Participants

Jacklyn Rooker; Director, Investor Relations; Martin Marietta Materials Inc

C. Howard Nye; Chairman of the Board, President, Chief Executive Officer; Martin Marietta Materials Inc

Robert Cardin; Senior Vice President, Chief Accounting Officer, Controller; Martin Marietta Materials Inc

Kathryn Thompson; Analyst; Thompson Research Group

Trey Grooms; Analyst; Stephens Inc.

Jerry Revich; Analyst; Goldman Sachs & Company, Inc.

Phil Ng; Analyst; Jefferies

Tyler Brown; Analyst; Raymond James

Angel Castillo; Analyst; Morgan Stanley

Anthony Pettinari; Analyst; Citi

Timna Tanners; Analyst; Wolfe Research

Steven Fisher; Analyst; UBS

Michael Dudas; Analyst; Vertical Research Partners

David MacGregor; Analyst; Longbow Research

Brent Thielman; Analyst; D.A. Davidson & Co.

Adam Thalhimer; Analyst; Thompson Davis & Co.

Keith Hughes; Analyst; Truist Securities

Garik Shmois; Analyst; Loop Capital

Andrew Maser; Analyst; Stifel

Presentation

Operator

Ladies and gentlemen, welcome to Martin Marietta's first-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 Director of Investor Relations. Jacklyn, you may begin.

Jacklyn Rooker

Good morning, and welcome to Martin Marietta's first-quarter 2025 earnings call. Joining me today are Ward Nye, Chair and Chief Executive Officer; and Bob Cardin, Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer. Today's discussion may include forward-looking statements as defined by United States securities laws in connection with future events, future operating results or financial performance. Like other businesses, Martin Marietta is subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation, except as legally required to publicly update or revise any forward-looking statements whether resulting from new information, future developments, or otherwise.
 Please refer to the legal disclaimers contained in today's earnings release and other public filings, which are available on both our own and the Securities and Exchange Commission's website. We have made available during this webcast and on the Investors section of our website, supplemental information that summarizes our financial results and trends. Non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix to the supplemental information. as well as our filings with the SEC and are also available on our website. Ward Nye will begin today's earnings call with a discussion of our operating performance, 2025 outlook and related market trends.
 Bob Cardin will then review our financial results and capital allocation. After which, Ward will provide closing comments. 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.

Story Continues

C. Howard Nye

Thank you, Jacklyn. Good morning, and thank you all for joining today's teleconference. Before discussing our Q1 results, I'll take a moment to discuss our previously announced Chief Financial Officer transition. On April 10, we announced Jim Nicholas' departure as CFO, to move his family back to their beloved hometown of Chicago. We're grateful to Jim for his nearly 8 years of service to Martin Marietta, over which time he made meaningful contributions to our success.
 We wish him and his family the best in their next chapter. In partnership with a leading executive search firm, we've initiated its process to identify our company's next CFO and are considering both internal and external candidates. While the search is underway, we are pleased Bob Cardin will serve as our interim CFO. Since joining Martin Marietta in 2019, Bob has been an integral member of our executive and finance teams. We're grateful he's willing to assume this role in addition to his responsibilities as Senior Vice President, Controller and Chief Accounting Officer, and are confident that under Bob's leadership will not miss a beat during this transition period.
 Now turning to our financial results. I'm pleased to report this year is off to a strong start, highlighted by record first quarter aggregate revenues, gross profit, gross margin and gross profit per ton despite some challenging winter weather in January and February across key Southeast, Southwest and Midwest markets. This record-setting performance was driven by 7% pricing growth, disciplined cost control and margin accretive acquisitions. Additionally, building upon its full year 2024 performance, Magnesia Specialties established new quarterly record revenues, gross profit and gross margin, with gross margin increasing 806 basis points compared with the prior year quarter. These results demonstrate why we have consistently said this business has earned the right to grow, and we'll continue to evaluate both organic and inorganic opportunities to do so.
 We also established several consolidated first quarter records, including consolidated gross profit of $335 million, a 23% increase. Consolidated gross margin of 25%, an increase of 300 basis points. Consolidated adjusted EBITDA of $351 million, a 21% increase and consolidated adjusted EBITDA margin of 26%, an increase of 274 basis points. These results underscore the resiliency of our differentiated business model and benefits of our 2024 portfolio optimization actions. Given current macro uncertainty, we continue to focus on matters within our control, most notably realizing fair value for our vital materials while appropriately managing our costs with product demand.
 Looking ahead, we're encouraged by the double-digit growth in organic March aggregate shipments, April daily shipment trends and realization of April 1 aggregate price increases in select markets, all of which provide us confidence in reaffirming our full year 2025 adjusted EBITDA guidance of $2.25 billion at the midpoint. Consistent with our past practice, the company will revisit its guidance at midyear. Moving to end market trends. We'll start with observations regarding infrastructure, which continues to benefit from robust federal and state investments, including the five-year Infrastructure and Investments and Jobs Act or IIJA. As a result, the American Road and Transportation Builders Association or ARPA, expects construction activity to grow in 2025 as work advances on projects supported by federal and state funding sources.
 Importantly, with only about 1/3 of the IIJA funds reimbursed to states through the end of February 2025, we expect IIJA spending will peak next year in 2026, followed by an extended tail thereafter as further described on page 8 in today's supplemental information. Our contract award growth rates have moderated as reflected in the value of contract awards for the 12-month period ended February 28, 2025, the underlying baseline remains elevated. Funding certainty reinforce that both federal and state levels, provides the impetus for steady product volume levels and underpins a strong pricing environment for years ahead in this countercyclical public end market. Importantly, too, congressional priorities now appear to be increasingly shifting towards the reauthorization of federal surface transportation programs with key legislative discussions already underway. Early indications suggest the successor bill may emphasize projects with national or regional significance favoring roads, bridges, and ports.
 Shifting to nonresidential construction, artificial intelligence or AI continues to drive strong demand for data centers across the United States as hyperscalers invest significant capital in new sites. Projects underway in our geographic footprint, including Stargate in Texas, Google and South Carolina and Meta's 4 million square foot facility in Louisiana underscore this momentum. While not yet a meaningful contributor to product shipments. We expect data center energy consumption requirements will drive ancillary demand for new aggregates-intensive power generation facilities across many of our key markets. Warehouse construction appears to have reached a cyclical bottom with more green shoots emerging, including large Amazon warehouse projects in Claiborne, Texas; Fort Meyers, Florida; and Wilmington, North Carolina, to name a few.
 With respect to residential activity, affordability challenges continue to act as a natural governor on single-family housing starts. We don't expect this dynamic to resolve in the near term, absent either a modest home price contraction, lower mortgage rates or both. That said, long-term housing market fundamentals remain resilient, underpinned by demographic shifts and structurally underbuilt conditions in many of Martin Marietta's key Sunbelt markets. In summary, we anticipate demand for infrastructure in our public end markets and data centers in the nonresidential sector will remain robust. Our portions of interest rate sensitive private construction demand is expected to remain subdued in the near term.
 I'll now turn the call over to Bob to discuss our first quarter financial results. Bob?

