Hello, and welcome to Martin Marietta's Q3 2022 earnings conference call. All participants are now in a listen-only mode. A question-and-answer session will follow the company's prepared remarks. 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. Jennifer Park, Martin Marietta's Vice President of Investor Relations. Jennifer, you may begin. Good morning. It's my pleasure to welcome you to Martin Marietta's Q3 2022 earnings call. Joining me today are Ward Nye, Chairman and Chief Executive Officer, and Jim Nickolas, Senior Vice President and Chief Financial 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've made available during this webcast and on the investor section of our website Q3 2022 supplemental information that summarizes our financial results and trends. As a reminder, all financial and operating results discussed today are for continuing operations. In addition, non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in the appendix via supplemental information, as well as our filings with the SEC and are also available on our website. Ward and I will begin today's earnings call with a discussion of our Q3 operating performance and portfolio optimization efforts. Jim Nickolas will then review our financial results and capital allocation. After which, Ward will conclude with end market trends and our preliminary outlook for 2023. 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, Jenny. Good morning, everyone, and thank you for joining today's teleconference. I'm pleased to report that Martin Marietta delivered record results in the Q3. This is despite current macroeconomic challenges that include persistent inflationary pressure across multiple cost categories, tighter monetary policies and heightened geopolitical tensions. Our quarterly performance is a testament to our team's commitment to commercial excellence and execution of our strategic business plan. The results also reflect our successful implementation of double-digit pricing growth across all building materials product lines. That, combined with acquisition contributions, drove record quarterly consolidated total revenues, gross profit, adjusted EBITDA and adjusted earnings per diluted share. Importantly, too, our year-to-date safety and health performance, inclusive of acquired operations, remains at world-class levels as measured by both total injury and lost time incident rates. While we acknowledge and celebrate our continuous safety and health improvement, our work in this vital dimension is never done. In addition, on August 9, we entered into a definitive agreement to sell our Tehachapi, California, cement plant and related distribution terminals to CalPortland Company for $350 million, subject to regulatory approval and customary closing conditions. This transaction aligns with our commitment to an aggregate-led business, complemented by strategic cement assets in certain markets, improves the durability of our business through cycles, and provides balance sheet flexibility to continue driving shareholder value. Our capital allocation priorities remain focused on prudent investment and attractive acquisitions, organic growth initiatives, and returning capital to shareholders while reducing net leverage to within the company's targeted range. As highlighted in today's release, we achieved a number of significant financial and operating records in the Q3, including consolidated total revenues increased 16% to $1.81 billion. Consolidated adjusted gross profit increased 8% to $488 million. Adjusted EBITDA increased 9% to $533 million. Adjusted earnings per diluted share from continuing operations increased 10% to $4.69. These results on flat organic aggregate shipments underscore the success of our value over volume commercial strategy, through which multiple pricing actions were successfully implemented this year. However, inflationary trends also impacted our operating costs and affected our adjusted consolidated gross margin, which declined 200 basis points to 26.9% for the quarter. Notably, this is both a moderated pace and sequentially higher as compared with the Q2 of 2022. As a result of the current demand environment and persistently high inflation, we've advised customers of a Q4 price increase in a number of our markets as well as broad-based January 1st, 2023 increases. We believe these commercial initiatives, together with other inflation containment actions, position Martin Marietta well to expand margins in the Q4 and deliver another year of strong profitability in 2023. For our company, it passes prologue, and we believe that it is. Inflation supports a constructive pricing environment for upstream materials, the benefits of which endure long after inflationary pressures abate. Let's now turn to our Q3 operating performance, starting with aggregates. We continued to experience healthy aggregates demand across the company with total aggregate shipments inclusive of acquisitions, increasing 5.6% to a quarterly record of 60.2 million tons. Organic aggregate shipments were largely flat, as otherwise strong demand was offset by supply chain disruptions, inclement weather in certain key markets, and most notably, logistics constraints and cement shortages, the latter curbing the immediate need for aggregates in the manufacture of ready-mix concrete. Aggregates pricing fundamentals remained very attractive and organic aggregates pricing increased 11.9% or 11.3% on a mix-adjusted basis. The cumulative effect of multiple pricing actions continued to build in the Q3. These disciplined actions, combined with overall customer confidence and demand visibility, bode well for meaningful price acceleration in the Q4 and in 2023. The Texas Cement market continues to experience robust demand and tight supply, resulting in effectively sold-out conditions. Against that backdrop, combined with our cement team's focused execution on commercial and operational excellence, we delivered record Q3 shipments of 1.1 million tons and pricing growth of 21.4% as our second $12 per ton increase this year went into effect on July 1st. We expect favorable Texas Cement commercial dynamics will continue for the foreseeable future, supportive of our recently announced $20 per ton price increase effective January 1st, 2023. Shifting to our targeted downstream businesses, organic ready-mix concrete shipments decreased 16.8%, largely due to a historically wet August in North Texas, as well as the completion of certain large projects in the quarter. Organic pricing increased 20.3%, reflecting multiple pricing actions, including fuel surcharges necessary to pass through raw material and other inflationary cost pressures. Organic asphalt shipments increased 4.3%, driven primarily by strong demand in Colorado, while organic pricing improved 22% to help offset the increase in raw materials costs, principally liquid asphalt or bitumen. Notably, for comparative purposes, prior year asphalt volumes were constrained by a bitumen shortage in Colorado. Including