Martin Marietta Materials Q2 2024 Earnings Call Transcript

Good morning, Kathryn. Thank you for the question. So, look, weather was a big deal and -- in Q2, there's no doubt about it. So, I said in the prepared remarks that it was 119% wetter in DFW this year than it was last year. And the fact is, if you look at what happened in North Texas all by itself, but then you couple that with what happened in the Central division. And what I'll suppose is most people don't think about the Central division as being impactful to us as it is. Really, if we're looking at Dallas itself and the Central division together, those two areas of business typically represent nearly 40% of our Q2 shipments. So, if we're looking at significant rain in Dallas and significant rain and flooding in the Midwest, that was really a serious body blow to the business.

And what I liked about that is it took that blow and came in with record aggregates profitability, record unit profitability and did all of that taking on the $20 million of inventory fare mark-up that we've totally absorbed in Q2. So, seeing what happened in Dallas was important, understanding what happened in the Midwest was important. But I was also taken with the resiliency of our cement business in North Texas. Again, we've long defined what equals strategic cement for us. And clearly, what we have in that market is just that. I mean, we saw organic shipment volumes down about 18%, and again, that was all driven by rain, but pricing up nearly 10% and with very, very good performance. And as Jim indicated in his comments, we were seeing that marketplace turn to near sold-out levels as soon as the rain abated.

So, those were your issues. I think 50% at least of what we saw in the quarter was attributable to rain. Do I think a portion of it was attributable to the economy? Yeah, probably 25% of it. So, what am I seeing there? It's really what we indicated. Private construction, because of what's happening with interest rates, are seeing degrees of modest pull-back. But the important thing to remember there, Kathryn, is we don't see markets that are over-built today in Martin Marietta Marketplaces. So, we feel like that's going to be fleeting. But equally, value over volume cost us some tonnage during the quarter. But the fact is, we're perfectly okay with that. Again, we monitor that. We're going to be thoughtful around it. But again, we're seeing continued expanded adjusted EBITDA margins in what we're doing. We feel like the breakdown we've had between weather at 50%, market at 25% and value over volume at about 25% makes sense.

But the other part of your question went to the cadence of how we think about the quarters. Let me turn that over to Jim to talk you through that a bit, because that is going to change modestly.

Yeah. So, last year, Kathryn, second-half of the year, about 60% of consolidated EBITDA came through in Q3 and 40% came through in Q4. Because of what we're seeing this year with weather, etc., in July and even August, the split is probably closer to 55% Q3, 45% in Q4. So, a little bit more Q4 weighted this year than normal.

Sure. Thank you, Kathryn. If we're looking at customer backlogs, they're up sequentially, so they continue to build, number one, I think that's important. Number two, if we're looking at the nature of the projects, look, infrastructure is going to be a good end use for several years and we see that continuing.

If we're looking at non-res, we're seeing degrees of shifts there. And by the way, that's not a surprise to us. So, are we seeing more factories? The answer is yes. Are we seeing good pricing that goes with that? The answer is yes. Are we seeing good steady work and growing work frankly relative to energy? The answer is yes. Are we seeing growing work relative to data centers for all the reasons that I indicated in the prepared remarks and in the commentary that we published today, that continues to grow. Obviously, warehousing is not, that's not a surprise to anyone.

And what we're seeing is, you almost have two lanes of travel. You have data centers in one lane and they're going in a positive direction and warehousing is going in the other, and you're seeing those percentages almost past each other on a precise precision or percentage basis today. So, that's the type of work that we're seeing.

The other thing that we're beginning to see and this is more in Georgia, it's in North Carolina, it's in South Carolina, we're seeing green shoots and degrees of single-family housing right now. And again, that's not a big surprise simply because of the population dynamics. And again, relative to housing, we're such a small portion of the overall housing that traditionally in single-family housing, back to the essence of your question, that tends to be very attractive priced materials, Kathryn. So, I hope that's helpful.

Thank you.

You bet, happy to. And Stanley, thank you for your comments. We appreciate it. I'm with you. I think that was actually very good performance given what our team managed through. So, several things. Look, let's start with pricing. So, as you've seen, we've reaffirmed our pricing guide of 11% to 13% up. And that includes the previously announced mid-years for California for the Frei business for Blue Water locations as well as the targeted product in market-specific mid-years in other geographies. And by the way, that's pretty typical for us.

