MLM
#I think you will see good FAST Act activity as soon as we start getting toward the May timeframe.
I don't think you're going to see a lot of dirt being moved in January, February, March, but I think by the time we get April, and surely by the time we get to May, it will be happening.
Which is why, in large part, I think you hear people across the industry speaking to the notion of more of a back-half-loaded year and I think that's one of your big reasons, <UNK>.
We are seeing a lot of good light non-res; that's probably the bigger headlines.
But what I will tell you is we are still seeing probably more of the heavy side than you would otherwise think and it's funny to see how it rolls.
For example, we are seeing a lot of big energy-type work going on in the Southeast right now.
If we're looking at what's going on in Florida and parts of Georgia, it's actually pretty attractive.
There's the Big Bend power plant in Tampa; there's the FPL natural gas pipeline that they refer to as the Florida Southeast Connection.
Savannah River has some things going on as well.
And you've also got Georgia Power Plant at the McManus plant that is going through a demolition and some rebuild after that.
Again, we see fantastic work on the light side and the way that I would encourage you to think about that is really do it kind of corridor-focused spot in your mind.
Think about the I-25 corridor in the Rockies; think about I-35 in Texas.
When you get to the East really start thinking about 85, 95, Interstate 20, Georgia 400; all of those we are seeing very good activity.
And we are seeing good activity, too, in the Midwestern United States right now.
Part of what we've seen there ---+ and this has really been a surprise to me and it's part of what gives us even a more robust outlook, I believe, on what could happen on infrastructure.
Historically, in places like Indiana and Ohio the vast majority of our work there has always been public work and what we saw this past year was a reversal of that.
We really saw considerably more private work in those markets than public and I think we're going to see a big pickup in public there as well.
But my point to you on that is I don't think that private is going away; I think it's going to be healthy.
I think the light side will be healthier than the heavy side, but I equally think the heavy side is going to be better than most people believe.
No, look, it won't float away.
It's going to come in different waves throughout the year.
The other piece that is hard to really gauge, <UNK>, is how some of the repair behind Matthew is going to work, because there were some parts of South Carolina and North Carolina that stayed so inundated for so long.
It still strikes me as amazing to see what we're doing in Colorado behind the flooding there four years ago, because Colorado still has flood repair work this year to the tune of $290 million of related projects in that state that many years out.
So what I would say to you is: one, I don't think any work that didn't happen due to Matthew goes away.
I think there's work caused by Matthew that's going to come and I think there's likely to be work that comes from Matthew that's going to come, candidly, probably for the next five, six, seven, eight, nine, 10 years in the eastern part of North Carolina and parts of South Carolina.
I think the market in the Western US that clearly has the most room for that is in Colorado, as we've discussed for a while, and we have been focused on that.
As you know, barriers to entry there are very high.
And for us to come back and make sure that we can keep those long-term operations in place is a tough thing for anybody to do, so we want to make sure we are recognizing good pricing there.
I do think that spot shortages up and down I-25 may well lead to the opportunity to look at more mid years in that marketplace than we've seen over the last several years.
If you reflect on what has happened to pricing in Dallas over the last several years, keep in mind that was about 65% of our corporate average here 2.5 years ago.
It's still not to our corporate average, so, <UNK>, I think there's still room for pricing to be had there.
Look, I think the pricing story is still very much intact.
I don't see anything materially different on it today than I would've said to you a year ago or two years ago.
Keep in mind, the metric that we have always said ---+ and, frankly, we've been ahead of that metric ---+ is you could look at volume growth on a percentage basis and look at ASP growth on a percentage basis and expect them to be relatively close.
What I would remind you is we had a whopping 1.5% volume increase last year, but you saw what happened to pricing, so clearly pricing got ahead of that.
But, again, if we think about what our story has been on incremental margins, it hasn't changed and we are doing exactly what we said we would do in incremental margins.
And if you think about the story that we have had for years on pricing, I think we are right there and I don't see any material change there.
Well, I'll talk a little bit more about price than I will volume.
I'm always sensitive to talk too much about our cement business with granularity, because we've only got two and when we talk too much about it we tell the whole world, including our competitors, what is going on with some of that.
If we look at pricing where it ended up at the end the year, on an average, it was right at $102.
We are looking at an $8 a ton price increase.
We've got some confidence around that, particularly in North Texas, so we are going to be very focused on that.
Again, if you look at the way cement worked overall in Texas last year, cement shipments were modestly down across the state.
Ours were actually modestly up, so we feel pretty good about where that's going this year as well.
The other thing that I would remind you on cement, because I think volume is going to clearly be an issue that will be even more helpful on price going forward, clearly people believe Texas is going to be better in 2017 than it was in 2016 and we agree.
PCA actually believes Texas is going to be better in 2018 than it's going to be in 2017.
So we think we've got a forecast on cement in Texas.
PCA is saying up three in 2017; PCA is saying up 5 in 2018.
