to be is that person who gets the call you either want to be the person who gets the first call or the person who gets the last call. And I think that goes back in part to Kathryn's question as well. I think it helps that we've had the people on this stage who have had the history in this industry that we've had who know our customers as well as we do, but who also know these entities that we may buy.

So have I felt undue pressure doing M&A because of what you identified? The answer is no. And do I think we will continue in a very systematic way toward going about executing our plan with a high degree of confidence that we'll be successful in it? I think the answer to that is yes. To your point, relative to population and immigration, what I would say is this, go back to the slide that I put up that spoke to population in Martin Marietta serve states. I mean, it's 2x the U.S. average. So I think what can happen and it's easy to do it. You can look at U.S. averages and think that you need to take that U.S. average and put it across the Martin Marietta footprint or otherwise. And I actually think that's a mistake.

If we look at what's happened relative not just to immigration, but if we think about what's happened to population movement in the United States, pre-COVID, post-COVID, et cetera, these states in which we operate have grown disproportionately. And as we said, if you come to places like North Carolina or Texas or Colorado or Georgia, what you'll find is you can sell a home wherever you're leaving with a high degree of efficiency. Your problem is finding a home in these markets where we build our businesses. Is it a near-term issue because people are having to move there and often live in multifamily housing when that was not their intention when they got there?

The answer is yes. I think you're going to see degrees of movement in interest rates. I think it's not going to take a lot of movement in interest rates to come back and address the population movements that we've seen. So that's more the immigration issues that I think are relevant to our business today. So I hope I answered both your questions. Where are we going? I'm good either way. Do it Garik.

Yes. So 40% of your plants have the automation now. Does that represent 40% of your volume as well? And then secondly, as far as the sales tools that have been implemented, is there any way to quantify the incremental pricing that you've been able to glean out of the sales force that is utilizing the tools versus before?

I'll let Michael speak more to some of the commercial aspects of that. If we think about the volume piece of it, it may be representing close to that now, Garik, but probably not that because if you think about degrees of automation, I mean one that we talked about that's been automated today is in North Bridgeport. I mean that's a really big quarry. So if you think about the 80-20 rule that I said, what I was saying in that respect is you probably want to have about 80% of your plants automated, but at the end of the day, about 20% of your plants are really where you're making most of your money. So we are going to be focused on automation at those big, highly productive plants to make them even more productive and more sustainable. So I don't think we're to that 40% of volume or we're probably close to that. But you'll see that move up pretty dramatically because it's only going to take a relatively finite period of plants to really put some leverage to that. Does that answer your question?

Ward, the question is on vertical integration. And I want to go back to your slide and your comments about wanting to be very selective about where you are participating in a vertically integrated business. Within the context of that 300 million tons of incremental aggregate capacity, it seems like you would need some kind of a vertical structure in order to get that high mix downstream wash stone business otherwise, there's obviously a negative mix issue there. I just got to get your thoughts in terms of how you invest. What do you mean specifically by being precise about or selective about markets but if you could just elaborate on that a little further.

No, happy to, David, thank you for the question. I would say several things. One, just because you're going downstream in some instances, doesn't actually mean you're being vertical in it. So one of the clicks that I gave you was the Tiller Corporation business that we bought in Minnesota. Now that's probably, let's call it, close to half of the asphalt tonnage that we have. Keep in mind, that's not per se an integrated business because what we're doing in that market is crushing stone, putting it together with bitumen, turning it black and then selling it FOB at our facilities.

So we're not responsible for the laydown of that. Now if you go to some of the other markets and Colorado is a good example. When we went into Colorado, to take the position that we wanted in Colorado, we did go in with a vertical position and we had a vertical all the way through aggregates into concrete into asphalt and paving as well. If you think about how that market looks today, we're not in ready mix in that market anymore. So if we think about how we get the benefit of the downstream, as we sold those downstream businesses, we tend to take back long-term supply agreements with the contractors who are taking that. So at the end of the day, we almost get the best of both worlds because that way we're doing what our core is. We're in the core aggregates business. At the same time, we've got a close customer relationship that we know is married to us for an extended period of time. So with that said, we've got time literally for one more question, then we'll take a break.

Ward, Adam Seiden from Barclays. I wanted to ask you, is it in the best interest of Martin's low double-digit profitability aspirations if the rest of the market moves to precision pricing? Or is it better if Martin has it and the greater good doesn't? And I'm asking that because I'm just thinking about how much is Precision IQ a competitive moat to take advantage of the industry today versus where the industry goes?

That's a really good question. I think several. One, it's important for us to do it because it's frankly going to make us better. But the fact is you want your competition to be really good, good competition makes you a better player, and I've long believed that. Look, this is a really great business. It's a really great business. It's a really good industry. I want our competitors to be really safe at what they do. I want them to be good operators at what they do. And I want them to get the value for their materials that they should get. And the fact is it's not easy to find it, drill it, blast it and put a quality product that meets specifications for different DOTs on the ground.

And I've never apologized for making sure that we're getting good value for it. I think precise will be an important piece of what we're going to do to continue getting good value. But I think good competition makes people better, and I think it's going to make us better.

With that, you have been very patient. We're going to take a 10-minute break, and we'll be back in here at 11:10 Eastern Time. Thank you so much.

[Break]

Welcome back. Please welcome Michael Petro.

Thank you, and welcome back, everybody. I hope that the fireside discussion was productive, and you got to see why we're very confident in that new normal price/cost spread. You saw the operating team that we have. We talked about how we're going to leverage data and analytics. Combining those 2 to go from 230 basis points of spread that we did during the SOAR 2025 period to 250 doesn't seem like an aspirational goal.

That said, we're going to shift the discussion now, starting first with our balanced capital allocation priorities. And as you know, our first dollar starts with M&A. And we have what we call a disciplined approach to M&A. But really what M&A does for us, it actually accelerates and advances the organic growth of this business. We've seen how powerful just that price cost spread alone is and what's been a very muted volume environment. We expect that to continue. Following M&A, our next use of capital is for organic capital investments and we're going to do those strategically to continue to improve our industry-leading cost performance. And what we've all come for, we're going to conclude the discussion today with a 5-year financial outlook in both a flat volume scenario, and what it will look like amid various volume recovery scenarios.

So consistent with our M&A-led growth strategy from a capital allocation standpoint, first use of cash goes to M&A. Follow that with organic capital investment that enhance efficiency, capacity and/or our reserve position. And after that, we return cash to you through both opportunistic share repurchases and sustainable dividend growth. During the SOAR 2025 period, you see the uses of capital on the slide. The capital deployed has been wholly consistent with these priorities. You should not expect that to change over the next 5 years. So we've said this, our source strategy does not change. That's the beauty of it. It's consistent and it works. But it's really rooted in execution Ward talked about when we were here in 2021, we said we were going to do a number of things: one, establish 8 new platforms, which we've done.

We'd sustain as price/cost spread of 200 basis points which we've done. And we said we were going to invest capital and the DFW Metroplex, in particular at North Bridgeport, which we've done. And in doing so, we said we'd double our market cap or said differently, we'd deliver a total shareholder return in excess of 100%, which we've also done. M&A has been core to that strategy since we launched it in 2010. It's become even more so our component of strategy during SOAR 2025 as it was our most active year of M&A in our company's history. And that was both from an acquisition and divestiture standpoint. So we're saying that's not going to change over the next 5 years but it's going to look a little bit different. And what I mean by that is a lot of the portfolio shaping and divestitures is now largely behind us.

So the M&A that you'll see is going to be uniquely growth-focused now going forward. And as we've said, we now have this new coast-to-coast footprint, which just expands the hunting ground. And from an integration risk standpoint, we've completely derisked that because everything that we do now in the U.S. in aggregate looks and feels to bolt-on. And what we'll talk about is how we integrate bolt-ons. We literally do that over a weekend, and we'll talk a little bit more about that in a few slides.

So we call it disciplined approach to M&A. So what do we mean by that? First, and we talked about this earlier, we prioritize quality assets over quantity by narrowing that total addressable market into a targeted opportunity list. We do that through our bottoms-up SOAR process. We don't want to be everywhere or in every product line. We want to stick to our core, which is aggregates and key MSAs in the U.S. From there, our execution strategy is the following: we established new aggregates platforms. We quickly realized synergies, and we follow those platforms up with subsequent bolt-ons to further enhance our market presence. As we aim to get a leading position as we define as #1 or #2 in each market that we participate in.

And ultimately, we delever back to our targeted range pretty quickly after a large acquisition. And our target net leverage range is between 2 to 2.5x maintaining that investment-grade credit rating is a priority for us, so as to not put the balance sheet in any degree apparel. We have this long history of delevering within that 12 to 18-month range, and that's just another lever that we have as you think about our M&A strategy to drive equity value creation. As you delever the balance sheet, of course, the equity value accretes as well.

