Martin Marietta Materials Stock

Ladies and gentlemen, welcome to Martin Marietta's Second 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, everyone, and thank you for joining Martin Marietta's Second 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 from those expressed or implied by such statements. 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. 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 second quarter and year-to-date accomplishments, 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 one 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 another strong quarter, highlighted by record second quarter revenues and adjusted EBITDA. Our results benefited from favorable demand in infrastructure and heavy nonresidential markets, disciplined execution across the organization and contributions from recent acquisitions.

During the quarter, we also took significant steps to thoughtfully advance our SOAR 2030 priorities positioning Martin Marietta for its next phase of growth. Specifically, in May, we completed the acquisition of New Frontier Materials, or NFM, a complementary bolt-on to our aggregates position along the I-70 corridor in Missouri, creating opportunities to further leverage our existing scale across our differentiated Central Division footprint.

Most recently, we announced a transformational agreement to combine with Lhoist North America, Inc., or LNA, the nation's leading producer of lime and industrial mineral products. The planned combination builds upon our aggregates-led foundation and is expected to substantially broaden our differentiated upstream Specialties platform. The strategic fit is compelling, like construction aggregates, lime production begins with limestone reserves and relies on many of the same core competencies that have long defined Martin Marietta's success, including quarry operations, mineral resource management and reserves optimization. With nearly 200 heritage limestone quarries across our portfolio, we're uniquely positioned to unlock significant value through recognizing the full potential of the combined limestone reserve base.

LNA brings to us leading positions in key geographies and end user markets, an advantaged Sun Belt footprint and more than 200 years of high-quality limestone reserves. Its products possess unique properties, making them mission-critical across industrial, infrastructure, manufacturing, environmental and other applications. With limited substitutes and a modest share of customers' overall production costs, lime benefits from attractive and durable demand fundamentals throughout economic cycles. Upon closing, the combination will diversify our end market exposure, enhance free cash flow conversion and create significant opportunities to realize commercial and operational synergies across our aggregates and specialties businesses.

Taken together, the NFM acquisition and planned LNA combination demonstrate our disciplined approach to capital allocation and continued commitment to executing a strategy designed to enhance the quality, durability and long-term growth profile of Martin Marietta for the benefit of our shareholders, customers and employees.

Importantly, our SOAR 2030 priorities extend far beyond portfolio optimization and acquisitions. They encompass a wide range of operational and commercial initiatives. Operationally, we identified approximately $350 million of run rate pretax cash flow improvement opportunities driven by enhanced asset utilization, network optimization and lower sustaining capital requirements. Year-to-date, as compared with the prior year period, disciplined inventory management and reductions in capital spending alone have unlocked more than $200 million of cash flow benefits. Combined with our organic second quarter cost performance, we've already made meaningful progress toward our efficiency and cash generation objectives with additional runway ahead of us. It's important to note that these benefits are not the result of deferred investment or actions that may negatively impact the business long term. Rather, they reflect a more efficient alignment of our footprint production capabilities and capital requirements with our current and evolving portfolio.

Commercially, I'm pleased to report that in June, we completed the enterprise-wide rollout of our Precise IQ mobile quoting application and associated pricing algorithm. Precise IQ enables greater customer responsiveness, enhanced pricing precision, improve commercial insights and more consistent execution of go-to-market strategies.

Turning to our year-to-date results. We delivered the best first half safety performance in our company's history as measured both by total injury and lost time incident rates. Safety is the foundation of everything we do and remains our most important measure of success. I'm grateful to every Martin Marietta employee, long-term team members and recent additions alike for embracing our shared responsibility to care for one another and ensure that every team member returns home safely each day.

Based on our strong first half performance and continued momentum, we're raising our full year revenue guidance to $7.2 billion to $7.4 billion and reaffirming our adjusted EBITDA from continuing operations guidance of $2.36 billion to $2.5 billion. This guidance does not include contributions from the pending LNA transaction, which we will update following the closing.

Looking at our end markets. Infrastructure remains the most durable and visible source of aggregates demand. Recent legislative proposals and continued bipartisan support for transportation investment reinforce our confidence in the long-term funding environment. Although a short-term extension of the current surface transportation authorization appears increasingly likely, we do not expect it to materially impact project activity or funding flows. State Departments of Transportation continued to advance large multiyear construction programs, supported by elevated state revenues and the over $150 billion of federal infrastructure funds yet to be invested. As a result, we remain confident in sustained infrastructure demand over the coming years.