Robert Cardin

Thank you, Ward, and good morning, everyone. The Building Materials business posted revenues of $1.3 billion, an 8% increase. Gross profit increased 20% to $298 million, and gross margin improved by 229 basis points to nearly 24%, both first quarter records. As Ward mentioned, our aggregates business achieved record first quarter revenues, gross profit, gross margin and unit profitability of $1 billion, $297 million, 30% and $7.60 per ton, respectively. Notably, aggregates gross profit per ton improved over 16% and aggregates gross margin expanded 260 basis points as organic price cost improvement and the benefit of margin accretive acquisitions more than offset headwinds from targeted inventory management efforts.
 As mentioned in our previous earnings call, we will continue to prudently manage our inventory levels. That said, we expect these inventory drawdown headwinds on gross margin will conclude by midyear as we began reducing inventory levels in the third quarter of last year. Cement and Concrete revenues decreased 12% to $233 million due to the threefold impact of the February 2024 divestiture of the South Texas cement plant and related concrete operations, winter weather this past February and slower residential demand. Gross profit decreased 23% to $24 million as the year-over-year gross profit improvement in cement was more than offset by a decline in ready-mixed concrete gross profit due to higher raw material costs. asphalt and paving revenues grew 37% to $80 million due to increased asphalt shipments in California.
 This business posted a $23 million gross loss due to customary winter shutdowns in Minnesota, consistent with typical first quarter seasonality trends as well as higher raw material costs in Colorado. Magnesia Specialties achieved all-time quarterly records for revenues, gross profit and gross margin of $87 million, $38 million and 44%, respectively, driven by pricing improvement and continued cost discipline. Turning now to capital deployment. Martin Marietta's capital allocation priorities remain consistent and focused on prioritizing value-enhancing acquisitions, responsible reinvestment in the business and returning capital to shareholders. Relative to the latter, during the quarter, we repurchased nearly 911,000 shares at an average share price of $494 and paid $49 million of dividends.
 Since Martin Marietta's repurchase authorization announcement in February of 2015, we have returned a total of $3.8 billion to shareholders through dividends and share repurchases. Our $1.3 billion of total liquidity, free cash flow and net debt-to-EBITDA ratio of 2.5x as of March 31, and provide ample balance sheet flexibility to capitalize on our active M&A pipeline.
 With that, I'll turn the call back over to Ward.

C. Howard Nye

Thank you, Bob. We're pleased with our strong first quarter financial results and remain optimistic about the opportunities ahead in 2025. The foundational strengths in our resilient aggregates-led business, strong balance sheet disciplined execution of our strategic plan and proven experience successfully navigating market cycles reinforce our confidence in delivering our full-year adjusted EBITDA guidance. Longer term, in 2026 and beyond, we remain confident that Martin Marietta is exceptionally well positioned for sustainable growth and compelling value creation. To conclude these prepared remarks, I'll briefly touch on tariffs.
 Tariffs present both opportunities and challenges, some enhanced profitability, while others may increase certain input costs or impact product demand. However, it's worth noting that our company's supply chain is largely domestic. That said, given the uncertainty surrounding potential exemptions and retaliatory measures, our 2025 guidance neither assumes any material tariff-related tailwinds or headwinds at this time.
 If the operator will provide the required instructions, we'll turn our attention to addressing your questions.