The one thing that I think is going to be important this year relative to the mid-years, so much volume that had already been bid at the January 1 pricing is still yet to go because of deferral that we've seen. So, typically, in a year, I've always told you historically, look, you could probably see about a quarter of the mid-years really show-up in any given year, in which, they're put in. I think the mid-years are going to be notably more impactful in '25. In other words, when we come back to you in January and talk about our guide for next year, I think, you're going to see more mid-years affecting that this year than not. So, that's how we're thinking about the ASP in the guide.

Relative to volumes, clearly, that reflects an impacted first-half result and early weather here in the second-half of the year. Look, July was wet and we're sitting here today as Tropical Storm Debby is going through the Carolinas. So, we're living that. And so, we're trying to take our experience with those events and really build that into the volume guide for the second-half of the year. So, we feel confident that we've hit that with as much clarity as we can, given these circumstances. Look, relative to what will be expected as lower shipment levels, our teams are going to be focused, as you would imagine us to, very much on cost control and making sure we're flexing our costs with demand. So, we're very focused on that.

The other thing that, I think, you'll see is given the inventory builds that we had with wet weather where we're producing, but not selling, you know what, there's going to be a little bit of inventory draw-down and that's going to impact us a bit in half-two and it can provide a modest headwind to EBITDA. But again, we've taken that into account in what we put out there for you.

One thing to keep in mind, too, is we're looking at the EBITDA guide, and I think this is something that's easy to forget. We grew EBITDA in 2023 by 33%. I mean that's a really big number and it gives you a difficult year compare, but at the same time, we're seeing EBITDA margin grow. And even at the guide, we're looking at a two-year CAGR of high-teens, and getting close to 17%, getting close to 20%. So, again, numbers that we're very proud of, numbers that we feel good about, as we're going into the second-half of the year. And again, a foundation, particularly relative to pricing that we think puts us in a very attractive place as we start increasingly thinking about 2025, Stanley.

Thanks, Stanley.

Thank you, Trey, very much.

Sure, happy to, Trey. And look, that's a great question. So, if we think through it, I'll actually work from the bottom up. So, we were previously in res. We were saying, look, res was going to be down low-single-digits to mid-single-digits. So, now as we see it, look, we think it's going to be at mid. So, we've gone to the lower-end of the original guide, if you see what I mean relative to res.

If we're looking at non-res, we had previously said, look, that's going to be down mid-single-digits to high. So, we've really taken the same view on that we have relative to res. We said that's going to be down high-single-digits, not because we think heavy is not going to be good. I think heavy is going to be increasingly good. These are going to be big jobs. It's going to take a little bit of time. But really, what we've done -- excuse me, we've looked at the public side of it.

We had said we thought public would be up mid-single-digits to high-single-digits. We actually think that's now going to be modestly down and it's more of a timing issue than anything else, because part of what we're assuming is, let's assume we're going to have a relatively normal weather calendar year this year. And if we go to businesses like the Central division, once we get toward late October, frankly, you're rolling the dice a little bit on whether you're going to have good business, and there won't be frozen weather of -- impacted in November and December. So, now, we pulled back a bit on infrastructure. And again, that's not work, Trey, as you know, that's going to go away. It's going to be work that's going to be pushed into 2025. And for a lot of reasons, we're perfectly okay with that. But relative to the guide and relative to the end uses, I hope that puts the specificity around it that will be helpful to you.

Great questions, Trey. So, thank you for all of that. So, we'll start with both Blue Water and Albert Frei relative to integration. So, you're right. I mean, from our perspective, those integrations are done. They have been tucked in, they're pure bolt-ons. Our integration process is extraordinarily efficient. And we've discussed that before. We typically integrate the back-office systems and processes and onboard people literally over the course of a weekend. So, our intention is typically to close on Friday and do a lot of training over the course of the weekend, open Monday and have people going over our scales, getting Martin Marietta tickets and having them in our systems, and that's exactly what happened.