Having nonresidential construction continues to provide an important source of growth supported by investments in data centers, warehouses, power generation and domestic manufacturing across our markets. According to Dodge Construction Network, more than 70% of planned or under construction data center square footage and 70% of manufacturing square footage are located within 55 miles of a Martin Marietta facility. This proximity advantage positions us to participate meaningfully in several of the secular growth trends reshaping the United States industrial economy. Upon closing, the planned LNA combination is expected to broaden our participation in these long-term growth opportunities while adding exposure to other durable end markets.

LNA's high calcium and dolomitic lime products are essential to steel production, soil stabilization, water treatment and other industrial applications. With its advantaged Sun Belt footprint, LNA is uniquely positioned to benefit as domestic steel production capacity and data center construction continues to migrate to the Southeastern United States and Texas. Taken together, these end markets provide an attractive balance of demand, a durable infrastructure base, compelling secular growth in heavy nonresidential construction and meaningful upside from an eventual residential recovery.

I'll now turn the call over to Michael to discuss our second quarter financial results and capital allocation. Michael, over to you.

Thank you, Ward, and good morning, everyone. Our core aggregates business generated record revenues of $1.5 billion, an increase of 16%. Supported by strong infrastructure and heavy nonresidential demand across our footprint, organic shipments increased 2.3% while total shipments increased 17% to 61.6 million tons, reflecting contributions from Quikrete and a partial quarter contribution from the NFM acquisition. Average selling prices decreased 2% but increased 3.7% on an organic basis after adjusting for geographic mix. The impact of acquisitions on headline ASP is expected to become more pronounced in the second half of the year as NFM contributes for the full period. That said, we expect strong realization of midyear increases in those relevant markets that are well below the company average.

Organic cost of goods sold per ton increased 3.6% inclusive of a 150 basis point headwind from higher pass-through external freight costs, such that our controllable cost growth was notably below the implied 3% in our guidance. This strong performance underscores the execution of our operating teams and the effectiveness of our cost management initiatives. While we expect energy costs to remain elevated through year-end, our focus will remain on what we can control to mitigate the current inflationary pressures and to protect and enhance margins.

Reported aggregates gross profit of $418 million was negatively impacted by a $52 million noncash inventory step-up charge, of which $45 million was an adjustment to EBITDA as well as $42 million of higher depreciation, depletion and amortization expenses. With most of the fair value inventory charges now behind us, we anticipate only modest residual impacts on aggregates gross profit during the balance of the year allowing reported results to more closely align with the true underlying economics of the business.

Our Specialties business delivered record quarterly revenues of $152 million and gross profit of $50 million reflecting contributions from the July 2025 Premier Magnesia acquisition and organic pricing gains across all products. As illustrated on Slide 7 and 8 of our supplemental information, our single heritage lime plant in Woodville, Ohio has demonstrated the ability to compound profitability through macroeconomic cycles. Of note, during the financial crisis, Woodville volumes declined only 7% as compared to the U.S. aggregates industry's 37% decline. By 2025, Woodville Lime shipments exceeded 2006 levels by 2% while U.S. aggregates production remained 25% below its peak. This consistent demand profile combined with average selling prices compounding at mid-single digits resulted in gross profit compounding at a high single-digit rate for 19 years.

This favorable algorithm is continuing in 2026. Specifically, in the second quarter, Woodville's average selling prices increased 4% or 5% on a mix-adjusted basis, while shipments increased 1%, resulting in 7% growth in gross profit to a new record as compared with the prior year quarter's previous record, notwithstanding energy-related inflationary cost impacts. These results demonstrate lime's mission-critical nature and its value proposition to customers across a broad range of essential applications.

Looking ahead, we increased our full year revenue guidance and reaffirmed our full year adjusted EBITDA from continuing operations guidance, reflecting our strong first half performance and contributions from the NFM acquisition partially offset by continued energy cost headwinds. As Ward mentioned, we plan to update our 2026 guidance following the closing of the LNA transaction.

Turning to capital allocation. As indicated on Slide 9, since 2022, we have fundamentally reshaped Martin Marietta's portfolio. We divested more than $525 million of EBITDA from our cement and ready-mix concrete assets at attractive valuations near cyclical peaks and redeploy those proceeds into aggregates and specialties businesses with more durable and higher-margin earnings profiles, all in a largely balance sheet-neutral manner. What makes this transformation particularly compelling is that despite divesting businesses that contributed more than $0.5 billion of EBITDA, we still expect adjusted EBITDA to compound at approximately 10% annually over the 5-year period ending in 2026. This performance highlights both the success of our portfolio optimization strategy and the exceptional underlying earnings power embedded within our core business.