So we've talked about this. The U.S. aggregates market is large and highly fragmented. We're talking about 2.7 billion tons of annual production just in the U.S. alone. At our current ASP, that's about a $60 billion market. We as one of the leading producers in the U.S. produce and sell less than 10% of that total addressable market. So still plenty of white space for further growth. But as we said, we like to downsize that addressable market into where we really want to be. What markets do we want to be in, what businesses do we want to own, can we afford them and can we get them cleared from a regulatory perspective. As we do that, we see a 300 million-ton opportunity still out in front of us and to contextualize that, that's 1.5x what we currently produce and sell today.

Then on the right-hand side of the page, you can see what Chris Samborski was talking about. There's also select M&A opportunities within our Specialty segment that began with our core competency of rock mining. While the adjacent opportunity set, it's not near as large or as fragmented as the aggregates market but it's similarly compelling in that it has aggregate like characteristics. And these businesses are actually accretive to our consolidated margin profile. So rolling it all together, still significant runway ahead for decades of further acquisitive growth for Martin Marietta.

All right. So how do we integrate these? Targeting and execution is certainly important, and I think we do that very well, but the value is delivered during post-closing integration. And we take a 3-phased approach. We talked about cutting over a weekend. We call it back-office cutover. And literally, this is how it works. We closed a pure aggregates acquisition on a Friday afternoon. We used the balance of Saturday and Sunday to onboard, train the new employees on our safety culture, rebrand, change the signage at the facilities, transition to our IT infrastructure and our ERP system and billing system such that on Monday morning, when customers come across the Martin Marrietta scale, they're getting the Martin Marietta ticket. So that's what we mean by integrate over a weekend.

From there, we get into value realization or synergy realization. During the first year, that's when we begin to implement our go-to-market strategy. And oftentimes, we're entering a new market with this. So I wouldn't necessarily call it synergy, but just bringing a different commercial philosophy to bear. From there, Ward mentioned what we've been doing relative to procurement. We shipped the vendor spend of the targets over to our enterprise-wide contracts to realize our purchasing power. And then also, we're realizing SG&A redundancies during this year 1 period as well. As we get into year 1 plus, these are the synergies that take a little bit longer to materialize, and that's what we call martinizing the operations.

So some of that is just operational best practices that we bring, but also there's targeted capital investments that we may need to make into these operations to further drive value. And as you can see, all the while, we are looking for those subsequent bolt-on opportunities to further enhance our market presence. This is a pretty repeatable playbook, rinse and repeat. It served us well, and we're going to look at a couple of case studies in the following slides to demonstrate as much.

Starting first with North Georgia. So this is a nice platform plus bolt-on strategy that's worked exceptionally well for us since 2007, if you look at what we had in the Atlanta metropolitan area, we had 2 sites to the Northeast. From there, in 2008, we were able to acquire the 4 sites to the West. We followed that up in 2013 with 3 sites to the Southeast. And ultimately, in 2017, with the Bluegrass acquisition, we filled in our Northern Flank. In doing so, we've increased EBITDA in North Georgia by over 10x since what we would call the prior industry peak. And we've ultimately created a strategic position of quarries that surround the I-285 perimeter such that we can supply customers' needs in every micro market within the Atlanta metropolitan area. This is a hyper localized business.

So where you are matters a lot. We often say that but I think what's underappreciated is that even matters where you are within a given MSA. And as you can see in Atlanta, there's 4, 5 or 6 distinct markets within that larger marketplace. What's important about this is we've established 8 new platforms over the last 5 years. This same approach is what you should expect in all of those new platforms.

Now two case studies on the integration approach and what we can bring to bear to drive value. So case #1 is North Texas, and Kirk spoke a lot about this, but this puts it into perspective. So you see the time period on the page on the left-hand side, 2013. So that was the year prior to TXI. Post TXI in 2014, as Kirk mentioned, ASP has increased by double digits for an 11-year period. So that's very sustainable, consistent pricing growth. And again, that's coming from a different philosophy of how we went to market.

But together with those operational improvements that he made at key sites, including the large investment at North Bridgeport, we've increased EBITDA in North Texas by over 13x since the TXI acquisition which is now our single largest aggregates business in our company. Now on the right-hand side of the page is a little bit different of a case study. This is San Bernardino, Riverside County or call it East Los Angeles. We had no existing presence there until late 2021 with the Lehigh Hanson West acquisition. And what you can see is a couple of months later in the summer of 2022, we began to implement that new go-to-market strategy again, in a market that we had never done business before. Look at that result in 3 years. The ASP has doubled in East Los Angeles. But it's still, interestingly enough, below our company average.

So still more to come in Southern California. But what we would expect is to see similar performance in that marketplace as what you've seen in North Texas. So takeaway from this slide is really this, and I think we were talking about it some last night. The commercial and operational improvements may take some time to manifest themselves. But as they do, they ultimately endure compound and can drive significant value over time. So this is often underappreciated for Martin Marietta, but a strong and flexible balance sheet is an imperative for us to achieve our growth ambitions. Now as you can see on the slide, we're entering the SOAR 2030 period with just that. We have limited near-term bond maturities. We have fixed long tenor, low-cost debt as we were able to take full advantage of the post-COVID bond bull market and really lock in and term out our debt at very attractive rates.

In fact, 40% of our bonds outstanding have maturity dates between 2047 and 2054. And again, maintaining the investment-grade credit rating that underpins our disciplined M&A approach. And the reason for that is it enables us to access the debt capital markets in both the cost and time efficient manner such that as M&A opportunities present themselves, we can capitalize on them very effectively. So to conclude the M&A discussion, there's a large and highly fragmented market out there. We've got the balance sheet to further consolidate and we've got the proven playbook to both identify, execute and ultimately integrate those acquisitions. So all of that being said, you should fully expect M&A to be core to our long-term growth strategy at Martin Marietta.

Okay. So shifting from M&A to our second call on capital, and that's organic capital investments. You should expect sustaining CapEx in our business to be roughly 25% of EBITDA. So that's good to put into your models. From a growth perspective, our near-term focus is going to be focused on productivity and efficiency improvements as opposed to capacity expansions. Given where we are with the demand environment today, we have plenty of capacity to serve our customer needs. But then land and reserves. These are our lifeblood. We've talked about it. These are depleting natural resources. We're a resource business. These tend to be opportunistic in nature. So sometimes you'll see us do more or less in this regard. The last couple of years, you've seen us do a little bit more. But what we're doing when we're buying land, we're typically bolting on adjacent reserves to existing sites as opposed to greenfielding.

We talked about that in 2021. We said that greenfield intends to be a low return exercise, and it can take many years to become cash flow positive, if at all. So our strategy and our approach is through M&A, we're acquiring permitted reserves near major metropolitan areas that we can come behind and tack on adjacent land to further buttress those reserves over time. Okay. So we talked a lot about this during the fireside chat. But just to hit on a few key points. Kirk mentioned the investments that we made at North Bridgeport. And I know many of you in the audience today and certainly some of you on the webcast, you have done the North Bridgeport quarry tour.

For those of you that haven't, I would encourage you to do so. Kirk loves to show it off. But when you see this, this is what we mean by a fully automated plant. So as he mentioned, as soon as the shot rock is dumped into the primary crusher, it goes all the way through the processing, crushing, screening, watering and gets loaded via overhead bins into a customer truck, and you can see who does that in the middle picture on that page. That's a control room operator.

On the right-hand side of the page, Oliver discussed a lot of where we are with our fleet, both from an autonomous and battery electric perspective. We certainly view this as longer-term opportunity. We're partnering, but this is largely going to be led by the equipment manufacturers and our technology partners such that when the technology is there it's safe and it's cost effective. We'll certainly be fast adopters in this regard.

So capital returns. We returned excess cash to shareholders. That's what we do, and we do it through both opportunistic share repurchases and consistent dividend growth. Starting first on the left-hand side of the page, this is our share repurchases during the SOAR 2025 period which is about $1.2 billion or 2.5 million shares at an attractive $480 per share from where our share price sits today. On the right-hand side, that would be $800 million of dividends, which we've increased at about an 8% CAGR over the 5-year period or 37%. In fact, we've either maintained or increased our dividend every year since we became a public company nearly 31 years ago. And we were the only company in our sector to never cut or suspend our dividend during the financial crisis. So looking ahead to the next 5 years, you can expect a continued, consistent and balanced capital return program like you see on the page.

Okay. So what we came for and for those that didn't flip ahead in the slides, we're going to look at the 5-year outlook, and we're going to look at it through a few volume recovery scenarios to frame expectations for really the earnings power of this business. What we're going to start with is this flat volume scenario, which is on the page, is aggregates has a demonstrated history of growing gross profit by double digits by price/cost spread alone. In other words, no volume. Aggregates over a long-term period has been a GD plus -- GDP plus revenue grower, but that's all been by price. It's never been a volume story.