contributions from our acquired operations in California and Arizona, asphalt shipments and pricing increased 31.3% and 26.1% respectively. Before discussing our preliminary 2023 outlook, I'll turn the call over to Jim to conclude our Q3 discussion with a review of our financial results. Jim? Thank you, Ward, and good morning to everyone. The building materials business posted an all-time record this quarter with products and services revenues of $1.61 billion, a 15.9% increase over last year, and an adjusted product gross profit record of $467 million, an increase of 10.9%. Adjusted aggregates product gross profit improved 10.5% relative to the prior year's quarter to a record $330 million. Adjusted aggregates product gross margin declined 240 basis points to 32.5% as robust pricing growth had not yet offset the continued inflationary impacts of higher energy, internal freight, repairs, and maintenance costs. Our Texas Cement business delivered all-time quarterly records for top and bottom-line results. Revenues increased 23.4% to $163 million, while gross profit increased 35.7% to $68 million. Importantly, execution of a disciplined commercial strategy drove a gross margin expansion of 380 basis points to 41.5%. That was despite notable energy cost headwinds primarily related to natural gas and electricity. Domestic production capacity constraints and strong demand contributes to extremely tight supply in the North and Central Texas markets. As a reminder, we are taking two notable near-term steps to increase cement production capacity in Texas. First, we are in the midst of conversions at our Midlothian and Hunter plants to manufacture a less carbon-intensive Portland limestone cement, also known as Type 1L. This eco-friendly product has been approved by the Texas Department of Transportation, and we believe our customers will view it as providing significant stakeholder benefits. Once we have completed our transition to Type 1L, our cement production capacity will increase by approximately 10%. Second, we are installing a new finish mill at our Midlothian plant, which is expected to be completed by the end of 2023. This new finish mill will provide 450,000 tons of much-needed incremental production capacity to the Texas marketplace. Our Q3 ready-mix concrete results exclude the Colorado and Central Texas operations that were divested on April 1st and include the acquired Arizona operations, impacting the comparability with the prior year quarter. On an as-reported basis, ready-mix concrete product revenues declined 29.1% to $227 million and gross profit declined 40.3% to $19 million, driven primarily by the divestiture, which was partially offset by contributions from the acquired operations. The increased raw material costs further weighed on the gross margin for the quarter. Our asphalt and paving results include the operations acquired on the West Coast, impacting comparability with the prior year quarter. On an as-reported basis, stable demand, improved pricing, and acquisition contributions led to record revenues of $310 million, a 58.1% increase, and record adjusted gross profit of $50 million, a 22.9% increase. However, continued liquid asphalt inflation contributed to the adjusted product gross margin decline of 470 basis points to 16.3%. Magnesia Specialties generated product revenues of $69 million, a 4% decrease, driven largely by lower demand from domestic steel industry customers for dolomitic lime products. Product gross profit declined 22.9% to $22 million as higher energy costs resulted in gross margin compression of 770 basis points to 31.3%. On a consolidated basis, other operating income net included $15 million in non-recurring gains from the sale of surplus land and other assets. We saw sequential moderation in diesel costs in the Q3. During the month of October, diesel prices have trended back up. While we anticipate additional volatility in diesel prices, we are forecasting that Q4 prices approximate current levels. As a result, with diesel costs no longer increasing sequentially, coupled with our disciplined pricing initiatives, we expect to return to expanding gross margins in the Q4 as compared with the prior year period. We remain focused on the disciplined execution of our strategic plan to responsibly grow through acquisitions and reinvest in the business while also returning capital to shareholders. During the quarter, we returned $141 million to shareholders through both dividend payments and share repurchases. We repurchased nearly 288,000 shares of common stock at an average price of approximately $347 per share in the Q3. We also reduced gross leverage this past quarter. On September 29, the company utilized cash on the balance sheet to satisfy and discharge a $700 million tranche of senior notes due July 2023. Our net debt-to-EBITDA ratio continued to trend down and ended the quarter at 2.6x. We continue to anticipate a return to the top end of our target net leverage ratio of 2x to 2.5x by year-end. Additionally, the company's board of directors approved an 8% increase in our quarterly cash dividend paid in September, underscoring its confidence in our future performance and free cash flow generation. Our annualized cash dividend is now $2.64 per share. Since our repurchase authorization announcement in February 2015, we have returned $2.3 billion to shareholders through a combination of meaningful and sustainable dividends, as well as share repurchases. As detailed in today's release, we have updated our full year 2022 guidance to reflect our year-to-date results as well as the impact of lower expected aggregate volumes and continued inflationary pressure. As a result, we now expect full year adjusted EBITDA to range from $1.610 billion-$1.675 billion, which excludes the non-recurring gain on the divestiture in the Q2. With that, I will turn the call back to Ward. Thanks, Jim. Looking ahead to the remainder of the year and into 2023, demand from expanded federal and state level infrastructure investment coupled with heavy industrial projects of scale are expected to offset near-term affordability driven headwinds in the historically under-built residential sector. Importantly, we have both the ability and capacity to supply these needed products and supported by our locally led pricing strategy will do so in a manner that emphasizes value over volume. As we enter the Q4, aggregates customer backlogs are ahead of prior year levels, with supply chain challenges continuing to serve as the primary governor to the growth of product shipments. In the Q3, infrastructure shipments accounted for 36% of total volumes. In the current period of broader economic uncertainty, one constant theme across our footprint is that infrastructure. Our single largest end-use market is poised for accelerated growth as already healthy state department of transportation or DOT budgets receive incremental funding from the Infrastructure Investment and Jobs Act, or IIJA, through the