That momentum has continued through the first half of 2026 as organic growth and the acquired Quikrete assets outperformance relative to our initial expectations have more than offset the EBITDA associated with the divested assets and the exchange transaction. As a result, we delivered a new first half record of more than $1 billion of adjusted EBITDA. The announced combination with LNA represents the next step and a natural extension of the portfolio strategy we have executed for years further strengthening Martin Marietta through a broader mix of differentiated mission-critical upstream materials businesses with compelling long-term growth prospects. This transaction enhances the quality, scale and resilience of our earnings base, which expands our participation in attractive secular growth markets.

Importantly, our approach remains unchanged. As we have consistently demonstrated through prior portfolio actions, we will pursue value creation with the same disciplined capital allocation framework that has guided our company for decades. Accordingly, we remain firmly committed to maintaining a strong investment-grade balance sheet and expect to delever back to our targeted range within 24 months post closing of the LNA transaction.

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

Thank you, Michael. The strategic actions we've taken over the past several years have strengthened Martin Marietta's portfolio, expanded our growth opportunities and enhanced our ability to serve customers across attractive end markets and geographies.

As we continue advancing SOAR 2030, our priorities remain clear: operating safely and efficiently, successfully integrating acquired businesses, allocating capital with discipline and delivering superior returns over the long term. Supported by a high-quality asset base, resilient market fundamentals and the dedication of our talented teams, we remain confident in our ability to execute our strategy and create sustainable long-term value for our shareholders.

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 Adam Thalhimer with Thompson Davis.

Congrats on the solid Q2 print. Ward, I wanted to focus on your organic aggregates business. If you strip out deals, how is the underlying aggregates business performing versus your expectations?

I really appreciate the question because you're right. There are a lot of moving parts in today's release. So let me try to take you through that. So number one, I would say it was very strong, and here are the reasons why organic volume was up 2.3%. So let's put that in context. That's the fourth consecutive quarter of good solid organic volume growth. Mix-adjusted pricing was up 3.7%. So that's more in keeping with what we would have expected. And keep in mind, part of what we've seen this year is portions of the United States, such as the Central and the West, growing at faster rates from a volume perspective than the east and [ southwestern ] scene. so that's going to automatically give us a little bit of an optical headwind as we go through it. So again, mix-adjusted pricing up 3.7%.

Here's what I'm really proud of. If I look at the cost of goods sold, they're up just 2.1% if we exclude the pass-through external freight component of it. So that tells me our teams are doing a great job in managing costs, but here's a [ fact to it ]. if we want to go out and say, okay, what would have happened if energy had been even, and we hadn't seen the spike in energy, we actually would have seen cost of goods sold flat for the quarter. I mean to see that type of performance, I think in an inflationary environment, broadly speaking, is really impressive. So what that means at the bottom line is organic gross profit was up about 4.3%, but if we think about what this is going to look like going forward, Adam, I think that's really important. Much of the noncash inventory charges are now pretty much behind us. And that's obviously we're going to see some modest impacts from NFM as we go into half 2. But that's going to make the reported numbers much more easy to see. But as we go through it, and I think as we're just talking about adjustments to make sure we get our heads around it.

If we're looking at reported aggregates cash gross profit, and we think about a bridge, I mean, here's the way I [ rank ] it up in my mind. $418 million reported, if we come back and adjust for the fair market value inventory adjustment, that's $52 million. Then if we come back and look at the adjusted gross profit at that number, you're at $470 million. That's 9% over prior year. And then equally, if we come back and take a look at the noncash DD&A of $166 million, that gets us to adjusted cash gross profit of $636 million and that's up 15% year-over-year. And Adam, to your point, I think it's so easy for that to get lost when you're going through GAAP and you're going through reported and you're going through adjusted and all the rest of it. So I really appreciate your question on what was happening in the organic aggregates business. And I know that was a long answer, but I hope it answered your question.

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

Next up in [ Q ] and focus is acquisitions and more specifically with Lhoist, you now are in the midst of -- you've made the announcement -- you've already had a call that gave some details at the time of closing -- the announcement of the acquisition. But where we sit today, what are you seeing as the risk and opportunities for this acquisition.

Thank you, Kathryn. I appreciate the question. I would say several things. If we just look at the opportunities, I'll come back and address the risks too. I mean the opportunity is this is the leading producer of dolomitic lime and high-calcium line in the United States. Look, there's a reason that we put some slides in today talking about what our heritage performances look like at Woodville. I think when you look at Woodville, number one, you think, well, that's an impressive business. It's done really well. And it's done really well in the central and northern tier of the United States. This business that we're picking up. One is the market leader, and it's in the southern half of the United States. So when we think about that geography and think about their network of 20 quarries and production facilities and then 45 distribution terminals and how that's going to click in to what we've had historically, we think that's a great opportunity.