So, as we think about what's happening with those businesses now, operationally, they're performing really very well, number one. Number two, these are folks who know that they've got a forever home right now. I mean, we're in aggregates-led business. They're delighted to be a part of Martin Marietta. Number three, their safety numbers have been extraordinary. I mentioned in my opening commentary that from an incident rate perspective, this was the safest quarter that Martin Marietta has ever had. And to be able to say that after we've done the degree of acquisitions that we've done, in my view, is pretty extraordinary.

Now, if we think about what continued synergy realization is going to look like, several things. Number one, we will continue to invest responsibly in these businesses in fixed plant, rolling stock, etc. And we think that will continue to make the businesses more efficient. But equally important, the pricing at those locations is actually notably below a Martin Marietta corporate average. By that I mean, let's call it, $4.00-plus a ton. So, if I go back to the commentary that we had on targeted mid-years and the fact that they're coming through the way that we would have expected on the acquisitions, that's going to give us continued near-term upside on those businesses. We think that's likely to persist for a number of years. Operationally, they will continue to get better for a while. So, we think there's going to be goodness that's going to be coming to us from Blue Water, from the Albert Frei & Sons, and by the way, from the continued acquisitions in California and Arizona for a while yet.

Now, that leads into the second part of your question, that is what does the pipeline look like? And the pipeline continues to look attractive. The pipeline continues to be almost entirely pure aggregates businesses. And they tend to be a bit of a blend of what you said. Some of them have a little bit of chalkiness [Phonetic] to them. A lot of them are nice tuck-away transactions. We hope we'll have more for you on some of that as the year goes on. As you know, between what's gone in and what's gone out this year, we've done well over $4 billion worth of transactions. But if we're sitting at a net leverage of 2 times as of June 30, as you know, that gives us ample dry powder to continue doing what I think is really a core competency for Martin Marietta and that is doing M&A and doing it well. M&A is something that's in our DNA, and we're very proud of that.

So, Trey, thank you for that second question. I hope that cleared some of those items up, too.

Thank you. Take care.

Good morning, Jerry.

You know what, obviously, we'll give you more of a definitive guide on that as we go into next year. But Jerry, as I think about the building blocks for what we have, I think, infrastructure is going to stay very attractive. I think housing in our markets has more than found bottom. I think that's going to get attractive. I think heavy non-res is and is going to stay attractive. As I indicated in the commentary, I think the lag we've typically seen between non-res, on the light side and res is going to be abbreviated. I think that sets us up for a really attractive 2025 and beyond relative to pricing.

From my perspective, the pricing that you have seen in Martin Marietta for 30 years as a public company that, I think, you would look at and say, historically, has looked really good. Frankly, you're seeing a step-change. And I think the step-change is appropriate, but for a number of reasons. And among others, is people now are starting to think about this business on what does replacement cost look like for these hugely valuable reserves. I mean, if we look at the reserves we have today, 70 years-plus at current extraction rates is a significant body of reserves. At the same time, I don't think that we should be punished for having the discipline and having the vision to make sure that we've got adequate reserves.

So, does that tell me and does that help inform you that we think pricing will continue to be at what I think will be new levels and probably in that zip code of what you're talking about? I think, the answer is yeah, it probably will. And again, we'll come back with more definitiveness on that in February. But I would not encourage you to think about it materially differently.

Yeah, you're right that those ballpark numbers are correct. The star of the show as always has been growing ASP. So, that's flowing through in the second-half of the year. That's the primary metric that's driving that improved margin, Jerry. The secondary impact is, as I mentioned in prior calls, inflation is abating, it's moderating as the year goes on. So, the cost pressures are by and large coming back-down, not to where they were pre-COVID, of course, but 5 percentage points to 6 percentage points on baseline cost inflation. So, those two things are the main driver.

Thank you, Jerry.

Hi, Anthony.

No, thank you for the question. I appreciate it very much. So, let's just march -- through march together. So, look, if we're looking at Texas DOT lettings for FY '24 lettings forecast of 13.7%, that's up 17% from the year before. But equally, if we're looking to see where they are next year, again, they're looking to be up over that next year.

If I'm looking at Colorado, they passed a $5.3 billion 10-year infrastructure bill and that basically ensures consistent stream of DOT funding beginning in 2023 and that's going to go on for several years. And we expect even going into '25 that Colorado DOT is going to have at least $3.7 billion available to spend, and that's going to be a really attractive budget.