allocation for the 2023 fiscal year, most of which began on July 1st. Notably, for the first eight months of the year, federal aid highway construction obligations for the company's top 10 states are up 28% relative to the prior year period. As a result, we expect a step change in the public sector investment in 2023 to provide a stable base level of demand for years to come. Aggregate shipments to the non-residential end market accounted for 35% of total Q3 volumes. Non-residential construction project backlogs remain strong in our markets, led in large measure by heavy side energy, critical product manufacturing, and data center projects of scale. The announcements of these projects are accelerating. Driven by a post-pandemic shift in global energy and manufacturing supply chains, as well as data usage from adoption of digital and cloud-based services. Illustrative projects in our markets include Golden Pass LNG and CP Chem's plastics facility along the Texas Gulf Coast, Samsung's semiconductor operation in Austin, the Taiwan Semiconductor campus near Phoenix, the Stellantis Samsung joint venture lithium-ion battery plant near Indianapolis, both VinFast electric vehicle and Wolfspeed's planned chip manufacturing site near Raleigh-Durham, and Meta data centers in Kansas City and Des Moines. While we continue to see a recovery in pandemic-impacted light commercial, retail, and hospitality sectors, we expect this recovery will moderate as these categories generally follow single-family residential development. Not surprisingly, the residential end market, which accounts for 23% of our total Q3 shipments, began to slow down in the Q3 as organic shipments to the sector decreased 3% following the decline in single-family housing starts, which was partially offset by continued strength in multifamily construction. That said, housing across our Sun Belt footprint remains underbuilt amid significant population inflows with demand far exceeding supply. As shown in our supplemental slides, single-family housing starts per capita in our key metro areas remains significantly, and to varying degrees, below peak 2005 levels. As such, we continue to expect the current affordability-driven single-family housing slowdown to be moderate in our key metropolitan areas as home prices and borrowing rates find equilibrium. As we look to 2023, our preliminary view anticipates aggregate shipments to be effectively flat as we expect increased infrastructure investment, coupled with robust activity from heavy non-residential projects of scale, will largely insulate product shipments from a slowdown in the single family residential sector. We remain confident that favorable commercial dynamics, underpinned by our value over volume pricing strategy, will continue to be supported by attractive 2022 exit rates as well as realization of our announced January 1st, 2023 price increases. Together, we expect this will drive low double-digit growth in aggregates pricing in 2023. To conclude, we're proud of our record-setting performance against a challenging backdrop. We expect our current momentum to accelerate in the Q4 and in 2023, resulting in a return to margin expansion. We remain committed to employee health and safety, commercial and operational excellence, sustainable business practices, and the execution of our strategic plan. In doing so, we're confident in our ability to successfully navigate the current macroeconomic challenges while demonstrating the resiliency of our proven aggregates led business model. If the operator will now provide the required instructions, we'll turn our attention to addressing your questions. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from Stanley Elliott with Stifel. You may proceed. Hey, good morning, everyone. Thank you all for taking the question. Ward Nye, you mentioned the infrastructure piece as being critical into next year. Can you talk a little bit more about the state budgets? You know, kinda what you're seeing, how it looks right now, and their ability to get projects and lettings out the door for you. Good morning, Stanley. Thank you for the question. I guess several things. One, not all states are gonna be created equal, and part of what we've been focused on is building our business in the right states. If we look at our top 10 states overall, we're seeing basically budgets for next year that are up around 10%, and that can move around a lot. For example, North Carolina, our home state here, up 11%. Florida, up 27%. South Carolina, important state for us, up 28%. Part of what we're seeing too is not just increased funding, but in many respects, Stanley, the way that states are looking at funding. For example, in North Carolina, 2% of sales tax in FY 2023 will find their way to infrastructure. That's gonna work its way up to 4%, then 6% over a multiyear period. At the same time, even reflecting on Florida recently passed in their FY 2023 budget, basically a historic high. They're looking at $4.4 billion for highway construction and another $1.2 billion just for resurfacing. If we're looking at Texas, which is our largest state by revenue, their 10-year unified transportation program is $85 billion worth of projects. To try to contextualize that's a 13% increase from the 2022 plan. The nice thing is when you sit back and look at what we're gonna have from a baseline from IIJA, which is gonna be the single largest pop we've seen since the Interstate Highway Act went into law in 1956. You layer on top of that very healthy state budgets, it's a pretty attractive backdrop. It's important to see too, Stanley, I think to your question, if we're looking at those same top 10 states in contract awards year to date, they're up around 13%. Importantly too, as we're looking at federal aid highway construction obligations year to date, those are also up 28%. As we think about what public is gonna look like for us next year on the federal side, plus to your question on the state piece of it, we think that's attractive, and it starts leading us back towards volume on public that looks more like history in the low 40% of our volume, as opposed to what you heard me speak to just moments ago, which was in the high 30s. Stanley, I hope that helps. Sure does. Thank you very much. Best of luck. Thank you, Stan. Thank you. One moment for questions. Our next question comes from Kathryn Thompson with Thompson Research Group. You may proceed. Hi, thank you for taking my question today. It's a great color on the public end market, and you've also given some good color into early pricing actions for 2023 with a 20% per ton increase for cement and low teens for aggregates. When we look at the private side, what gives you confidence, particularly focusing on customer backlogs about what to expect for 2023, and in particular, more color on backlogs that you're seeing right now that gives a view for next year? Thank you. Kathryn, thank you for the question. Look, as we look at customer backlogs compared to where we