In fact, volume in aggregates, if you draw a long-term trend line, tends to grow in line with population, which is about 1%. Of course, it has peaks and troughs as the private construction cycles go. So what we're saying is a reasonable assumption and one that we expect to achieve is that we can sustain that price/cost spread of 250 basis points over the next 5 years. Some years may be modestly above that, some years may be modestly below that. But for a 5-year period, that's what you can expect. And what's shown on this page to get to that double-digit profitability growth in our aggregates product line is mid-single digits pricing at 5.5% and a cost per ton growth at 3%.

What you then see is together with some of the other product lines growing at a low single-digit to mid-single-digit rate, total organic EBITDA should grow at a high single-digit CAGR and imply $3.3 billion of organic EBITDA by 2030 in a flat volume scenario. Given what we think we can do relative to M&A, that should contribute another $400 million of EBITDA such that we can grow EBITDA in this business by a double-digit clip for the next 5 years in a flat volume scenario, which would imply EBITDA of $3.7 billion.

Please note that this is not pro forma for the asset exchange with Quikrete, which will, of course, increase our exposure to the aggregates product line, which is growing at a faster rate and decrease our exposure to the lower growth downstream product lines. But our base case over the next 5 years is certainly not flat volume as we expect that single-family housing will recover once the rate cutting cycle begins in earnest. And we're kind of expecting that to be starting in September, but being more pronounced probably sometime next summer. And as Ward showed, single-family housing is the key driver of aggregates volume with a lag. That's over a very long period of time. That correlation held even with the most recent single-family housing peak in 2021 coming out of COVID.

And please note that these scenarios do not assume that pricing accelerates as a result of increased product demand. So we're holding the pricing flat at 5.5% in these 1%, 2% and 3% scenarios. And to put the volume in context, in 2022, which was the most recent peak of volume for us coming out of the housing peak of 2021, we sold 208 million tons of stone. If you pro forma that for the 2024 acquisitions that we made, so again, not including Quikrete, that 208 million tons would equal approximately 230 million tons. So the 3% CAGR scenario that we're showing is effectively saying that we would expect demand to only get back to 2022 demand levels by 2030, and that will generate $4 billion of EBITDA. And that's just organically. So we're not expecting a return to prior peak in 2005. We're just expecting most recent peak of 2022, and that's the earnings power of this business.

You put a housing recovery together with M&A, and you see $4.4 billion of EBITDA is what this business can generate. To put that in perspective, it's nearly doubling the EBITDA that we're guiding to for 2025. So I know there were some questions out there, will we say we could double our market cap again over the next 5 years. What I can say is we're going to do it the old-fashioned way and try to double our earnings growth. We'll see what the multiple does, but that's what you can expect this business can do. And we feel pretty good about these assumptions. We don't think we're getting out over our skis. Price/cost spread 250 basis points, volume getting back to 2022 demand levels.

But how does that EBITDA translate into free cash? So this is an organic view. And what we're saying is in these volume recovery scenarios, you can expect free cash flow of this business to generate cumulatively between $8 billion to $9 billion. And as we define that, that's cash flow from operations less sustaining CapEx, so that 25% of EBITDA number. Another way to look at this is after dividends, there's $7 billion to $8 billion of cumulative free cash flow left for M&A, growth CapEx and share repurchases. And then assuming only modest degrees of leverage consistent with maintaining that investment-grade credit rating, we'd have ultimately $13 billion to $15 billion of total firepower at our disposal during this time period, which is going to provide us plenty of flexibility to execute on M&A opportunities as they arise.

So to conclude, during this SOAR 2030 period, we're very confident that we'll be able to continue to deliver TSR in excess of the market and grow our EBITDA by over double digits annually. You should expect us to be consistent with our capital allocation priorities with dollar 1 focused on the right acquisition, which is really going to complement and accelerate the compounding benefits of that new normal and price/cost spread. And in parallel with M&A, we're going to reinvest in the business to sustain that industry-leading cost per ton growth and ultimately return excess cash to you.

Thank you for your time and attention. I'll now turn it back to Ward for some closing remarks before we get into Q&A.

Michael, thank you very much. Thanks to all of you. Look, I've just got literally a couple of slides I want to take you through, and we can talk through them. And I don't think you're going to be surprised with anything that I'm going to take you through. Let's start with this. This is what we started with today. We talked about who we are, how we plan, what we've done and what we're going to do, an aggregates-led company with a differentiated specialty products business. Industry-leading unit profitability growth that we've offered you that we believe we're going to continue providing to you. If you think about what we put up today, my guess is there's nobody in this room who's looked at the assumptions that Michael just put out there and thought, boy, it really seems like they've gotten out to use his words, way over their skis. We came into this year and we said when we gave you our guide, we thought it was a really measured guide. And I think it has been. I think we're giving you something that's actually a very thoughtful, very measured guide over what we say we're going to do for the next 5 years. And you can see what the financial results are based on that. And you can see based on that, what free cash flow looks like and the firepower that this business has. And that firepower is going to be important because we will continue to be a very responsible, very smart leader relative to the continued consolidation in this industry, and there is so much space that we still have to do that.

And again, it's not space everywhere. It's space where we want to be. It's space where we can continue to do M&A, not for the sake of doing M&A. Our aim isn't to make it a bigger business per se. Our aim is to make it a consistently better business. I think we spent 31 years doing that. But if we think about the targets that we have for 2030, this is my point. These don't seem anywhere near over our skis. I think we can all get a sense of what this business can do when degrees of volume return to this business. We're talking about a 250 basis point spread between price and cost. We have a history of doing that. I don't see that [indiscernible].

Again, we see good, solid low double-digit returns on unit cash profitability on a CAGR rate. And we also see good, solid low double-digit consolidated EBITDA CAGR growth. But you see what that kicks out. You've seen several things today. You've seen how SOAR has worked in this organization since 2010. You've seen how we've doubled our market cap every 5 years. You've seen what our plan is for the next 5 years. And importantly, you've seen the people who are going to deliver that plan for the next 5 years. Look at the plan. It doesn't seem like this is pie in the sky. Look at the team. If you can find a team that you have more confidence than the division presidents I put on the stage here this morning, come and tell me about that because I'm confident that they can do exactly what we've said that we'll do. And you know what? I think you are, too. It's a great business. It's just a great business.

So with that, I'm happy to tell you, that's our last slide. I bet you're relieved as I am. I'm going to ask Michael to come up and join me. And now we'll do just as we did at the end of the Q&A and the fireside chat with the division presidents. We'll take our attention and come back to answer your questions. So again, I know we've got some questions. We'll do the same drill microphones will come around so that those who are attending virtually can hear the questions. And we'll start here with Adam Thalhimer.

Adam Thalhimer. I wanted to ask about M&A. How rigid do you plan to be on aggregates-led or aggregates-only deals versus if another TXI came along, would you absolutely not consider that in the next 5 years?

Our emphasis is going to be on pure aggregate transactions as much as possible. Now at the same time, if you go through that process that I took you through over the last 5 or 10 years, there have been a number of vertically integrated transactions that we've done. And look, we can look back at TXI, which was a vertically integrated transaction. And I think what you would tell me is, look, Ward, if you can do -- you and the team can do TXI again, do it all day long. I mean that's been a great return. So look, are we an aggregates-led company? Is that where we're going to be aimed? Yes.

Are we wildly pragmatic in what we do? I think the answer there is yes as well. I'm more driven by a market and a market quality than I am the near-term structure because over time, we can affect the structure. We can change the structure in time. But if you're going into a really compelling market, in my view, Adam, that's the bigger driver than the near-term purity. Does that answer your question?

It's Adam Seiden from Barclays. Just wanted to ask a little bit about the EBITDA numbers for 2030. So you gave an organic and one with an inorganic expectation. So how focused are you on the all-in 3.7 versus the 3.3? And I ask that just because if we sit here in '28, '29, '30 and things are a little slower to materialize on the M&A side, not because of your side because you need Dan's partner here. How aggressive would you be then?

Michael, you start with that, I will come back.

Yes. No, I think for modeling purposes, Adam, you can only model for the organic piece, and we feel very confident in that. Because as we said, pricing in this industry writ large has been 3% to 4% over a very long period of time. We've been seeing double digits in the post-COVID world. And so we've always said it will settle out somewhere in between. And we think that mid-single-digit number is a pretty safe bet for the next 5 years. And we're going to do everything that we can as the division presidents talked about to manage our cost profile. So I would focus on for modeling the organic piece. Of course, M&A is opportunistic, but we're certainly going to be focused on M&A as well.

But we always ask you, please don't put anything in the models until the transactions are closed. So that would be consistent with Quikrete for now. That's been announced, not yet closed. As we close that, we'll certainly update you and refresh our guide accordingly.

It's so weird, Adam, because Michael cares so much more about models today than he did about 6 months ago. He's really focused on that.

Yes, Kathryn Thompson.

I guess the backdrop of bringing things back to the U.S. and a broad reindustrialization of the market. And this once again focuses on the specialty business. Are there any similar types of businesses that combine mining along with the manufacture process that could make sense for Martin in the future?