We think the leading market positions that they have across really attractive markets, including the Sun Belt, as I said in my prepared remarks, is pretty important to us. we equally think the fact that it's mission-critical products, meaning you're not making steel without it. Water treatment is critical. Flue gas treatment is important, Nonferrous metals are vital. But highways and mega construction projects are going to be very much in this business' wheelhouse now and after we close on the transaction.

The other opportunities, I mentioned it briefly, is it's going to change our end market exposure because it makes it even more well diversified. So part of what we tried to build, Kathryn, is an upstream business that's differentiated that has the capacity in up markets to outperform and in down markets to outperform. And I think that's what we're doing. Now keep in mind, part of what I love about this business is it represents about 1% to 4% of our customers' production costs. So when we're looking at something that they have to buy, that's not a big part of their overall cost that looks, feels and sounds to me a lot like aggregates. So again, if we take a look at how this is trending, we continue to have really strong confidence in the synergies that we've talked about already. We hope to come back at some point and say that we will do better than those. Keep in mind, that's precisely what we did with TXI.

The other part of your question, I'm not trying to ignore it all is what about risk mitigation. And what I would say is, number one, we've got a proven track record of doing these types of deals and doing them well of scale. I'm not worried about that. We also have shown our ability to rapidly delever following transactions of scale. We've talked about the fact in 24 months, we think we'll be back there. And then several things that we look at that we think mitigates the risk as well. I mean the business is are hugely complementary. Again, that's one of the reasons that we put in there, what you've seen from Woodville today. Lhoist has really operated almost as an independent business here in the United States, which means clipping it into what we're doing is not going to have a lot of a high degree of integration risks that you might see in other businesses. And we've seen the team there. And at the end of the day, seeing the team seeing the talent, seeing how well they performed, that they have a set of values and a culture that I think again joins ours very, very seamlessly. I see the opportunities. I'm never blind to the risks. I think the risks are very manageable. And the primary thing we want to do is get this deal closed. So again, Kathryn, I hope that helped.

It does. And in summary, it's -- maybe to be said it's a little bit different, but not a whole lot different from Martin's core strategy, is that a fair statement?

Yes, that's a totally fair statement. I think what people forget, we have 200 limestone quarries today. I mean what we're talking about doing, as I said in my prepared remarks, our core fundamental things that Martin Marietta has long done and long done well. And again, if we're looking at a business has even better margins than we've had a business that's had a wonderful pricing power business that has come through downturns with remarkable resilience. It's all very much what we do. I think it makes us better. And I think we can make them better.

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

So my question is on the updated guidance for the year. You're taking the revenue guide up $140 million at the midpoint, reiterating the EBITDA range. So maybe if you could discuss some of the puts and takes here. You mentioned you're layering in NFM, but any other details you could give us here around the guidance would be super helpful.

No, got it. Trey, thank you very much. I'm going to give you some early comments on that, I'll ask Michael to come back and address in more detail. So if you think about what's happening, are we seeing shipments trending toward the high end of our range? Yes, we are. Are we seeing pricing going more towards the lower end of the range? Yes, we are. And a lot of that is explained by what we've discussed before on geographic mix, product mix, et cetera. I think the primary thing that we're doing is we're simply looking at the energy markets, and we're saying -- but let's not bet on that getting better in the second half of the year. And so I think we're taking a very conservative view of the way that we're going to approach cost for the rest of the year. But I'll ask Michael to take you through the guide and give you a bit more granularity. So Michael?

Yes. Thank you, Ward. And Trey, thanks for the question. Ward hit it. But in a nutshell, what we're saying is the contributions to EBITDA from New Frontier should largely offset continued elevated diesel costs. So a bit of conservatism on the cost side, shipments certainly trending towards the high end. In fact, year-to-date, organic volumes were up 4.3%. So you should assume organic volumes certainly trending towards the high end of the original guide. On the ASP front, that's towards the low end organically. We got to the mix of just in the quarter, but where we started the year, just mathematically, it's going to be difficult to get to the higher end, even with mid-years. As we're talking about midyear, what I would say is realization of those is going to be strong in both the New Frontier and Quikrete markets. So we ought to get good momentum there, a, July 1 for Quikrete; b, August 1 for New Frontier, and that really is going to set up coming back January 1 in both of those markets.

On the heritage business, we're also quoting work at higher rates. So as Ward mentioned in his prepared remarks, we did complete the rollout of Precise IQ. So we have the quoting tool and the algorithm and all of our sales reps hands that targeted price and the algorithm accounts for elevated inflation. So we ought to see nice new quoted work coming through at higher ASPs. The only segment that was relatively challenged relative to midyears and it probably doesn't come as a surprise is, given what's going on in single-family residential, price increases to the ready-mixed concrete segment was probably not as strong as you would see on the quoted work.