If we're looking here in a backyard in North Carolina, we expect their budget to increase to $7.6 billion for FY '25. Again, that's an increase over prior year. And part of what's notable there, keep in mind, North Carolina started looking at different ways to fund their infrastructure a few years ago. And from 2025 thereafter, they're going to be using sales taxes at about 6% to fund infrastructure work here in North Carolina, that's going to make a nice difference.

Equally, if we look at Georgia, their '25 budget of $4.2 billion, that's a 7% increase over where it was in '24. And this one's interesting to me, even if we look at Florida. Florida's budget, if you look at it top side, looks like it's going down, but that's only because FY '24 had about $2.1 billion of one-time supplements that were in it. So, if we're looking at a base budget in Florida of about $15.1 billion, we're looking at what we think is a base in FY '25 of about $15.5 billion.

The punchline is this, if we go and look at our top 10 states, Texas is up, Florida is up from a base budget perspective, North Carolina is up, Indiana is up, Georgia is up, Colorado is up, Arizona is up and Texas is up. So, really, there are two states that are down. One is Minnesota. It's going from $4.5 billion to about $4 billion. And to put that in some context, Minnesota is going to have a DOT budget next year that's rivaling about where Georgia is. I don't think that's a bad place for Minnesota to be. And California is going to be modestly down. And I think that's simply in keeping with what we see more broadly in the California budgeting process. But again, if I look at these top 10 states, it looks awfully attractive to me.

But equally, when I look at the highway contract awards over a period of time, like, if we go back to, let's call it, midyear 2022 on an LTM basis and look at where it is this year on -- in June at an LTM basis, it's up 25%, and that's the step-change that we thought we would see on contract awards. And again, part of SOAR, that Jim referenced in his comments, dictated where we wanted to be in one of the places we wanted to be or places that had good long durable DOT budgets and had people moving those states, so they would have the imperative to continue to invest. And as we look at how those state DOT budgets look today and how they're going to look, more importantly to your question tomorrow, we have a lot of confidence about that and have a very attractive outlook as we contemplate it. So, Anthony, I hope that's helpful.

Thank you.

You know what, it was interesting, because I took that same deep-dive that you're trying to do intellectually just to make sure that there wasn't some overriding trend or something that we needed to be concerned about or alarmed by, and it wasn't.

I mean, as you recognize and we do too, markets in our world tend to be an MSA, because the weight to price ratio that I spoke of in the CEO commentary. The material often doesn't travel very far. And what we see on occasion is somebody can be aggressive, somebody can be long on any given product. There can be just a whole host of things that can drive different degrees of behavior in different markets. So, we're not seeing anything that's overwhelming in any one market that causes us any concern.

Obviously, we've stated a preference for value over volume. We believe in that. We see it in the numbers. We believe that it's proving its efficacy and what we're seeing in the financial results. At the same time, we're always going to be thoughtful around, are we pushing too hard on occasion and are we losing too much. And so, it's a process we do go through. It's a dialogue that we do have here in this office, but more importantly, we have it with our division presence and VPGMs. So, there's no one area that if I were you, I would look at and have any concern about. Obviously, I don't want to talk about specific markets per se. It was really more of a weather event than anything else, degrees of softening and then here or there on pricing. But, Angel, that's the best way that I can guide you to think about it right now.

Thank you.

Sure. So, I'll do a couple of things. One, I'll ask Jim to speak to the capital project that we have underway and he can give you a bit more on that and the 450,000 tons that will be added through that, because we'll be thoughtful around the way that we do it.

But obviously, if we're just looking at what happened relative to the weather in DFW, that was the driver pure and simply. I mean that took organic shipments down about 18%, but again, pricing was up 9.5%. And part of what we saw in that business is we actually saw gross margins expand in that business. And that's one reason that we speak to what we've long called strategic cement. It's where we're an aggregates leader, where the markets naturally vertically integrated, where we have a downstream business and we do in Dallas, that takes about 30% of what we're doing there. And its ability to be interdicted by waterborne imports is really quite minimal.