Yes. The short answer is yes. And -- but we're going to be really careful about that. And I want to come back to what we said during the presentation. That's never going to be the dog. I mean it's going to be a portion of the animal. It's not going to be the big thing that's going to drive it. And that was my point in rebranding and Chris' comments, too, on going to a specialties division because it gives you a little bit more room to look at some adjacencies to that. So if we can find businesses there that have those same aggregates like characteristics that in many respects, may begin with mining and they can really start playing into that industrial revolution that we think is coming in round 2. Something to think about, Kathryn. As we see more manufacturing coming back to the United States, several things have to happen.

One, you have to have available real estate for it. Two, you have to have areas in which they can, too, come in and get land, have it zoned, get it permitted and build something. And it typically needs to be near relatively fast transport, either highways, rails or ports. If you think about how we have built our business on big active corridors, highways, rail, ports as well, I mean, think about it. We've got a rail network in the United States with over 90 rail yards. There's not an entity in the United States that has the capacity during the next 2 phases of SOAR to match what we already have in that dimension. If we can start utilizing that type of a network, not just in aggregates, but also to degrees in specialty, it's really powerful when you take a look at what that margin profile has looked like, and we would expect to persist in specialties.

Tyler Brown, Raymond James. Michael, curious on the $400 million on the M&A. What's the assumption behind that? How aggressive or conservative do you think that ultimately is? Because on my math, that would be only a fraction of that $7 billion of total opportunity?

Yes. If you assume a mid-teens multiple for a pure aggregates deal, you'd probably get to about $6 billion. So effectively, what we're saying there is we ought to be able to deliver that with just free cash flow from the business. So not levering up. But yes, no, your math is correct.

Steve Fisher, UBS. I wanted to just ask to contextualize the 5.5% price growth relative to the 4% that was in the original -- the last store plan. And I know you said it's sort of somewhere in between the double digits we've had in that plan. But can you talk about how much there's a benefit from improved market structure over the last 5-year period versus what you anticipate from these digital tools and then the mobile abilities to kind of be more dynamic or any other factors?

Yes. I think it's a total coalescing effect. So I think we will you see some degree of assistance in that from market structure? I'd be naive to say otherwise. I mean, I think that would be foolish for me to indicate that that's not the case. I think at the same time, what Precise IQ is going to allow us to do is to be just that. We're going to bring a degree of precision to pricing in markets. And keep in mind, Michael said it so well, the markets in which we're operating are micro markets. I know when we're having earnings calls for the sake of simplicity, we'll talk about Texas, and we'll talk about North Carolina. We'll talk about Georgia. That's not really the way it works. I mean, a market is not a state. A market tends to be an MSA or a market tends to be a portion of an MSA. And it can be very, very competitive when you're doing that and dialing in and making sure that you're really able to take into account the myriad of factors that historically, in some respects, you're doing some degree of scientific swag with it and now bring greater precision to it with timeliness to it and closing the deal with the customer. I think that's going to be actually pretty notable in driving nice upside in pricing. But keep in mind, clearly, consolidation has been a help in that I do think back to my original answer, it's going to be a coalescing effect over the period of time.

And again, I think if we're looking at just being -- back to my point, not getting anywhere near over our skis, I don't think as we think about ASPs through that lens, we're anywhere near something that feels uncomfortable to us.

Can you give us any kind of update on, I guess, what we're calling IIJA 2.0 of any legislative moves there? And one other question, I just have to ask it, short term, weather is it probably a tailwind for you here as you progress through the third quarter?

So I'd say several things. I want to be careful not to talk too much about the quarter right now. We did mention, obviously, on the call that July had been very dry. And when it's dry, it's a really good show. So I'll probably leave it at that. I think it's probably far as I need to lean in on that, Keith. Relative to IIJA 2, look, I like the setup for it. I like the fact that we've got an administration that probably looks at the original IIJA and thinks that didn't have enough what they would refer to as real infrastructure in it. So I think this notion of more highways, more bridges, more streets, more raw infrastructure actually plays well with this administration.

I think at the same time, I was more prepared to hear than I've heard to date, look, we're going to take the top line down a little bit, but make sure we bulk up on the true heavy portion of it. I'm not hearing that much talk about taking the top line down. So actually, I feel increasingly confident about what this next bill is going to look like. If you go back to that slide we put up, we were showing $350 billion attributable to current IIJA within the $1.2 trillion bill. If you're wondering what that bar that didn't have a number over it, I think that was really right at about $500 billion. And again, there's no precision to that. But from my perspective, I think the administration is going to look at this as an opportunity to get something done that tends to be relatively bipartisan in history. But I think the notion is going to be let's get this done before midterm elections.

Obviously, we've seen a lot of activity in Texas. We're seeing California activity as well on what the electoral map can look like as we come into the next Congress. But I think this administration is going to be geared toward trying to get something done before midterm elections. And from our perspective, that's attractive because keep in mind, IIJA itself is going to have an attractive tail that's going to go beyond 2026 when it expires by its own terms. So what I would suggest that we need to think about is what does that tail look like? And then when you come and build on that tail, the successor of that, what's that going to look like for another 5-year period.

[indiscernible] from On Field Investment Research again. So 2 questions. On this 5.5% target for pricing, do you see a change in mindset when you look at the large publicly held competitor like I think CRH, Heidelberg Material, [indiscernible], they're talking more and more about the price of value over volume strategy. Do you see a change in mindset recently?

And the second question is that I understand that the month of July was great, but some other companies, I think, have warned that the August activity deteriorated on single-family housing in the South. And I think there is a bit of a concern there. Is there any concern on the recent trends beyond the?

So I'll take part one. Michael will take part 2, if you're good with that. So part 1, I would say this. One, those companies that you listed are fine good companies led by tremendous teams for which we have an enormous amount of respect. Many of them have historically been more geared towards cement than toward aggregates. And I think part of what we've seen change over the more recent years, and I think we've seen it in the public releases that they put out and otherwise is I think they really do have a greater respect and regard and appreciation for what aggregates can mean. And my guess would be they have a greater sense of what the values of aggregates can be. So I think as we watch more European players have themselves listed in the United States, I actually think that's fine because, I think part of what they've done is they've looked at some of the performance historically that pure -- relatively pure aggregate American-based companies have had. And I think they would like their businesses to look more like that. And I think, as I indicated before, good quality competition, in my view, makes us better at what we do. Do you want to talk a little bit about that?

I think consistent with the question there, we can't get too far ahead on the quarter, I think, was the volume question in the quarter. What we said on the call was July was up double digits across the footprint. And that was really all the guidance we gave. But we also said, look, last Q3 was significantly weather challenged, in particular, in July and in particular, in September in the Southeast with all the hurricanes that came through. So really, we'll come back to you with more detail on what Q3 looks like with our earnings call.

Our General Counsel is looking me right in the eye, and say [indiscernible].

David MacGregor at Longbow Research. I guess the question is on acquisition multiples. And you've had a couple of questions already about some of these larger international companies coming to the United States. And I would think as a lot of these properties come up, maybe the smaller ones, you could benefit from your relationships with those people and years and years of speaking with them and knocking on their door. The larger transactions are more likely to go to an auction process. And so I guess within that context, I guess I'd like you to talk about just what you see as your competitive advantage at Martin in terms of winning the best assets and without overpaying.

I would say several things. I would start with what you referenced, and that is we've been really consistent. And we -- between Steve's time here and my time here, that's 30 years of building relationships and building trust and building confidence. And I think that helps. I think to your point, if you're in an auction process, I think several things. One, think back to the map that we put up today. I mean that's a big coast-to-coast business. In many respects now, when we're looking at transactions, because we're not having to parachute into brand-new markets in a host of circumstances and work for synergy totally using another person's team and having to train them in a Martin Marietta way, it's going to be considerably easier even if we're doing transactions that financially can look like a platform, but strategically, we will feel more like a bolt-on.

If we're thinking at it through those lenses, David, what you can do commercially, what you can do operationally, certainly fuse in ways and they're much more powerful. And again, I think the other notion that we have, David, is we're not going to be swinging at everything. We're going to be very careful. We're going to be very thoughtful. We're going to be very disciplined about what we're going after, why we're going after it, what the financial parameters can be, what we're willing to do relative to our balance sheet and in many instances, what we're unwilling to do. Michael made a point in his comments, I did in mine as well. You've seen this company do a lot of M&A, but you've never seen us put ourselves in any degree of financial peril. You can count on that going forward, but I think the geography that we have now is a real differentiator for us relative to our peers. I think what we can do relative to peers with respect to HSR is different. And I think in some instances, the level at which we trade will allow us to think about transaction multiples a little bit differently as well.

Garik Shmois, Loop Capital. I wanted to ask about price cost. And I think in steady-state periods where there's reasonably managed cost inflation, we can certainly see very nice spreads. But when there's cost shocks and energy cost spike or diesel cost spike, it does take several quarters to offset. I'm curious if the initiatives that you're putting in place, whether it's a Precision IQ or the automation, how are you thinking about the ability to price maybe a little bit quicker to inflation to reduce some of the price cost volatility during those peak periods?