Question and Answer Session

Operator

(Operator Instructions) Kathryn Thompson, Thompson Research Group.

Kathryn Thompson

Thanks for the color that you gave in the prepared commentary and going to the earnings season broadly, TRG has been focused on talking to a wide range of construction value chain companies. And there certainly seem to be some that are doing better versus others and the heavy materials generally seem to be doing better, but it's still early days with the tariff debate that is ongoing. Against that backdrop, what gives you confidence with the volume guidance and maintaining it? And pulling a string a little bit further, we are seeing some green shoots stabilization in certain end markets like distribution that previously had been weak. What are you seeing there?
 And are you seeing any projects canceled or delayed. Or any other upside that you're seeing as you said in the infrastructure market?

C. Howard Nye

Kathryn, thank you for the question several things. One, I do believe heavy-side materials in these types of circumstances, far better than most. And I think that's exactly what we're seeing. I think we've long been a safe haven for investors. I think we'll continue to be.
 If we're looking at the trends that I think are worth noting, infrastructure, as we noted, is going to be good for the rest of this year. Infrastructure ought to be good going into next year as well, we talked about the fact that only 30-some percent of the state reimbursements have even occurred so far with IIJA. So there's lots of money to come in that. And the state DOTs in which we're doing business. If we look at our top 10 states, 8 of the top 10 have budgeted up year-over-year.
 Infrastructure is strong. It's going to remain strong. Equally, and you called it out data centers and what's going to be coming behind data centers will be at the moment. We're seeing that in a host of markets, as you know, they are terribly power generative. And as a consequence, we think we're going to see good energy activity in those markets as well.
 But the other thing that I called out in the prepared remarks and you noted is warehouse and we believe is found the bottom. And the fact is we have the largest Amazon project in North America underway right now just outside the Dallas-Fort Worth Metroplex. We're seeing good activity in the West Coast of Florida. We're seeing good activity in that respect on the coastal areas of North Carolina as well. But separate distinct from that, if we're looking at customer backlogs right now, they're nicely up year-over-year and sequentially.
 So that's looking at work. It's also looking at prospective work. But here's what's important, too, because I think this is something that's really important. We're not seeing project cancellations. I mean so the backlogs are building projects are not being canceled.
 And so those three building blocks, I think, Kathryn, really give us some nice outlook for the year. The other thing that I think is important for us to remember is we really got washed out last year in Q2, particularly in the Southwest and in Dallas-Fort Worth, which is our largest single MSA market. So as we're looking at volume and we'd look at the trends in Q1 and I mentioned in my prepared remarks, the daily trends that we're seeing in April right now. All of that points to me to a very steady and attractive and appealing volume environment for heavy side building materials, particularly in the aggregate space. So Kathryn, thank you.
 I hope that helps.

Operator

Trey Grooms, Stephens.

Trey Grooms

I did want to touch on the cement business. I mean, it's a fairly small part of the overall business now. But if you look at the margins there in the segment, it looks like ready-mix, the headwinds there more than offset the improvement you may have seen in the cement margins. So how are you thinking about margins in that segment as we progress through the year, especially with any additional increases in cement pricing that we could see going forward?
 And then to that point, the Texas market is clearly an importer of cement. How do you think the tariff backdrop could play into that and potentially into the pricing outlook for your cement business?

C. Howard Nye

Simple things. One, if we're looking just at cement, I mean, pricing was up 6% and profits and gross margin actually grew despite the fact that we had lower production volume in cement. So when we're looking at that business, it performed really well despite what was a pretty tough February, simply because of the weather. The other thing that's worth noting is FM7 is obviously finished.
 It's operating well. Obviously, pricing growth in cement is moderating. That's totally as expected from the rates that we've seen in the past couple of years, but we expect good mid-single-digit growth this year. And again, to that end, price was up 6% in Q1. If we're looking at ready mix, I mean, ready-mix several things were driving that portion of the business in Q1.
 Some of it was simply seasonality. And the other is if we're looking at organic shipments, they were down 2% to prior year, and that's really due to continued softness, largely driven by residential demand and degrees of weather headwind as well. The other thing that's happening there is in our downstream businesses, we're taking the increased aggregates and cement cost impacts as well. So keep in mind, that really ends up being a distribution chain for us more than anything else. Now relative to your question on Texas Cement and tariffs, it's interesting because I think that actually could provide some upside for us because that's going to further insulate mid- low-end cement from the waterborne imports.
 And frankly, as I just think about tariffs generally for our business, I know I said in the prepared remarks that we're neither putting in a headwind or a tailwind. If I really think about them it's really in two different strain, what happens from a revenue perspective and what happens from a cost perspective. And if I'm thinking about it from a revenue perspective, frankly, it's pretty helpful to aggregates because you end up passing the cost through talked about cement. The fact is in Magnesia Specialties, depending on what happens with steel production, the more steel production we see, the more dolomitic lime that's going to go out the gates as well. And of course, much of this is driven to drive more reshoring and manufacturing demand across the United States generally, which will help us specifically.
 And again, as I noted, our supply chain is largely domestic. So we really don't see a notable threat there. But I do think relative tariffs and the essence of your question that was around cement, I don't see that there's any downside for us in that respect whatsoever. Trey. So again, I hope that's responsive.