were last year this time, in aggregates, they're actually nicely up about 7%. If we look in ready-mix, they're also up. If we look in cement, it's broadly flat, and we're expecting actually to pick up some nice work in Q4. Keep in mind, in cement, we're dealing with a market in Texas that is uniquely, largely sold out. If we're looking at backlogs today for customers versus where we were a year ago, it's actually pretty attractive. I think the other piece of your question that's so important, Kathryn, as we think about 2023, our view is clearly public is gonna be healthier. As we think about 2023, the heavy side of non-res, and we look at that through projects that are in the process of being let. We also look at projects and square footage that's out there in particular. We're seeing the heavy side of non-res, manufacturing, energy, et cetera, being very attractive, the markets in which we're operating. Do we think we're likely to see some degree of moderation in the light side of non-res? Probably so. Do I think the U.S. is gonna see a degree of cooling in single-family housing? We already have. I think that persists. I think if we look at multi-residential housing, that's gonna be really resilient. We're probably gonna see a nice pop in that. As we step back and look at backlogs and think about end uses, public appears to be quite healthy. Non-res on the heavy side is quite healthy. Multifamily res is healthy, and we think single-family residential and the light side of non is where we're likely to see varying degrees of weakness. Now, one of the things that we've been careful to do, and you see it in our supplemental slides, we've tried to spell out with specificity certain key MSAs, four of them in the West, four of them in the East, that we think are indicative of what's happened to population in our key MSAs and what's happened to housing. I think an analysis of that will reveal, to the extent that the U.S. feels some degree of headwinds on housing, ours will not be as pronounced. Kathryn, I've tried to deal with both the public and the private side, excuse me, to give you some good data points on why we have the degree of resilience we do around relatively flat volumes going into 2023. Perfect. Thank you very much. Thank you. One moment for questions. Our next question comes from Trey Grooms with Stephens. You may proceed. Hey, good morning, everyone. Hi, Trey. Ward, you know, your cement pricing there in the quarter, very impressive performance. Looking into 2023, you know, how much of today's pricing will be carried over from this year into next year? Then you know, you mentioned having some widespread increases in January, and we've heard of some being announced for the Texas cement market in the January timeframe. If you could comment on that and maybe around, you know, the magnitude you're expecting there. Look, it's been a thank you for the Trey, for the question, Trey. It's been a good year for pricing and, excuse me, for Texas cement this year. We anticipate that's going to recur next year. I mean, if we look at ASP, for the quarter, it was up 21.4% on a reported basis, 20.6% on a mix adjusted basis. What that's done, to your point in cement, is basically led to a new all-time record for gross profit, and you can see gross margins that are above 40%. If we think about the Texas cement market, here's some things to remember. I think this gives you a good build on why we have resilience around a $20 per ton increase effective January 1. That's a market that's going to consume around 20 million tons of cement per annum, but it's a market that has the capacity to produce it in the state of Texas at about 16 million tons. In other words, that goes back to my commentary in the prepared remarks that the market's effectively sold out. Keep in mind, we've got two plants, one in Midlothian, one at Hunter. We're in Central and North Texas, frankly, where water imports are not particularly meaningful to what we're doing. I would say all of that underscores why we have resilience around the pricing. The other piece of it that I think is important, and I think it likely recurs, is I'm not going to lead you to believe that we have enormous amounts of material going to basically oil well cement, but there is some going to West Texas. Those are actually at much higher ASPs than you would see ordinarily. I think reflecting back on the geopolitical tensions that I mentioned in the prepared remarks, it's hard to imagine that that piece of our business is going to slow. The other things that I think are important to keep in mind, Trey, one, we're also seeing a conversion, as Jim said in his comments, to the Type 1L cement. In that process, we'll actually get about 10% more capacity as we go into next year. Then it won't be immediate next year, but you will see more capacity come online as we finish the finish mill that's underway at Midlothian right now. That's gonna add another 450,000 tons to that marketplace that actually desperately needs it. Again, $20 a ton is what we're looking for. I think that answers your question specifically. Again, I wanted to give you some other data to give you a sense of why we have a high degree of confidence in that number. That does answer my question. Thank you, Ward, for the color. I'll pass it on. Thanks, Trey. Thank you. One moment for questions. Our next question comes from Jerry Revich with Goldman Sachs. You may proceed. Yes, hi. Good morning, everyone. Hi, Jerry. Ward, hi. I'm wondering if you could talk about, Ward, if we were to assume, you know, a mild recession next year and volumes are down year-over-year versus the base case of flat. It feels like with the pricing gains over the course of this year, you folks would still be positioned to expand aggregates margins by a couple of hundred basis points given the puts and takes. In that scenario, I'm wondering if you might be willing to comment on that, just conceptually, given the timing of a permanent price increase over the course of this year versus the quicker diesel and other inflation that we saw in the beginning of the year, and as a result, the catch-up we're gonna see in 2023. Sure, Jerry. Thank you for the question. A couple of things. Your question, which I think is a really good one, really focuses on margin and what we think happens with volume. Several things that I would point out. One, if you look at what we're saying for the balance of the year, we're actually anticipating margin expansion returning in Q4. What that means is multiple price increases in a big, heavy industry are actually finally catching up and passing what have been the cost inputs. We also expect that to occur going into next year. Now to your point, what happens if you see volume more bearish than we anticipate volume being next year? What I would do is I'd take you back, and it's been a while, Jerry. This might have been before you were actually following us. If we go back to 2005, 2006, and 2007, what you'll actually see if you