And so, if we look at what strategic cement for us is, it's Midlothian. If we look at how the pricing behaved, it behaved well. Despite the fact -- excuse me, that organic shipments were down, we still expanded gross margins, which is why we want to invest capital in that market. And for that, let me turn to Jim and he can give you a sense of where we are in that process and how we think about volume.

Yeah. So, that's -- that project, the Finish Mill 7, as we call it, will be completed this quarter. As you know, it's 450,000 tons per year of annual production capacity. So, give or take, 110,000 tons-ish per quarter. We won't hit the market with that full speed on day one. We'll be responsible about feathering in those volumes to ensure we don't disrupt the commercial strategy we've been following in that marketplace. Some more to come on when that comes out, but that will be helpful to us, a, in terms of volume, but also more importantly, operational flexibility, wait times for customers, storage facilities, our ability to react to different events is enhanced as a result of this project. So, we're looking for this to improve margins going forward and, of course, volumes as those become available to us.

Angel, the last part of your question was what we see happening in volumes here as the quarter ended. And I think we indicated as weather got better in Dallas-Fort Worth, we were back to near sold-out conditions at Midlothian. So, I think that puts a bow around it.

Thank you.

You know what, I think, we'd be naive to assume that degrees of inflation haven't eaten into that. And so, when we went back over time, I've said before, if -- whatever the volume that people thought would come out of IIJA the year it was signed into law, have you seen some of that being eroded by inflation? Yeah, I think so. But at the end of the day, very selfishly, from a Martin Marietta perspective, would we trade the volume that we see for the pricing that we're seeing? The answer is yes.

I think part of what's so important to keep in mind, too, is I don't think IIJA is a one-hit wonder. In other words, I think, we simply changed the floor in the way that the United States Congress and the government will continue to invest in infrastructure, because keep in mind, we went a decade and a half with woefully underfunded infrastructure. So, I think, in many respects, yes, some degree of volume has been taken out simply because of inflation. At the same time, I believe when we see a reauthorization of this act, we're likely to see something at or above where this is. And, again, it will provide a nice extended period of time for the United States to invest in this much-needed infrastructure. At the same time, it will allow us to make sure that we're getting the appropriate return for our very valuable materials that are in the ground and that we work hard to turn into a spec product.

So, that's the way that we think about it. There's nothing per se new in that, but I think it's important to be able to articulate that to the investing public, because I think from our perspective, it works.

Thank you.

No, it -- look, we've certainly told the market that we are looking to have another dialogue in September, obviously, it's not yet September. So, we'll have to see how that goes, Keith. But again, I -- there are a lot of different cement markets across the United States. And Dallas is a really good cement market. And obviously, Dallas had a strange market in Q2 simply because it was wet. But when Martin Marietta was buying TXI back in 2014 and 2015, I remember very clearly what I'd said to our Board of Directors at the time, and that was, I felt like Dallas-Fort Worth might well be the single most attractive heavy-side building materials market in the United States for the next 25 years. It has not disappointed.

So, have we told our customers that we're going to have a dialogue in September? Yes. Am I ready to tell you what that's going to look like? The answer is no. But in any event, to your point, as I've watched public data come out, I concur with your conclusion, I haven't seen a market that has reacted more attractively than DFW has on pricing on a percentage basis.

Thank you, Keith.

Hi, Adam.

Yeah. Well, simply, there's a couple of things that go into that. One is we were well below our target leverage ratio, and we had entered the year with -- or the quarter with over $2 billion of cash on the balance sheet. So, that was part of it. But of course, we thought the stock price was at an attractive level as well. We thought it was undervalued. So, that's really, it's as simple as that. We're pretty opportunistic about our stock buyback, try to avoid a lazy balance sheet at the same time, and those things just coalesced this quarter.

Thank you, Adam.

Yeah. It's -- thanks, Collin. Thanks for the question. We try at this point now that those operations are really fully integrated. I wanted to break some out for the quarter, because we were going through the integration process. But now that they're fully-integrated, we just think about it candidly at this point as all organic going forward. And I mean, clearly, I gave some, I thought, helpful color relative to end users and what we thought the shifts are going to be relative to up, down, sideways, etc.