Operator

Jerry Revich, Goldman Sachs.

Jerry Revich

Ward, in your prepared remarks, you spoke about Magnesia Specialty, as earning the right to grow organically and via M&A. Correct me if I'm wrong, but I believe this is the first time I recall you saying that. Can you just expand on what value-added M&A would look like in this line of business where you folks had value in ag is very clear? What's that recipe for value add if we see you move down that main trail for Magnesia Specialty?

C. Howard Nye

Jerry, I appreciate the question. So first, let's begin with the baseline. If we look at that business, number one, it's always been a very good, steady performer for us. If we look at the recent years, the working work that they've done on pricing actions, operational reliability and efficiency efforts are really coming together, and you just saw a very attractive story for the quarter. And we actually think that business has more upside than downside right now.
 The reason that we think that business has the right -- earned the right to grow is it's got many of the same attributes that aggregates does. It's got very high barriers to entry. It's got pricing power through cycles. This is a business that has been through what we feel like is probably the single most challenging chemical marketplace that we've seen in my career, and it's a business that continues to put in record quarters. If you think back to the financial crisis and by the way, I don't think we're anywhere near that.
 But if you think about the financial crisis, Martin Marietta always remain profitable. We never cut or suspended the dividend. And one of the big reasons why was we had that differentiated portion of our business that was Magnesia Specialties. So to the extent that we can take that portion of our business and grow responsibly. It's something that we will certainly look at.
 Obviously, we're going to continue to be an aggregates-led business. But when we look at our business and we recognize that is truly a differentiator for us. It's something that, number one, I think they've earned the right to be called out on because they're really good at it. And number two, to the extent that we can continue to invest organically and invest inorganically, we should, and I believe our shareholders would richly benefit from that.

Operator

Phil Ng, Jefferies.

Phil Ng

Congrats on the strong quarter. Ward, I mean, you started uber bullish on infrastructure, which is great. With the new administration, certainly, a lot of heads sick in terms of projects being paused and what's formula base and whatnot. So one, help educate us what you're seeing out there? And then two, you kind of hinted that as we kind of look out to 2026, maybe we get a new Service Transportation Act.
 There was some news the other day with transportation and infrastructure Chairman, Sam Gray, potentially pushing for a new source of funding for the Highway Trust Fund, which is the first on EV and hybrids Wanted to get your thoughts on that opportunity and what that could mean for you guys?

C. Howard Nye

Phil, thank you for the question. I would say several things. One, in true heavy-side construction that we're looking at, the traditional highway funding, we haven't seen any projects pulled. We've seen some of the grant projects pulled.
 And again, those -- that's an entirely different animal and a very small portion of overall infrastructure. So that has been nothing that has caused us any concern. Again, if we're looking at really what we're tracking right now several things, you've seen the data that I've seen as well and that is if we're looking at highway contract awards and we're looking at LTM from March of '23 to March of '25, they're up 19%. So number one. That's a great number.
 Number two, if we're looking at the cumulative state reimbursements, I mentioned this before, $118 billion has gone out of the $350 billion that has really been set aside for highways and bridge funds. So as a practical matter, only 34% of the total funds have found their way out into commerce at this point in time. But if we also go back in time and say, how does this usually play out? That ticks and ties back into my commentary both on '25 and '26. So we're going to see a nice continued build over the next couple of years. And again, if you look at the slide, I guess the slide -- forget which slide it is, particularly in the supplemental material, but it takes you through the ARPA snapshot of what these '25, '26, and '27 will look like.
 And then it shows the out years, but importantly, the out years are not showing what we anticipate will be on a track to successor bill. Now to your point, the successor bill is already gaining some degree of dialogue in both the House Transportation and Infrastructure Committee as well as CPW. And I'm saying a couple of things. One, they are talking increasingly about projects of regional and national scope. So look, I think there's going to be less about bicycle trails and a lot more about highways, bridges, roads and streets.
 I mean, I think that's code for what that means. But importantly, too, and this goes to the gravamen of your question, Sam Graves, as you mentioned, Republican from Missouri who heads House T&I opened a dialogue here this week that needed to be opened, and that is -- he's looking at what are we going to do with EVs? What are we going to do with hybrid vehicles? And how are they going to be in a position that they're helping pay for infrastructure when they're wearing out infrastructure just as much as the gasoline car is, and in some respects, more because these vehicles tend to be really heavy. So actually, what we're seeing as the revenue package put forward would begin from my perspective, a much overdue conversation and bring some fresh ideas to a problem that's long been avoided.
 And the issue is simply this. the gas tax and the diesel tax were never indexed for inflation. And if we go back and look at what's happened more to the point, not happened there since Bill Clinton's first term in office, it has remained utterly static. So as a consequence, we've been having to go to the general fund for years. And if you look over the last 17 years, it's been to the tune of about $275 billion.
 Now do I think we're going to have to look to the general fund going forward? Yes, probably so. But do we need to have multiple drivers, no pun intended, that are putting funds into that highway trust fund. The answer is that we do. And that's what the states have been doing very effectively.
 I think the fact that now we're having that conversation at a national level is important, and it's a really good start.