Yes. No. Well, certainly, from a pure bidding standpoint, you're absolutely right. That's what Precise IQ does for bid work, which is going to be roughly 50% of our volume, that will be dynamic, and we can adjust that accordingly. But typically speaking, for our fixed base business, the other 50% of our business, we like to give our customers a heads up. And that usually is about a 90-day notice. So as we start seeing inflation coming through, we typically hold those prices steady for at least 90 days. But yes, can we get out in front of it a little bit more than we did in 2022? The answer is yes. But you saw what happened in 2023 as a result. I mean, it was a pretty powerful show. So even if it lags a couple of quarters, we almost always are able to ultimately pass that through.

Thank you for a very informative presentation this morning.

Thank you, Eugene.

Michael, you talked about the ability to tack land on to existing locations and the efficiencies that can be gained there and then also the example of the sort of supersizing of the North Bridgeport facility and the efficiencies that can be gained there. Given the changing footprint that we talked about with the acquisitions of -- are there any examples going forward that you might be able to give us where you could see that sort of facility growth like has occurred in Dallas or San Antonio or other examples you've given us over the years that might be a more significant use of capital than maybe just the land acquisitions? And then the second thing would just be, I would like to thank you for never putting the company in financial peril.

Go ahead.

Yes. No, thanks for the question. Where we sit today in terms of a large capacity expansion project like we did at North Bridgeport, I wouldn't expect that in the near term. Just given where demand is, we have the capacity. If demand ramps back up to those 2022 levels that we were talking about, we still wouldn't have to add capacity to service that. So the short answer is no to a large capacity expansion from a CapEx standpoint.

We did increase our CapEx guide this year, and that was for a land purchase that was opportunistic, but it's at a site that I, you and everybody in this room would want us to take advantage of when it became available. So that's extending that site really for the long term. So that's what the increase was this year. And so those -- when those come up, we just have to capitalize on them, but they tend to be very opportunistic when they become available.

Yes. Michael made such a good point during his presentation, and we spoke about it in sort of '20, back in '21 when we said, look, greenfielding is something that we need to have in our bag. But it's not going to be something we're going to deploy that regularly. But buying property next door to current operating quarries makes great sense. And that's largely what he's speaking of because imagine what happens. If you're mining in a quarry right now, you've got certain setbacks on your own property. When you buy the property next door, it's not just that you're picking up this property next door, you're certainly opening up setbacks on your own property. So your ability to win by buying adjacent reserves that you know are good quality reserves, you're opening up more property on land that you own today and taking care of your property going forward.

If you think about the Quikrete transaction, that was 1.3 billion tons of reserves in the ground, and that's a massive amount of reserves. That's part of what goes back into that number that we showed you, 80-plus years of reserves at current extraction rates, that didn't have quick read in it, by the way. So again, we're playing this very long-term game.

Let me suggest this. You have been very gracious and patient with us, Dave. We're going to take one more question here, and then we'll wrap things up. We'll be around for a bit. So you certainly have some time to ask us some questions. So we've got one question coming. I've got one more thing to share, and then we'll wrap it up.

Ward, I'm just curious with the 2030 targets here. Even the assumption of flat organic, is there any shift there in terms of infrastructure, res and non-res? You seem pretty positive on the infrastructure signals out of Washington. So maybe that's positive. And maybe the private side has been a little bit more muted negative that gets you to flat. So any mix shift there in the business in the next 5 years. And just to tag on that, any time investors see a 5-year target, there's always going to be a question if some of that CAGR is back-end loaded? Is it front-end loaded? So is there anything we should be aware of that you're seeing today of why 2026 would it maybe be inside those ranges, maybe better? Just anything we should be thinking about as we're going through the next few months and thinking about next year?

Yes. So relative to the back part of your question, is it front-end, back-end, middle-end loaded? Not particularly. I mean we're just looking at it all the way through the cycle. What I would say is this, I mean that first one of the early slides I showed you showed infrastructure at 37%. It showed non-res at 35%, and it shows res in the 20%. If I go back over time, infrastructure really ought to have closer to a 4 in front of it. I think it probably will. Housing has looked from a percentage perspective, bigger than it ought to. I mean, really, if you think about the way our business ought to flow, infrastructure ought to have a 4 in front of it. If infrastructure is doing its part, housing ought to be somewhere in the mid- to high teens. It probably shouldn't have a 20% in front of it. But I equally think non-res is probably at a good new number somewhere in that mid-30 because the non-res projects today are just so much more stone intensive than they used to be.

I mean look back in the day, 25 years ago, if somebody was coming into a Martin Marietta market and they were building a Walmart, I would think that was a pretty big deal. Now when somebody is coming in and they're building a data warehouse, and it takes 7 to 9x more tonnage than a big box store ever did, that's what we're seeing. So now when we're talking about green shoots in traditional warehousing, and we're talking about what we think is a good track road track ahead of us on data. And I mentioned as well the energy that's almost guaranteed to come behind that.

As I think about the end uses, that's really how I stack those up. And again, I think this is a very measured view. I think it's hard to look at what we put up out there and say, Martin is leaning in, in place that we don't feel comfortable. I can tell you, we feel really comfortable as a team. So I hope that helps.

We're a little bit after noon time, Eastern Time today. So again, thank you so much. One thing that I would ask you to keep in mind, we don't do these every year. We tend to do them 3, 4, 5 years at a time. And we want to make sure that when we do them, we're meeting your expectations and presenting material to you in a way that's meaningful and doing it in a place that's meaningful. There'll be a survey that will come out. We'd be very grateful if you participate in that and give us your candid feedback because we want to make these ever better as we go through it.

So with that, it's a wrap. Thank you all so much for your time. We appreciate it very much.

Welcome, everyone, to Martin Marietta's Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. 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 Vice President of Investor Relations. Jacklyn, you may begin.

Good morning, and thank you for joining Martin Marietta's Second Quarter 2025 Earnings Call. With me today are Ward Nye, Chair and Chief Executive Officer; and Michael Petro, Senior Vice President and Chief Financial Officer.

As a reminder, 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 website. We have made available during this webcast and on the Investors section of our website supplemental information that summarizes our financial results and trends.

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.

Today's earnings call will begin with Ward Nye, whose remarks will focus on our second quarter operating performance, continued portfolio transformation, 2025 outlook and related market trends. Michael Petro will then review our financial results and capital allocation, after which Ward will provide closing comments.

A question-and-answers follow. [Operator Instructions]. I will now turn the call over to Ward.

Thank you, Jacklyn. Good morning, and thank you for joining today's teleconference. I'm pleased to report Martin Marietta delivered outstanding operational and financial results in the second quarter despite weather headwinds and subdued residential demand.

In addition to record financial performance in the first half of 2025, we also achieved our safest 6-month start to the year in our company's history, as measured by total reportable instant rates, which continue to exceed world-class safety levels. Together, these results are a tribute to our team's steadfast dedication and focus and reaffirm the strategic advantages of our company's geographic footprint, the resiliency of our differentiated business model and our company's unwavering commitment to safety.

Subsequent to the quarter end, on August 3, we entered into a definitive agreement with Quikrete Holdings for the exchange of certain assets. Specifically, Martin Marietta will receive aggregate operations producing approximately 20 million tonnes annually in Virginia, Missouri, Kansas and Vancouver, British Columbia, as well as $450 million of cash.

In exchange, Quikrete will receive our Midlothian cement plant, related cement terminals and North Texas ready-mixed concrete assets. This transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and other customary closing conditions.

Consistent with the priorities outlined in our strategic operating analysis and review, or SOAR, 2025 plan, our focus remains on shaping a higher-margin enterprise that is increasingly aggregates-led, which possesses a more durable and resilient earnings profile through cycles. The strategic exchange of our remaining cement plant and related ready-mixed concrete operations for core aggregates achieves this objective, enhancing the product mix of our portfolio while preserving balance sheet flexibility for continued strategic plan execution.

As highlighted in this morning's release, Martin Marietta established new records for the second quarter with key metrics showing gains year-over-year as sustained pricing momentum and effective cost management continue to yield strong results. Specifically, we reported consolidated adjusted EBITDA of $630 million, an 8% increase; consolidated adjusted EBITDA margin of 35%, an increase of 170 basis points; aggregates revenues of $1.32 billion, an increase of 6%; aggregates gross profit of $430 million, an increase of 9%; aggregates gross margin of 33%, an increase of 94 basis points; and aggregates gross profit per tonne of $8.16, an increase of 10%.

Magnesia Specialties once again established new records in the second quarter, achieving new quarterly record revenues of $90 million and second quarter records for gross profit and gross margin with gross margin increasing 605 basis points compared with the prior year quarter, reaffirming, as we previously indicated that this business has earned the right to grow.