From a COGS per ton perspective, what we think, and it does get lost in a lot of the noise is just how strong we've performed year-to-date. If you just strip out external pass-through freight alone. Year-to-date, organic COGS is up 3%. What we said after Q1 was, hey, look, we understand diesel is elevated, but we're not changing our guide on COGS because we're pulling certain levers relative to network optimization that we think we can maintain that 3% COGS per ton guide. You certainly saw that flow through in Q2. We feel pretty good about where we sit going into Q3 and Q4 because we're starting to lap those comps on a COGS per ton basis of last year that were relatively elevated in the second half. And the last piece, I would say, is just the Specialties business. So you saw the outperformance in Q2. The beauty of that business is it's not highly seasonal. So modeling it is very straightforward. So you can almost apply that $50 million of gross profit pro rata across Q3 and Q4.

And Trey, the one thing I'd come back on the guide and say it's not so much a granular portion of the guide for the rest of the year. But I think it's really important to look at the guide and try to put that in context to because, again, what we're going to deliver, and we said it in the prepared remarks, this is a CAGR of 10% or notwithstanding over $0.5 billion of divestitures with EBITDA neutral at 2.5x exiting 2021 and 2.5x today. So I'm really very pleased and proud of the way that guide has shaped up in the way that the shaping of the portfolio has gone to put us in this type of position. So again, try a lot of data, but I hope that's helpful because we said coming into this year with the M&A that we've seen, it is confusing. You do have to go through and make sure you're teasing out what's most relevant so you can truly see how the business is performing and the business is performing very well.

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

Ward, so there has been quite a bit of noise in aggregates pricing. And I know that '27 is still a bit away, but I was hoping that you could maybe help me out conceptually. So it feels that '26 has been impacted by geo mix, product mix, M&A dilution. But as we look to next year, shouldn't those pricing optics improve because geo and product kind of comp out, the midyear should have a bigger outsized impact. You've got let's call it, commercial harmonization in the acquired operations and you've got this new Precise IQ tool that's going to be fully utilized. So I guess why wouldn't we see reported pricing well in excess of, call it, that 4% longer-term average as we think about next year?

Tyler, thanks for the question. And look, as you were going through your bullet points and your question [ mark ], I kept thinking, yes, yes, yes. I think you've got it. I mean, it's fascinating to me look at it. Because, for example, we're looking at New Frontier, which we're so happy to own. I mean, their average selling price is $12 and some change. If we're looking at the Quikrete, again, which we are so happy to own, their ASP is dollars per ton below our average. And then to your point, if we think about the fact that really in Q1, what you saw was a snowless period of time in the West, and the Central division coming out really strongly.

I mean what's really happening this year is because of the timing of a really good Q1 for portions of our business that typically are sleepy, and they weren't sleepy because of weather. And then to your point, new acquisitions that are also coming in and the ASPs that come with those, that creates what you rightly said is an optical headwind. So when we're looking reported down to frankly, that doesn't mean anything. What means something is really what's happening relative to mix adjusted pricing, and that's why seeing that trending toward [ 4 ] is more important than that.

Now to your other point, as we think about the setup for 2027, here's what I'm excited about. When we go into 2027, we're going to be through all the inventory issues on purchase price accounting with Quikrete. We're going to be through all the inventory issues relative to New Frontier. And part of what happens with Lhoist is, keep in mind, they don't keep a big host of inventory. So they'll actually work through that relatively quickly, which means, to your point, on pricing in 2027 should be a pretty compelling story. I think it should. But equally, when you think about 2027, what I'm excited about is we get to come out and just give you nice clean unadjusted numbers and you get to see exactly what this business is doing. So back to your original question, yes, yes, yes. And yes, as you went through your bullet points. But again, I wanted to make sure that we talked about to what I think the balance of the setup is going into 2027. I hope that answered your question.

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

It's Jesse on for Phil. Just for Q2 pricing, could you kind of just contextualize what the different mix headwinds were and kind of which of those you think will abate in the second half and which of those will kind of continue? Obviously, the M&A ones will continue, but of the product and geo mix that will kind of abate in the second half.

Yes. No, happy to do that. So if you think headline was down to 40 basis points of that was acquisition mix. So the reason in the prepared remarks, we said that headline ASP impact will become more pronounced in the second half. Keep in mind, we only had 45 days of New Frontier in Q2. And as Ward just mentioned on the last question, those that product is selling for $12 a ton. So we're going to see that continue and become more pronounced of a mix headwind in the back half, but also understanding that that's where we're going to get very strong realization of midyears as well. So that brings you to organic ASP on a headline basis of 2.1%, of which about 160 basis points was geo mix related.