Operator

Tyler Brown, Raymond James.

Tyler Brown

Hey, Bob. Actually, cost performance was very solid in aggregates. I know that there is some discussion with the peer that maybe some maintenance or stripping costs got pushed out on the weather. One, I guess I'm just curious if you saw the same thing.
 And two, can you just help us shape how we should think about cost inflation for the rest of the year? I know you lapped the inventory pressures midyear. And now you're kind of looking at double-digit gross profit per ton each quarter. I appreciate it.

Robert Cardin

Yes. Thanks for the question. So in the first quarter, I would say that we saw just excellent cost management by our operations teams in light of the inventory reduction. The team was very proactive. So if you look at energy and contract services on a per unit basis, they were down low double digits.
 Supplies and repairs kind of down in the mid-single-digit range, again, on a per unit basis. So overall, I think just effective management. We do have a diesel fuel tailwind that's helping us as well. The other thing I'll mention is if you back out the impact of the $0.72 per ton impact from the inventory drawdown we were actually down 2.3% on a unit cost basis. So as we look forward, we expect in the future quarters that we will see continued healthy expansion in gross margin.

Operator

Angel Castillo, Morgan Stanley.

Angel Castillo

And again, congrats on a strong quarter here. Just maybe I wanted to unpack a little bit more along the lines of that kind of 2Q and 3Q, but maybe more from the price perspective. So you had some of your pricing maybe get pushed out to April. So just curious how should we think about the progression of price growth as we get into 2Q? And as part of that, could you talk about midyears, what you're seeing in terms of any pushback from perhaps those customers shifted out to April or anybody else perhaps pushing back on mid-years?

C. Howard Nye

Thank you for the question. So several things. One, if we look at the pricing as reported, up 6.8%. So that was a nice steady growth. Keep in mind, we do have some April increases that are going in as well.
 So that's primarily to certain select concrete customers. I think this is important, Angel, if we're looking at our organic business, the pricing was up about 7.4%. So actually, you saw a pretty healthy delta between as reported cumulatively in the organic business. That tells me several things. One, we continue to have some room ahead of us relative to the assets that we have bought get them up to Martin Marietta pricing.
 I think that also tells us that they're going to be mid-years in a number of markets. And keep in mind, the guide that we have given you does not assume any midyear price increases, and we're going to see degrees of midyear price increases. I think the other thing to keep in mind just from an optical perspective, during the first quarter, in particular, the central division operations because they tend to be more northern climate are not operating and not selling as much. Those will now start coming on and into play more meaningfully, obviously, in Q2 and Q3. Their average selling prices tend to be modestly lower.
 Now all that said, really, as I'm looking at the ranges that we've given for pricing. At this point, I'm thinking we're probably going to be on the higher end of ASPs relative to the guide that we've given. And obviously, we'll come back and review the overall guide at half year as our custom. But I think if you think about pricing in Q1, strong, if you think about pricing relative to the organic business, particularly strong. If you think about the price increases that we believe can be coming relative to the acquisitions, they look actually quite good.
 And I think I've given you a sense of how I think that's going to play out for the full year, Angel. So I hope that push responsive to your question.

Operator

Anthony Pettinari, Citi.

Anthony Pettinari

Ward, you referenced, I think, historically bad weather that you saw in North Texas in 2Q last year. Is there way to think about -- or can you remind us that was or if there's sort of an add about? I'm just trying to kind of circle back on this. You saw such strong gross profit per ton growth in 1Q. Just wondering what that could look like in given some of the puts and takes?

C. Howard Nye

Well, look, I think it will look attractive in Q2. Again, I'd have to go back and pull out exactly what the hit was last year in Q2 because of the weather in North Texas, but it was notable Anthony, and I know I spoke to it last year very specifically, we can go back and maybe take off-line what that was. But again, I think we should see a nice sequential build this year. And keep in mind, the other thing that will happen by the time we're done with Q2 is the inventory headwinds that we're working our way through, will have been totally dealt with, as Bob mentioned in his comments a few minutes ago, if we're simply looking at this quarter, the inventory headwind was $28 million. And we had indicated coming into the year that we thought it would be somewhere between $20 million and $30 million a quarter both quarter 1 and quarter 2.
 So do I think quarter 2 ought to be more attractive simply because we don't anticipate something that's Epic in North Texas in the quarter. Yes, I think we probably do. So I think you've got a nice build also into quarter 3 because suddenly, you don't have that real headwind from what we're going through right now relative to the inventories. So Anthony, I hope that helps.

Operator

Timna Tanners, Wolfe Research.