But again, if we're looking second-half of the year on infrastructure, we think it's going to be a busy second-half of the year at the same time. The biggest things that we're trying to get our heads around is what we're navigating right now, and what will be the fall-out from, as I said, wet July and what has so far been a wet August with a hurricane making its way literally from somewhere between Myrtle Beach and Charleston right now eventually up through the Greensboro-High Point area. So, those are more of the swing factors in the near-term. And then, the longer-term this year, to the extent there can be longer-term this year, it's really going to be more driven by when winter sets in and what the effects of that may be in certain markets.

Look, I can remember years that we were doing asphalt and paving in Colorado in December. That doesn't happen very often, but it does happen. And those will be your swing factors really as we think about volumes, but more granularly, as we think about infrastructure.

I think it starts to show-up reasonably early in 2025, because I do think in portions of private, particularly in home-building, etc., you've got the pent-up demand. And it's interesting, as we have people looking to move to Raleigh, one of the issues that they chronically run into and by the way, I'm using Raleigh as an example, but we could go across our footprint and say the same thing, the inventory is just really very low. And frankly, from our perspective, that's a pretty high-class problem, Collin.

Is it tougher people moving to the area because they can't find a home that they want? Yes. Does it mean, however, that once you have that more accommodating policy that you're going to see homebuilders moving? We think with alacrity to fill what's a needed hole right now. We think that's the case. And that tends to be particularly if they've made the investment in land, which in many instances, they have that they can move relatively quickly.

And keep in mind, a portion of what we're going to caption as residential will be those streets. It will be that carbon gutter, it will be the sidewalks, it will be the utilities until those sub-divisions are turned over to the local municipality for maintenance. So, will we see it on the resi side? I think so. Does that mean you're going to see light non-res come behind it in that more abbreviated period? I think so. And all that underlies what we think will be a continuing attractive infrastructure setting. So, again, I hope that's helpful.

You bet, Collin.

So happy to. Jim, you want to go ahead and take the first and I'll come back on where we're focusing.

Yeah. So, the full-year guide on COGS per ton, it's -- well, second-half rather, let's be more precise, is up 7% second-half of this year versus second-half last year. It's reflective of, again, general inflation slowly coming down. There's a little bit of under-absorption in that as well as the volumes come down versus our old view. And the repairs and maintenance costs have remained elevated. We've seen some improvement as we're -- as the volumes have come down on contract services. The outsourced services have been reduced lower over time. And of course, we do have a bit of diesel tailwind built-in. So, that's helpful too.

And, I think, Jim really hit very nicely, a, what the percentages look like, b, what the emphasis is going to be. Obviously, we're going to be focused on maintenance and repairs, because we've seen those up disproportionately. But we're also seeing general inflation come down. We are seeing some nice tailwinds coming from portions of energy. It's been a bit of a bifurcated situation though, because we've seen diesel clearly better. We've seen electric modestly up. But again, managing our hours, managing our over-time, keeping our people safe will be areas that we will have a unique focus as we always do in the second-half of the year. But I think you will see a better trend on repairs in particular.

You bet. Good to talk to you, Joe.

Hi, Tyler.

So, Tyler, thank you for the question. So, I would say two things. One, we are getting closer. We are getting ever closer to harmony in the Western U.S. So, pretty soon you can start humming that music. I think that's going to be there.

But here's the other thought that I would have for you. I'm not sure we're looking for harmony in the West. I think the West ought to be a price leader, because as we look at the cost of doing business in California, as we look at barriers to entry in California, just a host of things. The West Coast businesses should never, in my view, have been businesses priced below a Martin Marietta heritage number. And I think there should be a premium associated with businesses in that geography, because you've got at times some premium costs associated with that geography.

Now, to the rest of your question, should there be recovery in places like Tennessee and elsewhere as we continue to go through the synergy realization process of the Blue Water operations? The answer is yes, there should be. And as I indicated, I think, in some of my earlier commentary, there's over $4.00 a ton delta right now between the average in those locations and heritage Martin Marietta. So, to your point, should there be an extended period of goodness in that? The answer is yes, because obviously, the heritage footprint or price profile will continue to go up as we continue to move up at the Blue Water operations as well and get those closer to that harmony point that we spoke of before. It doesn't make a lot of sense to me as I look at our portfolio that North Carolina, Georgia and Tennessee would or should look materially different. And that's where we're endeavoring to take the business.