look at history is the industry, generally Martin Marietta specifically, was finding peak volumes back in 2005. We're actually seeing peak profitability in that last cycle in 2006, which underscores in many respects why we speak to this volume, or this value over volume strategy, because we recognize how valuable that is to our business. The other thing that I'll outline, Jerry, because you've seen it, and I think it's probably echoed in some of your writings as well. The pricing in aggregates tends to be a very durable set of pricing. As we go through cycles inevitably in the fullness of time, and I'm not sure if next year is gonna be a down cycle or not, we don't think it will be right now because of the strength in public. We have a lot of confidence around the resiliency of the aggregate pricing. As we think about what is likely to happen in margins in Q4, we think they expand. If we look at what we think is likely to happen to margins in 2023, again, we think they likely expand. Hopefully that answers your question in maybe 10% more, Jerry. It does. Thank you. Thank you. One moment for questions. Our next question comes from Philip Ng with Jefferies. You may proceed. Hey, guys. Appreciate the forward color for 2023. Maybe have a question for Jim. Your flat volume guidance, anticipating a lot of uncertainty on housing and maybe on the light side for commercial. Can you kind of help us unpack, you know, the percentage growth you're assuming for housing, non-res, and infrastructure? On the infrastructure side, you know, we can appreciate the lettings and bidding activity has really dialed up. Ward, help us understand kind of like the cadence of when that big inflection kind of comes through next year. Next slide. Look, I think you're gonna start to see the inflection as we get closer toward half year next year in particular. Keep in mind, it's always interesting to me, people want to look at Q1 and try to divine some degree of rhythm or cadence out of Q1. Remember, in our world, Q1 is January, February, and March. What I've long said is oftentimes Q1 is made or broken by the last two weeks in March, which is no way to really judge the rest of the year. I think going back to the percentages that I spoke to a little while ago on infrastructure gives you a good sense of what that rhythm and cadence can look like through the balance of the year. I think part of what we're gonna be seeing, and I think this is important, Phil, is in infrastructure, we're gonna be seeing more capacity type projects than we've seen in the more recent past. That's important because you're gonna send out a much wider array of volumes and more volumes over a period of years. I would reflect on that. The other thing that I would say in particular, and a lot of this is driven by energy and manufacturing. If we look on the non-res side, what we're seeing, and I mentioned it before, the square footage on a number of these plants, not just in Texas but beyond that, even on some of the new opportunities that we're seeing in the Carolinas and in the central part of the United States, have considerable square footage. These tend to be almost, concrete warehousing. The other thing that we are seeing is we're seeing estimated start dates now on all of the large LNG or energy plants that we've been looking at in South Texas, all with 2023 start dates. We think that's important as well because when we look at those projects all by themselves, and again, I'm talking about six different projects in South Texas, the cumulative yardage and tons from those are 13.7 million tons and about 1.3 million cubic yards. Again, we feel like on those, it won't just be an aggregates or concrete play for us. In varying degrees, it can be a cement play as well. I would certainly start looking to beginning Q2 to see those volumes ramp up. I think it'll particularly be in public. I think you're gonna see the heavy side of non-res on manufacturing and in energy actually do quite well. I do think areas like hospitality and others are likely going to slow. It'll be curious to see how single family housing goes in our markets. As I said, I don't think those are gonna go off a cliff. I don't think there's room for them to go off a cliff because we're looking at seasonally adjusted starts right now, below 900,000. Using 1 million is a good, steady start. Keep in mind, in many of these markets, we are still. It's not an affordability issue, it's an availability issue. I think in many respects, it'll be curious to see what home builders are willing to do relative to their margins. From a timing perspective, Phil, that's the way I would think about it, and that's how I would handicap it via end users. Ward, the heavy side appreciating a lot of momentum there. Is that enough to like more than offset the light side, at least when you think about 2023? I think the scope of some of those heavy projects are so large. I think the short answer is yeah, it really can, particularly some of these large energy projects. I think that's where you end up potentially with that non-res wash. I think that's probably a good word to use. Okay. Thank you. Thank you, Phil. Thank you. One moment for questions. Our next question comes from Timna Tanners with Wolfe Research. You may proceed. Yeah, thanks. I wanted to squeeze in two really, hopefully quick ones. One is, you know, you talk about the constraints from cement availability, and I was just wondering how we should think about that improving given some of the expansions you've talked about, from existing capacity, yours and others. And then the same idea, smaller market, but on the Magnesia Specialties side, your guidance assumes a rebound. Is this just a short-term blip you see in the demand side, or is this something that could perpetuate into next year? Thanks. Sure. Timna, thanks for the question. A couple things. On mag, I think we anticipate really more the same from mag in Q4. I think we actually expect a better year from mag next year. A couple of things are driving that right now. Steel is running at about 77% of capacity, which is lower than it's been for a while. The chemical side of that business is actually performing quite well. That business has a number of commercial contracts that are rolling off at the end of this year. As we think about the rhythm and cadence of what that's going to look like from a pricing perspective, next year's actually gonna be much more attractive for that business. That's how I think of that. If I think about the ready-mix market in particular, back to your comment relative to cement shortages, part of what that has done is it's put ready-mix players in a position that as they get toward the end of a week, if they don't have significant powder in some markets, they're not buying stone either. Look, I think the fact is cement in some markets could stay tight for a while. I think that could have from a bit of a logistics perspective, a little bit of a headwind. That's certainly what we've seen this