Timna Tanners

Could you help us notice the really strong share buyback in the quarter, bigger than all of last year. It might just be a question of just authorizing, but I didn't see a reauthorization to keep that level going forward. And just wanted any thoughts on the amount? Was it opportunistic because of where the share price is? Is it a commentary on a lull in M&A?
 Any more color would be great.

C. Howard Nye

Timna, thank you for the question. It was not a commentary on M&A because I continue to think that's going to be attractive for us this year. It was really more of a commentary that look, we like where our share price was and we thought that was a great place to go in and buy. So we bought 911,000 shares and that was $450 million because we thought it was opportunistic and a good buy. So -- and if you recall, actually, when we bought TXI in 2014, 2015, had an authorization that point to buy back 20 million shares.
 And if we look at where we are in that we bought back about half of that over that period of time. So we still have plenty of runway ahead of us. Importantly, if you look at where we finished the quarter relative to a debt-to-EBITDA ratio, we're still very much in the range that we like to be. And obviously, we're about to hit the time of the year where we really start making considerable money as well. So no, it's not a commentary on a lack of M&A pipeline because, in fact, that actually looks quite good.
 It is the commentary and the fact that we thought that was an attractive entry place for the stock. And we proverbially put our money where our mouth is. So thank you for the question, though, Timna.

Operator

Steven Fisher, UBS.

Steven Fisher

So back in February, you had characterized the guidance as being sort of conservative guidance. And I'm curious how you feel about that. Today, was there any conservatism you think you needed to draw on in Q1 or the first four months of the year or that you see in Q2? And I know you just said a couple of questions ago that the guidance does include -- does not include the midyear. So I'm just curious how you kind of characterize the outlook today, also in light of things have kind of changed a little bit on the macro backdrop.

C. Howard Nye

They have changed a little bit in the macro backdrop. But what I'll say is this, you're right. I forget whether we use the word measured or conservative coming out of -- coming into the year. But I think it's one or the other, and they're probably synonymous. Where I'm sitting today, I actually feel better today than I felt in February.
 So to the extent that we felt like it was a measured guide at the time, I probably feel that same way maybe little bit more strongly today than I did then. Obviously, we -- as we indicated in the prepared remarks, we come back and we'll revisit our guide at half year, which we typically do. I've already indicated, I think our pricing is going to be at the higher end of that. So obviously, more to come. But there's been nothing that I'm seeing in the way this year is playing out in the way that our teams are responding, whether it's relative to cost, whether it's relative to pricing, whether it's relative to what we're looking at from M&A that has been a disappointment to me.
 I think our teams are performing well. And again, I think the business is revealing the type of durability that I would expect it to, particularly given the significant portfolio shaping that we brought to the business last year, seeing these nice margin enhancements are not a surprise to us. It is a nice affirmation on where the business is, and I think it gives you a good sense of where the business is going.

Operator

Michael Dudas, Vertical Research.

C. Howard Nye

Mike, we're having a hard time hearing if you can speak up just a little bit, please.

Michael Dudas

Can you hear me now?

C. Howard Nye

Much better. Thank you so much.

Michael Dudas

Great. Terrific. Following up on Timna's question, turning to acquisitions. Has the macro environment looking at the sentiment amongst your acquisition pipeline changed materially have things been maybe pushed off a little bit because of the uncertainty. And we will take your temperature on where you feel like you've transformed portfolio quite a bit in the last 18 months.
 Are we at similar types of levels and given where the cash flows are going to be in your balance sheet and the opportunities ahead of you given there's going to be some pretty reasonably sized assets may be coming on the market.

C. Howard Nye

Great questions, and I would say several things. One, I don't see material changes in the sentiment on businesses that are looking to do M&A today. I think it feels broadly the same. As we've discussed before, typically, people aren't selling businesses because they're trying to time it in our space. They're typically doing it relative to family succession and other issues that drive M&A.
 So we haven't seen that as a significant issue for us. As I've also indicated before, I think we're in a place that give and take normal year is going to be around $1 billion worth of M&A. But don't expect that to be linear. There are going to be years that it's likely going to be notably more than that. And again, I think in some respects, M&A can be a little bit like the buybacks that we did this year.
 It can have a head of opportunism that comes with it because if some businesses come along that are particularly compelling businesses, you'll see us lean in and be smart and sensible about a business. because you're frankly not going to see it come through again. So am I seeing anything that I would view as a material change? No. Do I think it will continue to be an attractive year for us on aggregates led M&A.
 Yes. And do I think that's likely to be the case, not for a matter of quarters, but really for a matter of years and likely through this next sore 2030 period, I think the answer is undeniably, yes, because when I'm looking at simply closely held aggregate businesses in markets in which we want to grow -- we've identified businesses that produce and sell, let's call it, 250 million tons of stone per annum right now, which tells us there's effectively a business out there that's modestly larger than Martin Marietta is today that would be in something that we would think of as our sweet spot. So I think there's a lot that's been done on shaping a lot that's going to be done over the next several years and decades in growing this business and continuing to shape it and doing it in ways that hopefully, you will continue to see more profitability, but you'll see continued margin expansion and the quality of the business continue to grow.

Operator

David McGregor, Longbow Research.