Accordingly, on July 25, we completed the acquisition of Premier Magnesia, enhancing Martin Marietta's position as the leading producer of natural and synthetic magnesia-based products in the United States.

Given our strong first half results and third quarter-to-date shipping trends, we're increasing our full year 2025 adjusted EBITDA guidance to $2.3 billion at the midpoint. This revised EBITDA guidance also reflects contributions from the Premier acquisition for the remaining 5 months of 2025, most of which will not occur until late in the year as we work through existing inventories written up to fair value, consistent with purchase price accounting.

As we progress through the year second half, our teams remain focused on the key levers within our control: world-class safety, executing our strategic plan, commercial discipline and prudent cost management.

Moving now to end market trends. The outlook across our core end markets remains varied with infrastructure demonstrating relative strength, while residential and nonresidential construction trends remain mixed.

Infrastructure, our most aggregates-intensive end-use, remains a strong comparative performer during a decidedly wet second quarter, underpinned by robust federal and state investment. Encouragingly, the value of state and local government highway, bridge and tunnel contract awards, a leading indicator of future product demand, increased 10% year-over-year to $126 billion for the 12-month period ended June 30, 2025, well above historical levels.

As we look beyond the late 2026 expiration of the Infrastructure Investment and Jobs Act, or IIJA, early legislative efforts pertaining to surface transportation reauthorization are centered on roads, bridges and ports, which offer a compelling pathway to extend infrastructure momentum into the next cycle.

The ongoing reliability of infrastructure investment at both federal and state levels, points to a resilient years-long infrastructure outlook marked by long-term planning stability, steady durable demand and sustained pricing tailwinds in this often countercyclical public end market.

Shifting to nonresidential. The heavy side continues to benefit from the increasing demand for data center development and an inflection in warehouse construction. Texas is seeing substantial data center growth propelled by its low-cost energy, grid accessibility and business-friendly tax and regulatory environment.

In July 2025, OpenAI announced the expansion of its Stargate data center in Abilene, Texas, to develop 4.5 gigawatts of additional data center capacity. The second phase, which is already underway, adds 6 more buildings, bringing the total to 8 buildings encompassing approximately 4 million square feet.

Secondarily, while not yet a meaningful contributor to shipments, we expect medium-term upside from utilities investing in energy generation capacity to reinforce grid reliability to support this expanding data center and artificial intelligence infrastructure.

According to the Texas Tribune, the Electric Reliability Council of Texas, or ERCOT, is projecting that statewide electricity demand could nearly double by 2030. To address this anticipated demand, Texas is actively expanding its generation capacity. Currently, 4 new natural gas-fired power plants are under construction and an additional 33 have received permits and are positioned for future development.

The administration's prioritization of increasing semiconductor manufacturing in the U.S. is also driving significant investments. As an example, in June 2025, Texas Instruments announced its plans to invest more than $60 billion across 3 manufacturing mega sites in Texas and Utah.

At the national level, we expect green shoots will inevitably emerge from the newly enacted reconciliation bill, which reinstates immediate expensing for capital investment and expands R&D incentives and targeted tax credits, establishing a strong foundation for a multiyear resurgence in U.S. manufacturing and GDP growth.

Turning to light nonresidential and residential activity. We expect residential activity in the near term to remain subdued until affordability headwinds recede. That said, long-term demand drivers for housing remain intact supported by demographic tailwinds and undersupply across Martin Marietta's high-growth Sunbelt markets.

Based on historical trends, as residential construction recovers, increased light nonresidential activity typically follows. While near-term cyclical headwinds persist, secular momentum across infrastructure, data centers and energy-related development along with the eventual residential recovery continues to support our long-term growth outlook.

I will now turn the call over to the company's newly appointed Chief Financial Officer, Michael Petro, to discuss our second quarter financial results. Michael?

Thank you, Ward, and good morning, everyone. The Building Materials business posted revenues of $1.7 billion, a 2% increase. Gross profit increased 3% to $517 million and gross margin of 30% improved modestly. [Audio Gap] 6% over the prior year quarter and second quarter records for gross profit, gross margin and unit profitability of $430 million, 33% and $8.16 per tonne, respectively.

We are pleased to report that momentum is building as we enter the second half of the year. And as a result, we revised our full year guidance to reflect stronger aggregates pricing and effective cost management. Specifically, we now anticipate a full year price/cost spread of 340 basis points and a 14% year-over-year improvement in gross profit per tonne at the midpoint, both well ahead of historical levels.

Cement and Concrete revenues decreased 6% and gross profit decreased 25% to $245 million and $54 million, respectively, due to lower operating leverage and higher ready-mix raw material costs. Pursuant to the asset exchange with Quikrete, the results of operations for our Cement and Texas ready-mix concrete assets will be classified as discontinued operations beginning in the third quarter of 2025.

Asphalt and paving revenues decreased 7% to $228 million and gross profit decreased 8% to $33 million due to lower shipments and higher costs. As Ward indicated, Magnesia Specialties achieved all-time quarterly record revenues of $90 million and second quarter records for gross profit and gross margin of $36 million and 40%, respectively, driven by strong pricing, improved shipments and efficiency gains.

Turning now to capital allocation and liquidity. Martin Marietta has a well-balanced capital allocation strategy, which allows us to responsibly grow the business while maintaining a healthy balance sheet and preserving financial flexibility to further enhance shareholder value.

Our focus remains on value-enhancing acquisitions, prudent organic capital investment and the consistent return of capital to shareholders, while maintaining the company's investment-grade credit rating profile.

Full year capital expenditures are now expected in the range of $820 million to $850 million, an upward revision from the previous guidance of $725 million to $775 million. This increase is due to attractive and opportunistic land purchases.

That said, following several years of capital expenditures above sustaining levels, we expect 2026 capital expenditures to return to more normalized amounts resulting in increased free cash flow conversion. Importantly, with $1.4 billion of total liquidity, strong free cash flow generation and a net debt-to-EBITDA ratio of 2.4x as of June 30, we have ample balance sheet flexibility to capitalize on what remains an active M&A pipeline.

With that, I will turn the call back over to Ward.

Thank you, Michael. Our first half performance highlights the competitive advantage of our aggregates platform and the disciplined execution of our SOAR 2025 strategic plan. These strengths, combined with a solid financial foundation and track record of navigating complex market environments, reinforces our confidence in achieving our full year adjusted EBITDA guidance.

Looking ahead, Martin Marietta's attractive underlying fundamentals and long targeted runway for transformative growth offer compelling horizon of future shareholder value creation.

If the operator will provide the required instructions, we'll turn our attention to addressing your questions.

[Operator Instructions]. The first question will come from Kathryn Thompson, Thompson Research Group.

As you noted and as so many of your peers have also noted that Q2 was marked by some pretty tough weather conditions. And as we look forward into the back half of the year not to be looking too close to near-term trends, it's still nonetheless helpful to get more color on what you're seeing in July [indiscernible] getting some assurance that you're seeing a fundamental

[Audio Gap]

Here in the Raleigh area. Novo Nordisk manufacturing plant has a big job underway. I mentioned before that we're now seeing nice green shoots relative to Amazon, in particular, in Wilmington, North Carolina, we're seeing a nice fulfillment center there. So when we're seeing good, steady public, and we're seeing that portion of nonres, and we continue to see the commercial environment working well in our business, that's really powerful for Martin Marietta. And if you think about what made this quarter look good, [Audio Gap]

Next up, Anthony Pettinari from Citi.

Ward, the Quikrete exchange is going to give you some assets in Virginia, Missouri, Kansas and I guess, British Columbia. Just wondering if you could talk more about sort of strategic fit, asset quality maybe how long you've been looking at these assets? And then I think with BC that would be kind of an entry point maybe in the Pacific Northwest. Just generally, if you can talk about the attractiveness of those assets and the potential fit?

Anthony, thank you for that. So I'd say several things. One, let's begin with the notion. It's about 1.3 billion tonnes, I mean, so it's a very nice transaction, a lot of tonnage that's coming in. And by the way, most of it crush done. You know I always break down puts sand and gravel, I have a natural bias toward crush-tone because I just view it as the higher quality product.

So number one, I like it from that perspective. Number two, to your point, the geographies line up very much with what we were talking about in February of 2021 when we outlined what we wanted to do in SOAR 2025. As you may recall, we put a slide up on that day and that hour and we outlined geographies across the United States that we were going to be particularly focused on during that 5-year period.

And one of the areas in which we had not yet been able to put a check in the box was in Virginia. This does that very elegantly. And the other was in the Pacific Northwest. And if you think about it, Anthony, really, there are 2 ways to drive in market in a meaningful way, either coming in through Seattle or coming in through Vancouver.

This gave us a nice opportunity to come in through Vancouver. From how long had we been looking at the assets? Look, we've long admired portions of those assets that Quikrete acquired in the transaction was Summit. And Quikrete did a nice transaction there. Anne Noonan and her team did a magnificent job managing that business as well. So these are some very attractive markets, including those that we're picking up in the Central division.