year. It's not a massive headwind, to be fair, Timna. I think part of what's happening this year is cement tightness has been an issue, trucking has been an issue, rail has been an issue. I think some of the transportation and logistics issues, while still confronting the industry broadly, are getting modestly better. As we think about those issues going into next year, I would actually anticipate more logistics tailwinds next year than we've seen this year, and then we'll have to see how cement plays out. Keep in mind, Timna, in our world, the only place we have cement, and again, it's very much by design, is the strategic cement position that we have in Texas, where we're the largest producer of aggregates, cement and ready-mix concrete. I hope that addresses the mag issue and your thoughts around powder for next year. Okay. No, that's helpful color. Thanks again. Thank you, Timna. Thank you. One moment for questions. Our next question comes from Keith Hughes with Truist. You may proceed. Thank you. Looking at the Q4 in aggregate volumes, the yearly number seems to indicate it's gonna be negative. Is that correct? Other than weather, is there anything going on within the quarter in aggregates? Keith, thank you for the question. The primary thing that we're looking at as we look at Q4 is severalfold. One, what's the year to date look like to last year? It's worth remembering that we actually had a winter that didn't roll in until very late in the year. We had a Q4 that was unusually long. What we're doing in large measure is assuming that a normal winter shows up. If a normal winter shows up, and then we go back and augment it to varying degrees on those items that we were just talking about with Tim, that's saying, what happens with normal winter? What happens if logistics constraints concur or recur? What happens if cement continues to be tight? We're just looking at those things and trying to sort out what we think that could mean for the Q4. Really, your swing factor, as much as I hate to say it, is going to end up being winter. There are a number of markets that can be really weather affected that are actually quite good markets today. Among them, for example, Indianapolis is a very attractive market. Minneapolis-St. Paul, we're seeing asphalt volumes in that market where we're an FOB provider higher than they were last year. By the way, we thought last year was a pretty good year. If we end up with colder weather in some of these markets that are relatively high performing, it does have, no pun intended, a chilling effect on what the volumes can look like for the rest of the year, Keith. That's how we're racking it up. Okay, great. Thank you. Thank you. Thank you. One moment for questions. Our next question comes from Michael Dudas with Vertical Research Partners. You may proceed. Good morning, gentlemen. Jennifer. Hi, Michael. Ward, maybe you could remind us of what in your guidance for 2022, what was maybe the overall headwind toward the higher energy and materials cost or constraints, labor, however you wanna phrase it. As you're looking into 2023, certainly inflation will stay at a high level, but what kind of, you know, moderation may we see, and what are the parts that we could look for to, you know, help some of the tailwinds if we get this pricing that you're anticipating? Sure. Let me bifurcate that a little bit. Let me tell you what we saw. Jim will come back and give you a sense of what we're expecting. I'll try to break it down just a bit. Again, if we look at diesel cost per gallon, and if we're looking at the aggregates business and the single largest energy input, that's what it is. Diesel cost per gallon was up 69%. What that means is it was up from $2.44 a gallon in Q3 of 2021 to $4.12 a gallon in Q3 of 2022. In fairness, that did show, and Jim commented to this in his prepared remarks, that did show some sequential moderation from what had been $4.60 a gallon in Q2. Still, those are pretty big numbers, and they're big numbers in particular when you keep in mind that for a full year, we're anticipating having about 53.5 million gallons of diesel fuel that we will use. Similarly, if we look at electricity and natural gas, and of course, these will be involved in the aggregates business, but in fairness, they're going to be bigger issues in cement and in Magnesia Specialties. Again, if we're looking at those, the electricity costs were up 46%. Natural gas was up 106% as we look at Q3. Those are pretty significant headwinds that we have during the quarter that I think we actually very successfully navigated. Now, speaking a little bit, at least on what we look for for the rest of the year and into next year, Jim, I'll turn that over to you, if I may. Sure. The energy cost for the full year, the headwind we're expecting in 2022 is about $190 million or so, give or take. That's a full year view. At this point, we're not assuming those get better or worse next year. They stay elevated, but they don't improve, they don't get worse. That's a big, probably the most volatile of our cost components. Labor stays relatively well behaved. That's our biggest cost component at about 20-ish%. That's gonna be maybe a little bit above average, but not too bad. What is growing of late, and I expect to continue into next year, supplies, repairs expense, and contract services. Those will grow a little bit faster, as they have this quarter into next year. I think all that said, our ASP growth should surpass that cost inflation in 2023. Those are some stunning numbers, Ward. Well done. Thank you. Thank you very much. Thank you. One moment for questions. Our next question comes from David MacGregor with Longbow Research. You may proceed. Yes. Good morning, everyone. Hi, David. Congratulations on all the progress, Ward. Thanks so much. I just wanted to ask you about Texas cements. You know, you had highlighted in response to, you know, your answer to an earlier question, just everything that's happened this year is kind of out of the ordinary. There's unplanned maintenance outages and, you know, right down to low water on the river, import constraints, silo capacity everywhere. It's been a very, very tight year and an extraordinary pricing environment. You know, you're kicking off with a 20% increase for 2023. In response to a different question, you indicated you expected the inflection in infrastructure to be mid-year, which suggests, I guess, you know, absent something changing on the capacity standpoint, that there's another price increase coming mid-year. It just seems like a phenomenal setup in cement. I'm just wondering, what are the risks? Is it resi? Could resi potentially be enough of an issue to be disruptive to all the growth in public and private non-res? Just interested in how you're thinking about the downside to cement right now. No, look, I appreciate the question very much, David. I think cement as a general rule and cement in Texas as a specific rule are probably two different things. I