David MacGregor

Congrats on the good quarter award. Just wanted to -- I wanted to just take your temperature, I guess, this is an M&A question of sorts, but it would relate to just any changes you're seeing in the permitting prospects out there in the permitting process that would improve your ability to increase reserves oriented acquisitions?

C. Howard Nye

It's interesting, David. I don't see that changing notably, and I would say several reasons why. Obviously, there is a certain degree of aggressiveness relative to the regulatory state that's underway with the current administration. And frankly, I welcome that. The fact is the regulatory state that drives what's happening relative to permitting greenfields, adding reserves, et cetera, tends not to be a national issue.
 It tends to be a local issue. So is it a national issue relative to an air quality permit sort of kind of -- is it a national issue relative to water quality and discharge, yes, it's sort of kind of us. But the bigger issues aren't those. The bigger issues are zoning and the bigger issues are land use relative to either conditional use permitting or special use permitting. And those tend to be decidedly local.
 And when I say local, I don't mean at the state level, I mean at the city level or the county level. And the fact that those barriers to entry are notable. I think it's important. It also plays to the strength that we have relative to land use. Part of what you'll see us do, and you can see it in some of the CapEx numbers is we will buy properties adjacent to our existing operations.
 and recognize that we can go through a special use and a zoning process on those parcels that at times can take years. And that's okay because we typically have long-lived reserves. But when we get those adjacent reserves owned and permitted, two things happen. One, the setbacks that we have on our existing quarries basically go away. And then we also have opened up to us the new reserves that we've just bought.
 So the fact is we end up winning twice under those circumstances. So do I think it's changing relative to greenfielding No, I don't. I think it's going to continue to be a challenge in many instances to I think it's changing relative to next door. No, I don't. And do I think there's opportunity at the national level to change that.
 Actually, I really don't because this ends up being a highly local issue, and it's an area in which Martin Marietta has long had, I think, a very capable for source, and we've done that well. So I hope that helps, David.

Operator

Brent Thielman, D.A. Davidson.

Brent Thielman

Appreciate all the color around the federal funding visibility here. That's really great. And I think the other side of the question that we seem to get is on the state side. I mean, as you sort of scrutinize some of your largest states on the public infrastructure side and the mechanisms for funding infrastructure projects, just a bit curious what's your assessment, your experience as to whether there's risk of reallocation within those state budgets away from transportation funding, especially if the economy, yeah, begins to see a shortfall in tax revenue.

C. Howard Nye

Brent, thank you so much for the question. So I would say several things. One, if we're looking at Texas, Florida, North Carolina, Indiana, Georgia, Colorado, Arizona, Iowa, as I indicated before in my comments, our top 10 states, 8 of them are seeing budgets year over year that are up. And that's particularly true if we're looking at their baseline budgets.
 I think more importantly, if we go and look at some of the information on those individual states themselves and really think about that. I mean, if we're looking at the approved increasing for Texas long-term 10-year program. It's already up 4% to $104 billion. And if we look at how that translates, if we're looking at our March 25 aggregates backlog for customers in that state, they're up about 18%. So again, the state budgets matter.
 If we're looking in Colorado, they expect to have about $3.7 billion available to spend in FY25. That's a nice increase of what we've seen in recent years. equally in North Carolina, their budget has increased year-over-year. But importantly, this goes back to the question I had before relative to federal budgets. In North Carolina, did something that was important and they started taking sales tax revenue and shifting that to the highway fund.
 And beginning in 2025, goes up to 6% here in the state. And if we're even stepping back and looking at what has to be done, you'll recall, obviously, Hurricane Helene came through and created a lot of mayhem in the western part of the state. We're seeing nearly $5 billion worth of work that has to be done there, $3 billion of it will come from the federal government, $2 billion from the state and North Carolina has a $6 billion Rainy Day Fund. Part of the reason I call all of this out, when we began our SOAR process in 2009 and 2010, we were looking to do business in states that had a very, very strong fiscal condition because we believe that was going to be important as a continue to grow, and we wanted to be in states that had the capacity to continue to grow what they're seeing from a DOT perspective. Again, that's what we're seeing in Georgia as well.
 They've got a 7% increase this year from the original 2024 FY budget -- FY24 budget. So I think if we look at the federal side that you mentioned and then go to the state side that you specifically asked about, 8 of the top 10 are up. And then if you take even within a subset of those 10 and start looking at precisely what we're seeing, it's a very healthy storage.

Operator

Adam Thalhimer, Thompson Davis.

Adam Thalhimer

Nice quarter. When you talk about data centers and the associated power demand word, are those projects. Are you thinking about those as a driver in 2025? Or is that more 2026-plus.

C. Howard Nye

I think that's more 2026-plus. So I think in the near term, you're going to see more activity on data centers. And I think that's going to be pretty significant. I think in the near term, see growing activity on warehousing. I think in the medium to longer term, you're going to see more energy activity.
 I mean for example, we've got local power companies talking about small nuclear facilities for the first time in years. And the fact is we're going to have to see a number of those types of things. It's been interesting to watch what's happened in Europe this week relative to Spain, Portugal and other countries. And I do think the United States is going to have to be really thoughtful about the way that we're going to continue to grow in like nonres. And we're going to continue to see population shifts and dynamics to the Southeast and Southwest.
 And these states, in particular, going to have to be ready for that type of power transition.