So what we're picking up in Kansas and what we're picking up in Missouri are often, in my view, overlooked markets relative to their attractiveness in overall Martin Marietta. So again, if we're looking at the geographies, we think we landed in the right place.

As we look at the overall transaction, from a tax efficiency perspective, it was really quite compelling. is a great facility. And we've got a team there that is incredibly talented. And the toughest part of this transaction is being in a position that we won't have that team and that asset with us.

But we've long said we're in an aggregates-led organization. This is our core and this gave us the opportunity to do a transaction and redeploy the funds and do it in a tax-efficient transaction, all very consistent with our SOAR plan.

One of the things that we tried to do is never surprise people. If people listen to us, we won't surprise them. And again, I think if you go back and look at what we said in February of 2021 and what we've announced earlier this week, it actually ties a nice bow around what we indicated would happen over a 5-year period.

The next question is from Philip Ing, Jefferies.

Strong momentum in pricing quarter on the aggregate side. Ward, one of your bigger competitors actually called out given the strength in infrastructure, there could be some mix headwind from base pricing. One, are you seeing that? And then two, how is midyear is kind of progressing? And lastly, when we think about '26, how is the price momentum kind of playing out just given what you're seeing out there?

So I'd say several things. No, on the mix thing, we haven't seen a lot that's been a mix driver so far for us this year. So I mean, I think what you're seeing is just good solid year-over-year pricing. So no big surprises there.

Secondly, relative to the mid-years, played out about like we thought they would. We got them primarily in areas where we've been more acquisitive over the past several years because as we've indicated, Phil, those ASPs don't tend to be where heritage ASPs are.

With respect to 2026, it's a little bit early for me to lean in. I thought I was leaning in a little bit when I just talked about July. So I'm not going to go too much into 2026, but I appreciate you putting the bait out there for me. We'll talk more about that, but my take is this, Phil: we're just in a different place relative to the way pricing is going to work.

I think you've seen that play out this year. I think you'll continue to see it play out in varying degrees again next year. And keep in mind, the midyears that we've gotten this year really aren't so much a 2025 event, they're really something that builds as we go into 2026. So Phil, I hope I gave you all I can.

Angel Castillo from Morgan Stanley has the next question.

Congrats on another strong quarter here. Just 2 questions. I wanted to hopefully get your thoughts on. First, on the Quikrete acquisition, you noted Missouri is often overlooked as a geography for for MLM. Can you just expand a little bit more, perhaps maybe what the spread is in terms of the price of the Quikrete assets that you're acquiring are at in terms of the aggregate price versus maybe what you think the fair value is in those in those geographies?

And then on the data center point about the strength you're seeing there, I was wondering if you could maybe provide a little bit of color there? Because it seems like every week, we get several new announcements of new projects. And yet, when you look at the kind of put in place construction data for data centers, the growth there has been slowing. So it's a little bit confusing.

Just curious if you have any kind of visibility here as to what might be holding up construction spend or growth of those projects and anything you're aware of or maybe looked at a different way, is it just a spring and based on what you see in terms of quoting and ordering activity, when should we kind of expect that to start to reaccelerate?

Thanks for your question. I'd say several things. With respect to your pricing observation. Obviously, we have been focused on value in our pricing in the last several years. And I think we will continue to have value journey in which we can meaningfully participate in these different parts of the country relative to the assets that we've acquired.

Obviously, putting a spec product on the ground that's there to meet customer needs and do it in a sustainable way is important. It's not easy, and I want to make sure that we're getting good value for those products. So I think the philosophy that you've seen us bring will continue to be the overall philosophy.

Relative to part 2 of your question on non-res, I do think probably what you're seeing more than anything else is degrees of land use at work because it's fascinating fastening, Angel. You've heard, and I've heard the same thing. I mean, obviously, for example, Amazon has come out and said, look, we're going to put $100 billion over a decade in this type of investment whether it's warehousing, data or otherwise.

And again, we're seeing things, as I mentioned earlier in the prepared commentary and last time in Cleburne, Texas, and Fort Myers, I mentioned Wilmington already in the conversation that I had with Adam. I think part of that cold spring is probably to be found in dialogue like we saw yesterday at White House, where Tim Cook was also announcing a big investment coming from Apple.

And part of what's interesting in that is some of that's going to be new and some of that's going to be additive to different markets. So for example, when they discuss adding on to a facility that they have in Maiden, North Carolina. What you probably don't know if we're made in North Carolina is, but I do because it's in our backyard. And we very clearly have a quarry in Maiden that we call our Maiden Quarry. So the fact is we're going to see those types of projects go. The ones that are basically a new phase will go more quickly.

The ones that are going to be brand new, that's where your coiled spring is because they can announce that that's what they're going to do. But in some instances, they're still going to have to get the permitting, they're still going to have to get everything in place, including on occasion utilities, which tells me this is going to be a nice, long, steady climb over multiple years. And selfishly from our company's perspective, that's when we're at our best.

The next question is from Trey Grooms, Stephens.

Michael, congrats on the new role.

Thank you, Trey.

So you've touched on the swap Midlothian for Quikrete, makes a lot of sense. On Magnesia deal, any additional color you could give us there? Sorry if I missed it, but understanding the impact is going to be limited this year due to purchase accounting, but any additional color you could give us on the size, expected impact there, how it fits into and compares to the existing Mag Specialties business, which is clearly performing really well?

Trey, thank you for the question. I'm going to turn that over to Michael to talk about some of the specifics. I'll give you some broad strokes on that.

So if you really think about it strategically, we're building, as I indicated before, an ags and mags business, and it's going to be heavily emphasized on the ags piece of it. If you think about the criticality, though, to your question on magnesia, the business that we've had, very impressive business, high margins, just had a record quarter, and it's primarily synthetic magnesia.

If you look at the business that we just acquired, it's more natural magnesia. And what's important to remember is they both begin with varying degrees of And I think it's easy for the uninitiated to look at mag and ag and not have a sense of how tightly they overlap and what the required skills are between the 2 and how they go back and forth.

Obviously, Michael drove that process before he started wearing 2 different hats. So I'll ask him to go back and talk a little bit about what that business looks like and what you can expect from a contribution perspective.

Yes. No, thank you, Ward. Yes, Trey, just you hit the nail on the head with the guide. We were saying only about $10 million of contribution this year. And what we're saying is that's really 2 months out of 12 given the purchase accounting impacts for the first 3 months as we sell through the inventory that's valued at fair market.

So if you just did the quick math, that would imply on an annualized basis, about $50 million, so that's what you can use for now on a pre-synergy basis. We do expect pretty good synergies to come from this, both commercially and operationally, but more to come as we get into integration there.

Next up is Steven Fisher from UBS.

First, just a quick clarification. The $4 million of corporate, was there any special item in there? It seemed a bit low? And then the real question is I just want to make sure I get the the volume message, right. The new guidance reflects about 3 million tonnes lower expectation than what you had in the first quarter.

So I was wondering if you could just sort of break that down into the Q2 weather impact versus other factors. Is this somewhat lower guide you -- as you were talking about before, trying not to be on the wrong side of it? In other words, there still could be some upside because it sounds like you're seeing a bit more positive momentum.

You bet, Steven. I'll take the volume piece of it, then Michael will come back. Yes, I think we're being measured and thoughtful on the way that we look at that. Clearly, weather through half 1 was an impediment. I don't want to count on even normal weather through half 2, and I'm not counting on a kind November and December.

And the fact is if we've got a warmer and dry November and December and this season is extended, then I could see there would be upside in the volume piece of it. As I indicated, if we're just looking through July right now, we would be above the midpoint of the prior guide. So I don't look at volume and feel in any respect, weaken the knees. Again, I'm tired of being on the wrong side of that. Michael, do you want to address the rest?

Yes. No, I think the question was on corporate expense or SG&A in the quarter and 2 items really impacting the comp to prior. One is the only adjusted metric we report now is adjusted EBITDA, and there was roughly $20 million of acquisition-related expenses that got added back to EBITDA last year, which would be in that corporate expense line item.

And then the other piece of the comp is really just effective SG&A cost management. We've been focused on that. So those are really the 2 levers if you're trying to say, well, EBITDA grew at 8% and net earnings grew double digits, that's -- it was that adjustment for the acquisition expenses.

The next question comes from Garik Shmois, Loop Capital.

This is actually Zack Pacheco on for Garik today. Maybe just more on the SG&A reduction. Any more color of what the main driver was? And I guess, how to think about run rating that into the second half?

Yes. No, we would typically say to just run rate right around 7% of sales for a full year. SG&A as a percent of sales, that's a good modeling number. So it may tick back -- between quarters that may ebb and flow a bit, but I think 7% is a good number to keep in your model.

Next, we'll hear from David MacGregor from Longbow Research.

Congrats and Mike on the transaction [indiscernible] quarter.