And so as we look at it, if we look same on same geo mix from this quarter to last quarter, adjusted is 3.7%. So getting close to 4% geo mix adjusted, and that's due to the fact that our Central division and actually, what we -- the take away is quite compelling. We're seeing the broadening out of demand, in particular with data centers, energy and infrastructure and what we often refer to as our differentiated central division, and that's what we mean. Not only was it the fastest-growing volume division organically in the quarter is also the fastest-growing ASP division in the quarter. So we actually think that's a tailwind, not a headwind. It's obviously a headwind to reported metrics. But that volume growing at that rate, our West division volume growing at that rate, both of which have ASPs lower than the company average but growing at a faster rate really sets up 2027 to be quite compelling from an ASP standpoint. But keep in mind, I mean, Texas, as some others have reported, I mean, that was in a pretty bad spot with weather. So that just gives you a sense of how strong the Central division and the West division were if we were still putting up 2.3% when our largest state by revenue had the type of weather impact that it had.

That's good detail. And then just a quick follow-up. The $350 million number that you kind of calling out for cash cost saves, any way to kind of contextualize that for actual kind of drop down to either earnings or saves on like a cost per ton basis.

Yes. So we put it into 3 buckets. So think about it as OpEx, working capital, in particular, inventory and CapEx -- sustaining CapEx is the 3 buckets of cash opportunity. We quantified what we've already delivered year-to-date just on inventory and CapEx alone, so you can get to that pretty quickly in the cash flow statement. If you think about our CapEx guide for the year, it's nearly -- or a little over $200 million down from where it was exiting 2025. So that gives you a sense of where CapEx will be of that $350 million number.

We did not quantify the OpEx P&L direct piece just yet, except to say, "Hey, look, we just delivered 2.1% organic COGS per ton growth in the quarter with nearly a $20 million energy headwind." So that gives you a sense without that energy headwind, we're starting to talk about organic COGS per ton is flat in the current inflationary environment. So the best way to back into a number there would just assume an inflation rate, subtract what we're printing and multiply it by the tons.

Jesse, I would add a bit more color to that. I would say, number one, we're anticipating that $350 million, at least in our minds today as an exiting '27 number, just to contextualize it for you. Look, I think before then we're going to come back and probably adjust that for you and not adjust it down. I think we'll likely be adjusting that up.

The other thing, as we think about CapEx, and of course, Michael was talking about the heritage business or the going-forward business in those numbers. Something that we're really pleased with as we've gotten to see even more of M&A is how well that business has been invested in. We are not anticipating that's going to be a business that's going to be a significant outsized consumer of CapEx. And candidly, that's different than you would find in most circumstances because it's more typical when you buy a business that an owner might have gone relatively light on CapEx for a period of time leading up to the sale. That's not what we found in that business. So again, some building blocks for you to put some context to the $350 million number, please.

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

I wanted to ask, first off, a clarification question on the Magnesia guidance, the Magnesia Specialties segment guidance because of the comment from Michael on the run rate that implies the full year number could be closer to that $200 million to annualize the $50 million performance in Q2. And then I know we made it this far without talking about the weather, but I thought I might bring it up and ask if you can quantify the hit to Q2? And any guidance on the weather impact potential for Q3? Because so far, I guess, continuing to see pretty high range in [ case ].

Yes. Thank you, Timna. Yes, on the specialties business, of course, we have year-to-date already. You saw the $50 million and thereabouts, you can probably plug in $50 million for Q3 and Q4. So that's not a bad modeling assumption. On the weather, yes, the Southeast, I wouldn't say on a comp basis to prior year, it was notably impacted. In fact, in certain portions of North Carolina. We were in a drought until we got to July. Texas was the most impacted by weather in Q2. And what's good about that is a couple of things. One, all of those projects were pushed out. So they're starting to pick up certainly the mega projects into the second half. And those mega projects have certain escalators in them. So they reprice as you start to ship. So that's actually a nice tailwind moving into the second half. What I would say is July shipment trends, notwithstanding, it's probably rained every single day in North Carolina in the month of July, daily shipment trends in July are very supportive of our [ guide ].

So Timna, coming back to it. Look, I think the bigger issue relative to winter is we really didn't have major hurricane activity last year. And the fact is we try not to talk about weather as much as possible because it's outside, and we just have to manage through it. And what we've seen is we manage through it really quite well. And to your point, was the Southwest pretty wet in Q2? Yes, it was. And is Texas, our single largest revenue profit state, et cetera? Yes, it is. But here's something I'll say, too. You know what's going to be great in helping stabilize some of those wet soils, a whole lot of lime. And so we're actually seeing some nice upsides in what we think will allow us even to manage weather differently going forward, Timna. So I hope that helps you.