Operator

Keith Hughes, Truist Securities.

Keith Hughes

Ward, I want to go back to your comment on potential new legislation. Is there any kind of time line emerging when that would only be introduced in Congress and potentially push down the law.

C. Howard Nye

There hasn't been anything formal, Keith, that's come out, but I'll tell you anecdotally, what I'm hearing. And that is I think there's going to be a push to get that done before the midterms next year. I think there are practical reasons that people are going to want to see that done. I think the other thing that it does is it makes the takeoff for the next bill much smoother. I would not be surprised to see a headline bill that's less than $1.2 trillion, but I'd be really surprised to see within that bill the same geography that we saw this last time.
 $1.2 trillion bill that had $350 billion dedicated to Highways Bridges Roads and Streets. That's not the way I think this is going to come out. So I think we're going to see several things. One, I think what you've seen in House T&I this week relative to funding is a good part of an overall conversation. We'll obviously see how T&I take the lead on putting this out.
 That's the way that historically has worked. So they've taken the lead EPW has followed. But I still think it's going to be something that we will see done before midterms, Keith.

Keith Hughes

Okay. Is the talk in the -- I'm not sure a lot of this in trade routes something greater for roads, bridges, streets, something greater than the $348 billion that we saw in IIJA.

C. Howard Nye

I think that's certainly where people are trending, yes, Keith.

Operator

Garik Shmois, Loop Capital.

Garik Shmois

Wanted to just follow up on comment you made, Ward, that you feel better now on the outlook than you did after 4Q. I wanted to kind of specifically drill down on the volume piece, given the concern on private construction affordability and consumer confidence issues, is it fair to assume the outlook had a lot of discussion on infrastructure, but is it is fair to assume that your outlook for infrastructure this year, maybe directionally stronger than it was coming out of the fourth quarter.

C. Howard Nye

Yes, Garik. I think that's entirely fair. I mean if we think about it, Q1, if I look at the breakdown that we had, 33% was infrastructure, 36% was nonres. 24% was res. Look, I think going forward, we're clearly going to see that 33% get bigger.
 And I think we should given the quantum of projects that are out there, given their relative aggregates intensity, that number should move. That to me is a seasonally driven number. At the same time, I think people would be surprised the 36% was nonres. So the fact is we go to the point that the heavy side of that is actually doing pretty well. The light side of it, frankly, in some areas are doing better than people would have thought.
 And at this point, Look, we're not putting a lot of stock in what happens on residential all by itself. The thing that I think is worth noting, though, is residential, at least in our markets, is so far from being overbuilt, it's really ridiculous. If we're looking at what builders are focused on right now, they are focused on -- and this goes back to part of the question that David McGregor asked, builders are finding that it's taking more time to get zoning and special use permitting for subdivisions. So their notion of buying land and then getting entitlements in place is important. We think they're focused on that.
 I continue to believe, look, don't put a lot of money on housing on the second half or this year. But we will see that come. It's not going to take a lot of move but relative to interest rates or home prices to have it move pretty notably in our markets and the fact is we're well positioned to meet that whenever it does show up.

Operator

And my apologies. Now our final question is from Brian Brophy with Stifel.

Andrew Maser

This is Andrew Maser on for Brian. I just had a quick one on pricing opportunities for prior M&A. I believe some of the M&A you completed in the past year generally had ASPs below corporate averages. I was wondering where you stand on closing that gap? And then separately, how are you thinking about the potential for midyear price increases in markets where last year's M&A won't be a tailwind.

C. Howard Nye

I would say several things. As I indicated, organic pricing was up 7.4%, reported was up 6.8%. That gives you a pretty good snapshot right there on what's the difference between the M&A side that we've had and the organic that we've had.
 There are some places, for example, California, where we have now closed that gap. But the fact is, from my perspective, California shouldn't be at a corporate average. Barriers to entry in California are higher. The difficulty in doing business in California is higher. So the fact that we've closed that gap is nice, but it doesn't indicate to me that we finished the journey that we started on there.
 I do think we will see a number of midyear price increases, as I indicated before. I think the quantum we'll probably look a bit like it did last year. More to come on that. We'll talk more about that when we're together at half year. But directionally, I hope that gives you a sense of where we are and where I think we're going.

Operator

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

C. Howard Nye

Abby, thank you, and thank you all for joining today's earnings call. While the unpredictability of policy shifts heightens broader economic uncertainty, we remain confident about Martin Marietta's ability to appropriately navigate these conditions. Since 2010, we've transformed the durability of our portfolio and positioned our business in attractive markets through disciplined execution of our store plans. We built a strong foundation to continue extending Martin Marietta's long track record of delivering sustainable growth and superior value creation for investors for years to come. We look forward to sharing our second quarter 2025 results in the summer.
 As always, we're available for any follow-up questions. Again, thank you for your time and continued support of Martin Marietta.

Operator

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

View Comments