Thanks, David. Good to hear your voice.

Yes. On the tonnes that you've acquired, the 20 million tonnes, just how would you characterize the pricing on those tonnes within the context of their respective markets? Are they underpriced? Are they fairly priced? Is there a future ASP lift opportunity? And then if I could just squeeze in maybe some commentary around the rail mergers and the potential impact there?

Thank you very much, David. I'd say a couple of things. I think where I was before is probably right in that. And again, for the uninitiated when you're driving across a railroad crossing, if you look to your right and look to your left and you see all the stone on which the rails are sitting, hopefully, that's our stone. So I'll try to answer both of your questions. The first one commercially and the second one relative to the proposal between UP and S, and I hope that helps, David.

The next question is from Michael Dudas from Vertical Research.

Maybe could you just share some thoughts on unit cost performance, again, driving that double digit is quite helpful above that SG&A line, some of the trends you see there. And just on the transaction, net-net of all that's going on, you're going to get $450 million of cash. And is that going to be kind of pointed towards some debt reduction or some other near-term uses that you may have on that?

You know what, I'll take the cost portion, and I'll ask Michael to come back and take the boot portion. So as we look at the cost, I thought the cost was actually in the quarter. Cost could have been better in the quarter, and here was the big issue. It ranked. I mean the fact is it's really difficult to have your cost flow through the way that you would like if you've got a lot of stop start in an outdoor sport that's a heavy industrial use. And that's what we had in Q2. And even with that, I like the overall

[Audio Gap] down. And we're seeing our costs also come down and we're seeing our ASP go up, and you're seeing that margin continue to grow. So I would expect we would continue to see very good cost behavior. As you may recall, I think Bob Cardin was right in Q1 when he said, "Look, we had a home-run quarter on cost control," but that was actually a quarter because so much of it was January and February that you know exactly what you're having to do and where the levers are.

It gets a little bit more complicated when you're in Q2 and you need to be running everywhere. I think that's answered to part 1 of your question. Part 2 of your question was relative to the and for that over to Michael.

Yes. Thank you, Ward. Relative to the boot, I think a couple of things. One, capital allocation priorities are going to stay focused on dollar 1 to M&A. That being said, we did close the Premier transaction in July. So you can almost think of that boot as already having a home M&A-wise. We do have -- actually our first 30-year bond ever issued as a public company coming due at the end of this year for it was $125 million bond at a 7% interest rate.

So we're going to go ahead and pay that off when it becomes due. That being said, we should end the year well within our leverage range. And as we said in the prepared remarks, M&A pipeline remains active. So hopefully, more to come.

I wish own some of those 7% bonds.

You and me, both.

And the next question is from [ Jonathan Bettenhausen ] from Truist Securities.

I'm on for Keith this morning. So obviously, aggregates pricing is still really solid. Last quarter was no exception. But given that weather has been a drag on volumes for this many quarters and we know this impacts the pace of price realization. Can you quantify how much or even if weather is set back pricing in the industry? And then so -- like is this a gap that can be closed if we get, say, 12 months of notably below average rainfall?

Go ahead, Michael.

Yes. No, I think that's a good observation. It's certainly more difficult to realize price when volumes are subdued as a result of weather. So yes, no, I think there certainly could be some uptick as a result of that if we get a nice clean dry run like we saw in July.

That being said, this pricing environment at 7.5% price is well above historical normal levels. We've been saying we think that there is a new normal in pricing. We said it wasn't going to be double digits forever, but it certainly wasn't going to go back to kind of the 3% to 4% pre-COVID levels either. So we'll see where that ultimately shakes out, but we feel pretty confident in the price guide that we put out for the full year.

Jonathan, activity begets confidence, confidence begets pricing. And I believe the activity could be higher if the weather had permitted. And I think when I go back to the genesis of your question, I think that really does answer it. If we see activity continue to ramp up if contractors continue to see their backlogs grow, I think all of that actually portends quite well for overall ASPs.

Your next question is from [ Garrett Greenblatt ] from JPMorgan.

I just wanted to lean in a little more on the magnesia side of the business. How big of a focus is this going forward in terms of acquisitions? And how big do you think this business could become over time?

Thank you for the question. Look, it's never going to be a huge part of what we do, but it's going to be an important part of what we do. And it's going to be additive I think, to overall margins, cash flow because they have some of the highest cash flow conversions of any business we've ever seen.

And I think it adds that nice differentiating component that's important to us. One of the things that we've long talked about is as we went through the financial crisis, I don't know of any other heavy side company in our space who could say we never cut or suspended a dividend all the way through that time period.

And 2 things may that happen. One was Magnesia Specialties and its ability to go through cycles in a very resilient fashion and the other was the Midwestern United States, where we're just adding more quarries today because those are the areas that, as you go through more challenged times, tend to outperform. So do I expect us to continue doing bolt-ons, maybe here or there in mag.

I think that's entirely possible, and I think you should look for that. Do I think you're ever going to see a transaction there that you're going to say, boy, that doesn't look like an aggregates-led company? No, I don't think you're going to see that. But I do think it's a nice differentiator. And I think when you look at that, combined with the aggregate operations that are coming in with this transaction with Quikrete and the geography in which that's occurring, it's actually a very nice and very consistent story with what helped us come through a financial downturn very differently than others.

The next question is from Brian Brophy from Stifel.

Just any more color on the land purchases, you mentioned in the prepared comments? Are these related to potential greenfield opportunities? Or are these more adjacent to current operations? .

Brian, not to your voice, and thanks for the question. No, they tend to be more adjacent. And in my view, that's the more constructive way to go about that today because when you're greenfielding -- look, do we have that as a tool in our kit? The answer is yes, we do. But I would rather go to existing operations that we can expand.

If you think of it this way, Brian, if you buy the property next door and you already have necessary setbacks, when you buy the property, it's not just that you're buying the property next door on which you'll expand your operation, you're actually opening up some of your own reserves that used to be in a setback that no longer are.

So you end up winning multiple times when you're buying adjacent reserves, and that's primarily what we're doing. As a practical matter, when we look at quarries and they have less than 20 years; to us, that's a little bit of a flashing yellow light. We feel like we need to do something there.

We -- frankly, we have very little of that. But on occasion point, we have less than 20 or in some places, when we just have the right opportunity to buy property next to a very attractive operation, and typically buy it for numbers that would not be commensurate to the value that it's going to create when it's under our ownership, we move on that.

So that's what you're primarily seeing. And as Michael indicated in his prepared remarks, we have been at CapEx numbers over historic in the last several years. We do anticipate that coming back down to more normal metrics next year. But to answer your question directly, no, it's not greenfielding. Yes, it is adjacent, it is reserves, and that's the overall philosophy.

Next up is Ivan Yi from Wolfe Research

Ward, can you just give us an early preview of the upcoming Capital Markets Day? What should we expect to hear from you all? Will you be providing any long-term guidance on revenues or EBITDA, for example? Just any color would be great.

Ivan, thank you very much. Look, we'll be together early next month at the Mandarin Oriental in New York. As you know, we refresh our store plans every 5 years, part of what we've done in every store plan to date. And Ivan, I'm not saying this is what we're going to say when we're together.

But we have been in a position that we have doubled our market cap every 5 years. I think this company has an exciting growth trajectory ahead of it. I want to talk about that. I think this company has exciting geographies in which that will be focused, I want to talk about that.

I think there are a lot of new tools that are coming out today, particularly relative to what's going on commercially in the industry and our business, I want to talk about that. I think we've got an outstanding team that I get to see every day. I want to put you in a position that you got to see that in a more granular basis as well. So is this about long-term markets? Yes.

Is it about what M&A can look like for this company for the next 5 years and beyond? Absolutely. Will we give you a sense of how we're going to market and the sophistication that's increasingly being brought to bear in that? Of course.

And where you going to see what I think -- and I'm not talking about me, I'm talking about the rest of them that I believe is the most talented team in the industry? Absolutely. And I want to make sure you, investors and others get time with them and can affirm my judgment that you're going to like what you see.

And at this time, there are no further questions. I'd like to hand the conference back to Mr. Ward Nye for any additional or closing remarks.

Again, thank you for joining today's earnings conference call. Through deliberate and disciplined execution of our store plans, we fortified our portfolio and aligned our business in structurally advantaged markets that offer both resilience and compelling long-term potential growth.

With this durable foundation and a clearly defined differentiated growth strategy underpinned by our strategic framework, we remain well positioned to manage through macroeconomic volatility while continuing to create meaningful long-term shareholder value.

As a final reminder, and as we were just discussing with Ivan, we'll be holding our Capital Markets Day on Wednesday, September 3, in New York, where our leadership team will discuss strategic opportunities for long-term value creation through our updated 5-year strategic operating analysis and review plan or SOAR 2030. We look forward to your participation. And as always, we're available for follow-up questions.

Thank you for your time and your continued support of Martin Marietta.

Once again, ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.