Martin Marietta Materials CEO is bullish as he expects more federal spending on roads
Ward Nye, CEO of Martin Marietta Materials, was optimistic about his company’s prospects on Monday as the Biden government works towards an infrastructure spending package aimed at improving the country’s roads, bridges and other projects.
Parliament passed a $ 1.9 trillion Covid-19 stimulus measure over the weekend that is expected to be passed by the Democratically controlled Senate and later signed by President Joe Biden. Once this bill is signed, Biden is expected to come up with a campaign proposal that will add $ 1.3 trillion to the country’s infrastructure over the next decade.
Nye applauded the White House efforts made during a booming housing market.
“I think we are at a time when both private and public construction can move up and to the right,” he told CNBC’s Jim Cramer in a Mad Money interview. “At the same time, we haven’t seen this for a long time, and remember that we haven’t seen a significant increase in federal infrastructure investments in almost 15 years.”
Biden expressed a desire to spend more money on highways, high-speed broadband, and public schools on the campaign. Rep. Peter DeFazio, an Oregon Democrat who heads the House’s Transportation and Infrastructure Committee, recently told The Associated Press that he expected to enforce a package beyond transportation. That move would include funding for water systems and the electricity grid following a snowstorm that resulted in massive blackouts and deaths in Texas last month.
The White House could come up with a plan as early as this month. Martin Marietta’s shares, which supplies building materials like cement and asphalt, are up 26% since the November elections.
The company is optimistic about its end markets and is looking to recover demand for non-residential real estate. It is expected that the demand for clean energy warehouses and projects will be the main drivers.
Martin Marietta has focused on “mega-regions” for the past ten years. These are parts of the country like the Texas Triangle and Denver, Colorado. Megaregions are projected to account for 70% of population growth over the next three decades, Nye said.
“Our goal was to strategically position our business in these mega-regions and not just in these, but with leading positions in these mega-regions,” he explained. “We still believe there is white space in some of these mega-regions for us to grow our business and consolidate the industry, and our balance sheet is able to do that.”
Martin Marietta saw eight years of annual sales growth in 2020. However, sales of $ 4.73 billion were just 0.2% below pre-pandemic levels.
Despite a pandemic economy, home builders experienced a construction boom fueled by a low interest rate environment and rising home sales. That momentum carried over to 2021 when new home sales rose 4.3% in January. In the same month, roughly $ 1.52 billion was spent on construction projects, up 5.8% year over year, according to data from the commercial division.
“What you are seeing is the record performance for a company that really did this without much of a lever on the volume of shipments that we usually had in previous cycles,” he said. “We think that’s ahead of us.”
In 2021, the company expects product and service sales between $ 4.51 billion and $ 4.7 billion. The upper end of this forecast corresponds to an increase of 6% over the previous year.
Martin Marietta’s shares rose 3% to $ 347.56 on Monday, just before a record close. The company was valued at $ 21.65 billion.