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

This is Esther on for Angel. I guess maybe I wanted to hear more about how backlog and quoting activity has been converting to actual awards that you guys have been working on right now, particularly on the private and commercial side. And on top of that, are you seeing any pull forward or any push out behavior from any of the private customers just to assess like the current private demand market right now this year?

Thank you very much for the question, Esther. No, we're not seeing anything pushed off now. We're seeing work just continue to flow through very nicely. I mean if we're looking particularly on the private side and what's happening, of course, there's not that much happening on res right now. So if we think about what the show really looks like it's twofold, right? It's what's going on relative to infrastructure that's very constructive, and we don't see that changing. And it's what's going on relative to heavy nonres. And we continue to see the bidding. We can see the work, we see the backlog there very attractive. I mean, if we're looking at data centers in our world, [ they're ] around 90%. If we're looking at power in our world, it's up 23%. And keep in mind, that's going to continue to chase the data centers for a while. So you would expect the data centers to be up more on a percentage basis and power to be somewhere behind that, but growing.

And we mentioned in the last couple of quarters that we continue to see good activity and increasing activity in warehousing. And we're seeing that year-to-date up 53%. and again, that's not on any base that feels overbuilt at all. And part of what I outlined in my prepared remarks, is the percentage of that type of activity that's within a very close geographic proximity of a Martin Marietta location. So again, Esther, I hope that answered your question specifically.

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

I just wanted to level set the pricing expectation for Q3 compared to that 3.7% mix-adjusted price in Q2. Are we thinking that it's a little bit lower than that? Or just to kind of frame that, if you could. And then really interesting to hear you're able to deliver those flat COGS after adjusting for the fuel and energy, I know, Michael, you said there was some comps that were a factor and you had some network optimization. Can you just give us a sense of what some of the key actions that you took to get to that flat in this broader inflationary environment? And is that sustainable in the second half?

Yes. Let me start with COGS because I think some of these data points by COGS category on the organic business or quite compelling. So if you look at labor per ton, that was down year-over-year. If you look at repairs, contract services, and other plant cost production overhead, et cetera, all down. Really, if you look at line items, the only line items that were up year-over-year on a per ton basis were either energy directly or energy-derived call it, internal rail freight to terminals. So that's the type of cost performance that we saw. Some of it is network optimization certainly flowing through from some of those early markets that we put that into place. Other is just really good cost control and starting to lap some of those comps exactly as we said when we came into the year, we said Q1 was going to be a difficult cost comp and then they got notably easier as we roll through the balance of the year. You started to see that really in Q2.

On the ASP -- organic ASP, yes, look, we feel confident in the remaining quarters of our organic ASP guide starting to be in that mid-single ZIP code. That being said, on a headline basis, given that we have New Frontier rolling through for the full back half, the reported and headline numbers going to be notably lower than where it was for Q2 since we only had 45 days in that. But we'll continue to break out the acquisition mix to ASP, we'll be transparent about that so that you can see the true underlying performance of the business. But as Ward mentioned, just aggregates gross profit itself is going to be much cleaner in the back half, notwithstanding New Frontier impacts because all of the fair market value step-up is largely behind us, both for Quikrete and most of it for New Frontier, we have some residual impacts here in July and maybe a little into August and then the rest of the year is just clean reported aggregates gross profit.

And Steven, the other thing that I think is so important to say again because I can't underscore it enough. There's opportunity in the fact that the ASPs and those acquired businesses are where they are. So if you're looking at reported again, it's an optical headwind if you're looking at what the opportunity set is, it's pretty significant.

Yes. I mean 50% below the company average, to put it in perspective.

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

Ward, I wouldn't want to have a call end without you maybe sharing a little bit more insight on what might happen in Washington. Then it has been pretty quiet. They've been very busy on other things. Though it seems like consensus [ is a CR is upon us ]. Your sense that something gets done before December 31?

Well, you're right. It just -- it would just be wrong not to have this conversation on an earnings call. So I appreciate the question so much. Look, just as -- you always got my back. I'm grateful. So look, I mean, just to level set on where we are. Obviously, the House Committee has come out with Bill 250, approximately $580 billion over 5 years, right? So that's going to be roughly -- let's call it, $80 billion of guaranteed funding.