Thank you, Tyler.

Good morning.

No, happy to. And it's really a tale of two different businesses there. So, if we're looking just at revenues, as Jim said in his comments, they were relatively flat. Now, as we look at that, chemicals up around 7%, lime though up 24%. And what we're seeing is pricing gains are more than offsetting lower chemical shipments, so chemical markets around the world. And keep in mind, this is not just a regional business. This is a business that we cover in the U.S. and we have double-digit international business there as well. So, we obviously, saw volumes down, we saw pricing up. So, you're seeing a lot of the same dynamics in the Magnesia Specialties business that we're seeing overall in the aggregates business as well.

Part of what I'm pleased with is steel utilization levels are remaining just above the 70% historical average, that's not a terribly high number. And what our team has been able to do there is several fold. One, control costs really well. Number two, they're going about their commercial strategy in a fundamental -- fundamentally different way. That's been a business that historically has had longer-term contracts and they've been in a position to revisit those contracts, reset them and make sure that, again, same circumstances aggregates. We've got long-lived reserves at our facility in Woodville, Ohio. We have long-lived brine reserves in Manistee, Michigan. At the same time, we need to be getting good value for those. And Chris Samborski and his team have managed both sides of that business, controlling cost well and controlling pricing really well. And the EBITDA numbers that we're seeing in that business based on the volume in that business, frankly, it looks fundamentally different today than it would have two or three years ago under the same economic circumstances. So, I'm very pleased with that business.

The other thing that I'll say, too, it wasn't part of your question, but I think it underscores the efficiency of the business. Their safety numbers have also gotten notably better. And you just see that business going in a direction that we're very pleased with in what's probably one of the tougher economies that any sector of our business is dealing with, and they're likely to come in with a record EBITDA year this year. And that's the type of performance in this setting that makes us really excited about what Martin Marietta is going to look like in '25, '26, '27, etc.

You bet.

Go ahead, Timna.

So, Timna, thank you so much. You know what, we're not seeing -- I don't think we're seeing real slowdown on public relative to the election. So, I think that just chugs along. I think that can have an effect on private, and I think that's probably some of what we've seen in the first-half of this year. So, I think that's probably just more of the same.

Relative to public and what that could look like on IIJA reauthorization or the Inflation Reduction Act or otherwise, you know what, I would say several things. One, I think, we're relatively agnostic. And here's why, Timna. Look, I think, if you have a Democratic administration that's in power this next time, my guess is IIJA looks pretty similar on a reauthorization basis and then you continue to see things like the Inflation Reduction Act.

I think if you have a Republican administration, honestly, you probably have a more amped-up infrastructure law and probably less IRA. And again, from our perspective, they're probably almost awash. And again, if we're looking at where the big investments are going to be made in highways, bridges, roads and streets, it's going to follow where people are. It's going to be driven by what's happening with DOT budgets and it's going to be happening driven by what happens at the ballot box where most of these places that are seeing big population trends continue to pass initiatives at well over 80% rates of passage. And we think that's going to endure.

Frankly, if we've looked at the last several elections and you look at what's passed, almost half of it tends to be in Texas. And again, it goes back to building that marketplace that we have in Dallas-Fort Worth and San Antonio and in Houston. And again, relative to what we see going on in energy and otherwise, I think that can move around a little bit depending on whether we have regime change. But if you build your businesses the way that we have on major commerce corridors, that's where the activity is going to be, whether it's factories, whether it's industrial, whether it's energy or otherwise. And that's why the positions we have along the I-85 corridor, the I-95 corridor, the I-25 corridor, the I-35 corridor and the I-5 corridor, are so important to us.

And keep in mind, Timna, we're the largest shipper of crushed stone on the railroads for a reason. We're the largest shipper of stone on BNUP, number one on CSX and number two on Norfolk Southern and now number one on the Canadians after they bought the Kansas City Southern. And to the extent that this industrial build-out continues on either commerce by truck or commerce by rail, we're going to be well-suited by that. And I think that's why from an election perspective, we're relatively agnostic and think we're going to be good either way and we love that durability.

Thank you, Timna.

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