So if you've got those types of numbers up and you still have a marketplace there that I believe has room on price, hopefully directionally that gives you a sense of how we are thinking about it, <UNK>.
You know what.
Here's what I would say to you: we are not going to have a problem delivering base to people.
That's probably the safest way to think of it.
Because if you think back to the downturn, <UNK>, so much of what was happening was you were having maintenance and repair work so you were seeing more clean stone go out than you were seeing base project go out because you weren't dealing with new projects.
We do believe that FAST Act and the state initiatives will drive, not just in 2017, but probably 2017, 2018, 2019, probably into 2020, more new projects than we've seen and they will utilize a disproportionate amount of base.
So I don't think there are issues there.
I do think in some markets ---+ I don't think in the majority of markets, but I think in some markets you might be in a position to see some clean stone shortages this year.
And I mentioned the fact that we might see some of that in Colorado.
I can tell you there's some locations today that we are working to crush and put stone on the ground at times of the year that we typically wouldn't.
And that gives you a good sense of how much we feel like might be coming our way.
So I think at the end of it, <UNK>, there may be some pocket shortages.
I don't necessarily see that as a bad thing in all respects.
I do believe also that if there is significant issues not in given markets, but across the United States, on whether demand can be met, it's going to be more of a contractor issue as opposed to a producer issue.
That goes back to the comment that I made in one of the earlier questions.
I do think one of the things that can really benefit the United States, if we see a new transportation tax initiative that puts more money to this sector, is you will see more people come into it and the ability for the contracting community to execute on jobs will be amped up pretty considerably.
Does that help.
Yes, a couple of things.
One, we have had an acceleration of timing to complete the Highway 34 Rock and Rail project.
As you recall, that's in Weld County; it's north of Denver, because we want to make sure that we are meeting demand there.
So we would like to be able to move that from what would have been 2018 or 2020 back into 2018, so we are accelerating that.
If we are looking at the way that we really spent money this last year, I want to say $41 million went into growth projects, $145 million went into mobile, about $60 million on land, and then plant replacement at about $114 million.
Then you've got just a host of others, but that gives you a sense of really how we are looking at this right now.
So if you look at those two things, you are seeing a disproportionate spend on mobile, which makes good sense.
That is incredibly safe capital because if you got one market that's picking up and one market that's slowing, the beautiful thing about mobile equipment is it's mobile and you move it from the slower market to the more robust market.
The other thing that we saw toward the end of the year is we had some OEMs who were looking to move some inventory.
The simple fact is we were able to be in a place to get an awfully good deal at the right time year.
So what I believe we did relative to CapEx is almost in keeping with the conversation that I was having earlier with respect to M&A and that is we had the balance sheet and we had the moment and we seized the moment.
If you go back and think about the capital priorities that we have, keep in mind organic growth and running the business from that perspective is really a high one and making sure we're taking down our cost of goods sold is an important one for us.
The short answer is I think we will continue to invest capitally on a percentage basis the same way that I've just discussed with you, and I do think this is a year that we might see even some enhanced opportunities.
<UNK>, I don't know if you ever saw the movie Back to School, but Rodney Dangerfield did the Triple Lindy in that, do you remember.
There's no Triple Lindy in this one.
This one is pretty much just straight up.
We've got a lot of conviction around the price of where we've got it right now if there's ---+ I don't think there's any downside in what we put out to you on pricing.
I tell you what, let me ---+ <UNK> is here and she's doing her best Kathleen Turner imitation today, so let me let her walk through that for you.
Thanks, <UNK>.
Oh my gosh.
Okay, go to Wiki when this is over.
Our capital allocation priorities are really the first being acquisitions that can bring value in the right quarters of growth; organic capital investment; maintaining a sustainable meaningful dividend, which is a reminder we increased our dividend in the third quarter of last year; and then it's return cash to shareholders through share repurchases.
And that capital allocation priority hasn't changed.
So if you're wondering if we are ready to fight sick, we are.
Thank you again for joining our fourth-quarter and full-year 2016 earnings call.
In sum, we are pleased that our record-setting performance was achieved due to the important characteristics that differentiate Martin Marietta.
: our safety commitment, our strategically positioned assets in many of the nation's fastest-growing regions; our ability to achieve continued and consistent pricing gains for our valuable products; and our relentless focus on cost containment.
Importantly, our strong performance throughout the slow and steady economic recovery demonstrates the powerful earnings potential of our business.
We are confident that the successful execution of our strategic approach of developing leading market positions along high-growth corridors, possessing attractive near- and long-term economic characteristics, will continue to generate top- and bottom-line growth and enhance shareholder value in 2017 and beyond.
Rest assured we will continue to focus on the operations of the Company, as well as the best practices needed not only to sustain Martin Marietta as the premier aggregates company, but continue our transformation into the one of the world's best companies.
We look forward to discussing our first-quarter results with you in May.
Until then, thank you for your time and continued support of Martin Marietta.