To your point, the Senate continues to develop its legislation. We haven't seen any text come out of that yet. I think simply given that, I think it's just pragmatic to you that we're going to get a short-term extension. I think what's important is I haven't found a policy maker in either the House or the Senate who's not focused on maintaining the program continuity while preserving whatever time they need to negotiate a more broad multiyear arrangement. Do I think we'll end up with something before year-end? The short answer is yes, I think we probably will. Do I think it's likely to be something that from a structure perspective is more geared toward highways, bridges, roads and streets? Yes, I think it is.

If we look at what Senator Capito has said, who's clearly leading EPW and that she doesn't want to take anything that feels like a step backward on what we've seen from IIJA. I think she's really committed to that. So do I think they'll have something in place by September 30? No, I don't. Do I think there'll be a pretty significant push to get something in place by December 31? The answer is yes. I think they probably will. And do I think that causes any degree of disruptions this year or heading into next year? No. I don't think it does. If we go back over time, and just look at the way this process that's highly imperfect by nature, typically works, this is pretty standard fare. So I think we're going to end up in a perfectly good spot and have that most aggregates-intensive portion of our business that tends to be -- you've heard me describe it before, is the ballast in the boat. It's never something that pops aggregates way up or takes them down it just makes it good and steady for the biggest piece of our business. I think that works very nicely going into 2027. So thank you for the question. I hope that answered it.

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

Wanted to go back to M&A. And we've heard some concerns potential concerns about the Lhoist deal. While you're digesting such a large acquisition, does this mean Martin is perhaps out of the running for any future core aggregates acquisitions in sort of the near to medium term? And I just want to see how does this change -- this acquisition change your future M&A strategy at all?

Ivan, thanks for the question. I really appreciate it. The short answer is it really doesn't. The fact is with the coast-to-coast footprint that we have now, in many respects, the aggregate transactions that we anticipate seeing the most of are nice, steady, consistent bolt-on aggregate transactions. And if you think about the way that we structured LNA relative to cash and relative to equity, we did that very purposely, and we did that in large measures, so we could continue to underscore to the aggregate businesses with whom we're engaged. We're very interested in your business. We're focused on that, and we're in a position that we can move thoughtfully forward with you.

And the other thing that Michael and our team have done very well, is communicate clear with great clarity to the rating agencies as well. So we do not see losing our investment-grade credit rating we will continue to be an aggregates-led business. So keep in mind what we've done, we've taken up the specialty side of the house. The 2 different arms of the business. One was a Magnesia arm, the other was a lime arm, and we've made both of those leaders in the United States. And we will see nice deleveraging over the next 24 months that will not get in the way materially towards us sticking to our knitting that's on the aggregate side. And what we'll see over time is the Specialties business will simply serve to further what we're doing on the aggregate side, I think, in a pretty significant, material and attractive way. So Ivan, I hope that helped.

And our final question comes from the line of Garrett Greenblatt with JPMorgan.

This may be part of the $350 million of additional cash generation you called out earlier, but can you give an update on the pilot program you started in Denver at the end of last year, the progress you've seen year-to-date within that particular market and any additional markets you plan on rolling that out to?

Yes. No. What you're saying is exactly right. So we basically took what happened in Denver. We've used that as the prototype and pilot for what we're doing on the $350 million. Keep in mind, based on what we've seen so far, really, the $200 million that we've already put really to bet on that has been twofold, right? It's been relative to what's happened on inventory, what's happened on CapEx. What it hasn't fully taken into account yet is what this network optimization can look like. And that's going to clearly be a primary focus of our division presence who are being led very capably by Chris Samborski. And keep in mind, Chris was in large measure the architect of what we did in Colorado. So we will take what we did in Colorado, implement that same playbook, do it on a larger basis.

And that was in part what I was referencing before. Look, do I feel like we're probably going to come back to you in the fullness of time and say, look at $350 million that we talked about exiting 2027, we can probably refine that and most likely take that number up. I'd be surprised if we didn't. But again, I hope that gives you a sense of where we are in Colorado, how we've parlayed that into the balance of the organization. And even as we've done that so far, where we've made -- we're taking some ground and where we have more to go.

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

Abby, thank you, and thank you all for joining today's earnings conference call. As we look ahead, we're confident in Martin Marietta's long-term growth prospects through the continued evolution of our portfolio and disciplined allocation of capital, we're expanding our participation in attractive growth markets while further enhancing the resilience of our business.

At the same time, our teams are strengthening Martin Marietta every day, building an increasingly differentiated company with a broader set of opportunities and a stronger foundation for the future, guided by a culture of safety, stewardship and disciplined execution, we believe Martin Marietta is well positioned for its next phase of growth and to continue creating enduring value for our shareholders. We look forward to sharing our third quarter 2026 results in the fall. As always, we're available for any follow-up questions. 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.

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.

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