think part of what gives us such confidence in the Texas market overall is that has historically been the marketplace in which we've seen, all the way through cycles, the single highest infrastructure percentage of our business. When you're in Texas, you're riding on concrete roads, and you're going across concrete bridges. I think that's a really important component to remember when you think about what's happening in that marketplace. The other thing that we've spoken of, David, is really what the requirements are in that state, what the in-state production is in that state, and where our plants are located. If housing slowed to a degree, would that open up some powder? You know, the answer is it probably would. Does that mean that people aren't gonna be faced with tightness toward the end of the week and might be able to take more aggregates? I think it probably does. I do think Texas is in a very different, and it's an overused word, David, but I do think the cement in Texas is relatively unique. The other thing that I'll point out that I think has been a big help for us as we've looked at our business over time is the fact is, as we look at our reliability and as we look overall at the utilization of our plants in Texas, they continue on a year-over-year basis to get better. We're finding ourselves in a position in a market that's very tight, that making the shift to Type 1L is gonna add capacity. Adding the new finish mill at Midlothian is going to add capacity. The fact is, we're a better cement company now than we were last year, and we're gonna be better next year than we are this year. I think there are a number of components to it, but I do think the commercial aspects of it will continue to be very attractive. Right now, we've got a lot of resilience around what we're anticipating for 2023 in cement. Thanks very much, Ward. Thank you, David. Thank you. One moment for questions. Our next question comes from Brent Thielman with DA Davidson. You may proceed. Hey, great. Thanks. Hey, Ward, if you guys get back within your target leverage range by year-end, maybe if you could speak to your business development pipeline, overall appetite for M&A next year. A lot of internal focus here on margins in 2022 and obviously going into 2023, and a lot of economic certainty out there. Just wanted to get a sense how you're thinking about, you know, kind of the business development side. Brent, thank you for the question. I think that's such an important one as we go through cycles because our capital priorities aren't changing. Part of what I find really compelling about Martin Marietta is the ability of this company, after having done the most significant cash outlays in its history in M&A last year, to be delevered exactly the way that we anticipated we would be by the end of this year. Now, if we think about M&A more broadly, here's what I'll say. A lot of potential deals have come through our funnel in the last 18 months, and what we're trying to be is what you would expect, and that is very disciplined in what we're looking at. We're looking at a number of different potential transactions today. They are almost exclusively aggregates-based deals, and those are the types of transactions that we're most interested in. You hear the way that we speak of our business, aggregates led, strategic cement, targeted downstream. To the extent that we can continue to grow our aggregates-led business, that's what we're going to want to do. Part of what's different now, though, as we think about it, Brent, is our footprint is different. We have the ability to look in markets that we could not have looked in before to do bolt-ons. The reason that I call that out is bolt-ons, if you think about them from a risk allocation perspective, are actually very low, because you've got operating people in that market. You've got commercial people in that market. Integration can broadly occur over the course of a weekend, and the execution risk is really quite low. Do we continue to look at M&A? The answer is yes. Do I hope that we'll have some things to talk to you about late this year or early next year? I hope so. There are certainly no guarantees on that, but the aim is that we will continue to do that, and you should look for it to continue to be aggregates led. I hope that's responsive. Yeah. That's great, Ward. Appreciate the comments. You bet. Thank you. One moment for questions. Our next question comes from Garik Shmois with Loop Capital. You may proceed. Oh, hi. Thanks for taking my question. Wanted to follow up on the non-residential side. If you have an estimate of how much of your non-res shipments is going towards that heavy side of non-res that's expected to hold up as opposed to the light non-res. Just to be clear, on the non-res, are you s eeing any current delays or cancellations, or is your outlook there just more indicative of how this end market tends to follow the housing cycle with a lag? Garik, good to hear your voice, and thanks for the question. I'm gonna take part two and ask Jim to come back and deal with part one. Part two, we're not seeing significant cancellations on non-res projects. And frankly, that's not a big surprise to me. The only time in my career that I can remember that we saw that happen in notable ways was coming out of basically that 2005, 2006, where building was so robust, and the fall was so precipitous that we saw non-res projects actually stopping or being canceled. As a general rule, they don't. They tend to go through. The short answer is we're not seeing that. The other part of your question is really the breakdown of what's heavy and non, et cetera, so I'll turn that over to Jim. Hey, Garik. The heavy portion of non-res is about 55%. The light portion is 45%. Great. Helpful color. Appreciate it. Thanks, Garik. Thank you. One moment for questions. Our next question comes from Michael Feniger with Bank of America. You may proceed. Yeah, thanks for squeezing me in. On the public side, you mentioned an inflection in the second half of next year. Is it fair to say that the growth rate in 2024 for public is likely to be higher than the growth rate in 2023? Just to follow up on that, you know, the industry has observed past cycles where you can get three consecutive years of double-digit pricing. You're doing it, you know, in 2022. Next year will be number two. Just if public's accelerating in 2024, the heavy side of non-res is okay, do we have underpinnings to get that third year for 2024? Thank you. Those are great questions, Michael. So thank you for that. Do I think we're likely to see that type of a build on the public side? The short answer is yeah. I think we probably are. Do I think we're in a position? Again, look, this is really rank speculation, so I don't wanna get out there too far. I think we've got a good sense of what pricing will be in 2023. Of course, we've tried to capture that in what we put out in our preliminary guidance. If we're right, and I believe that we are, that we obviously have a multiyear highway bill. If we're right that the U.S. is far from overbuilt, if we're right that anything relative to housing will not be deep, and it will not be long, and if we're right that the U.S. is going to have to look at higher degrees, in particular of manufacturing going forward, I think you could take a number of economic indicators in that vein and say that volumes should be relatively attractive on a broader base for an extended period of time. What we've seen relative to pricing, particularly in aggregates, is aggregate pricing tends to be attractive even in a challenged volume environment. If we end up finding ourselves in a multiyear circumstance that you could have flat next year, up year after or however you want to fashion it, I do think that you could continue to see a very constructive pricing environment. Now, obviously, that's not guidance. That's looking out farther than we would typically look out. Obviously, what we've given you so far is a preliminary view of 2023, but if I'm just taking what has been more years around this industry than on occasion I'd like to admit, I think what I've just outlined for you would be consistent with broader history. Thank you. Thank you. One moment for questions. Our next question comes from Adam Thalhimer with Thompson Davis. You may proceed. Hey, guys. Nice quarter. Thanks, Adam. Hey, just real quick, Ward, on the residential side, are you actually seeing weakness today? I was just wondering if that had anything to do with the, you know, volumes down a little bit in Q4. I'm sorry. Say again. Are we doing what today, Adam? I missed that. Oh, actually seeing weakness in residential today, or is it still something you just expect to see? You know what? In some markets, I wouldn't call it a weakness. I would see it as a slowdown. I know that's parsing things a little bit. Overall, the reason that I don't say weakness is there's still in our markets such an acute need, and I think that's the fundamental difference that we're seeing today. Are we seeing a slowdown in large measure because of logistics constraints and otherwise? Yeah. Are most of our markets, in my view, more affected today by lack of availability as opposed to affordability? I think that is the bigger issue, Adam. I'm not going to totally dismiss affordability in some circumstances. I mean, let's face it, as a practical matter, we've got a lot more people in the United States, and we have interest rates trending up to things that would've looked relatively normal a decade plus ago. We're gonna have to see where that goes. The short answer is yes. We are seeing some degree of a slowdown, nothing that we think is dramatic. In fact, we think it's actually quite expected in what we're seeing more broadly. I do think this is gonna be a circumstance where very specific geographies will respond very differently, in particular on single family housing. Okay. Good color. Thanks, Ward. Thank you, Adam. Thank you. One moment for questions. Our next question comes from Anthony Pettinari with Citi. You may proceed. Good morning. It looks like CapEx guidance for the year was trimmed a little bit, maybe under $50 million at the midpoint, if I got that right. Can you just talk about what's driving that, and then any kind of implications for CapEx in 2023 or maybe early thoughts on 2023 CapEx, given you may be kind of flattish on volumes next year? Yeah. Hey, Anthony. Jim, happy to take that question. The reduction in CapEx this year was simply just taking longer to get the money deployed than we had expected early in the year. There's no other reasons than that, frankly. It's just a reflection of what we think we can get done this year. As for next year, I typically guide folks to about 9% of revenues. I think that holds true for next year. Sort of steady as she goes for us, and I would expect the same thing next year, about 9% of sales. Does that answer your question? Yeah. No, that's very helpful. I'll turn it over. Thank you. One moment for questions. Our next question comes from Angel Castillo with Morgan Stanley. You may proceed. Hey, guys. Thanks for squeezing me in. I just wanted to bring the discussion back to the supply chain logistics for a second. You know, Ward, you were pretty clear that I think, you know, elements of like trucking and rail still been kind of constraining aggregates volumes this year. I think you alluded to the fact that those should be kind of improving modestly next year. When we think about the volume assumptions that you have for the heavy side of non-res and public and infrastructure, for the 2023 outlook of, you know, flattish volumes, are you still embedding that those kind of pockets of the end market spectrum are still constrained by those issues, you know, vis-a-vis trucking and rail or, you know, how should we kind of frame up potential upside to that or how conservative it may be as we start to see more pronounced like relief in those areas as the year progresses? Angel, thank you for the question. The short answer is yes, we are assuming for purposes of next year that they continue to be constrained. We're assuming that degrees of constraint have been relieved, but not at all wholly relieved. Keep in mind, we're gonna benefit and we're gonna have a burden depending on how things work, particularly relative to rail. As rail gets better, we're the largest shipper of stone by rail in the United States. We will be a disproportionate beneficiary as that circumstance is inevitably righted. At the same time, when it's struggling, we're gonna feel it a bit more acutely, and that's where we've been over the last several quarters. Do we think it's going to be completely remedied next year? No. Do we think it's likely to be better? Yes. Do we see it getting better in the second half of this year than it was earlier? Yes. That gives us a certain degree of resilience around our view on that next year. That's how we're at least, Angel, we're trying to frame that more broadly. Great. That's helpful. Thank you. Thank you. Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Ward Nye for any further remarks. Again, thank you all for joining today's earnings conference call. We continue to strive for safety, commercial and operational excellence, and remain focused on executing our strategic plan. Martin Marietta's track record of success throughout various business cycles and our ability to adapt to the various challenges inherent in the current macroeconomic environment proves the resiliency and durability of our aggregates-led business model. We're confident in Martin Marietta's prospects to continue driving attractive growth and enhance shareholder value now and into the future. We look forward to sharing our Q4 and full year 2022 results with you in February. As always, we're available for any follow-up questions. Thank you again for your time and your continued support of Martin Marietta. Bye-bye. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.