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C. Howard Nye

Thank you, Jacklyn. Good morning, and thank you all for joining today's teleconference. Over the years, the disciplined execution of our proven strategic operating analysis and review or store plan has significantly transformed our company by providing Martin Marietta with a coast-to-coast footprint, majority of our products and services, going to areas exhibiting the highest growth potential by demonstrating our ability to manage through uncontrollable circumstances.
By adhering to our value over volume approach to meet customers' needs without discounting the value of our own assets, and generating a higher return on those assets and by showing the resiliency of our business model, no matter the macroeconomic backdrop. As a result, our business is superbly positioned for near, medium and long-term success.
2024 was no exception to those themes as we once again delivered record aggregates financial performance and successfully completed nearly $6 billion of portfolio enhancing transactions. Operationally, our team successfully managed many exogenous factors, including persistent inclement weather, tighter-than-expected monetary policy and related modest private construction slowdown.
The team's steadfast commitment to managing what they could control, namely commercial excellence, cost management and portfolio optimization enabled the fourth quarter delivery of record profits, margin expansion and record cash flow from operations.
Before discussing our full year results and 2025 outlook, I'll highlight a few notable takeaways from 2024's fourth quarter. With the weather better cooperating in fourth quarter, earnings growth and margin expansion resumed, evidenced by our record fourth quarter consolidated gross profit of $489 million, consolidated adjusted EBITDA of $545 million reflecting an increase of 8% and consolidated adjusted EBITDA margin of 33%, an improvement of 210 basis points.
Pricing gains more than offset the impact of inventory management efforts from fourth quarter record aggregates gross profit per ton of $7.92, an increase of 12% and aggregates gross margin of 33%, an improvement of 120 basis points.
In addition to our impressive financial results, we successfully completed three aggregates bolt-on acquisitions in Southwest Florida, Southern California, in West Texas, all of which are attractive source identified geographies.
Our full year results were notable given the year's extreme weather and a difficult macro economy. Despite these headwinds, we established new aggregates and Magnesia Specialties records specifically.
Aggregates revenues and gross profit both increased 5% to $4.5 billion and $1.4 billion, respectively. Aggregates gross profit per ton increased over 9% to $7.58. Magnesia Specialties revenues increased 2% to $320 million and Magnesia Specialties gross profit increased 10% to $107 million.
Martin Marietta's safety and enterprise excellence culture have long underpinned our financial results. I'm pleased to report we achieved our best full year safety incident rates in our company's history, inclusive of our newly acquired businesses. Notably, this marks our eighth consecutive year of a world-class lost time instant rate and fourth consecutive year of a world-class total injury incident rate.
2024 surpassed 2021 as our most active M&A year ever with nearly $4 billion of aggregates-led acquisitions and over $2 billion of noncore asset divestitures. We selectively pruned cyclical and nonstrategic cement and ready-mix concrete operations and redeployed the proceeds into pure aggregate assets in attractive markets adding nearly 1 billion tons of aggregate reserves to our footprint.
These proactive portfolio actions created a more durable business, increased the gross profit contribution from our core aggregates product line and enhanced our margin profile, all while maintaining a strong balance sheet for continued acquisitive growth.
Looking ahead, we expect the reshape portfolio, together with our fourth quarter results will provide a solid foundation for profitable growth in 2025 and beyond. Specifically, our full year 2025 aggregate shipment guidance of 4% growth at the midpoint assumes that strong infrastructure and data center demand, a full year of 2024 acquisition contributions and normalized weather patterns will all more than offset the slowdown in private construction, which is primarily interest rate.
Our full year 2025 pricing guidance of 6.5% growth at the midpoint, while lower than the last three years of double-digit growth remains notably higher than the long-term industry average of 3% to 4%. These revenue drivers, combined with moderating cost inflation, contributions from our cement and downstream businesses, Magnesia Specialties and the full year of contributions from our 2024 acquisitions underpin our 2025 full year adjusted EBITDA guidance of $2.25 billion at the midpoint, a 9% improvement compared with prior year.
Moving now to end markets. We'll start with infrastructure, our most aggregates intensive and often countercyclical end market, both building and maintaining our nation's heavy infrastructure remains a bipartisan national strategic priority. Three years into the five-year Infrastructure and Investment and Jobs Act or IIJA, Nearly 70% of highway and bridge funds remain to be invested, indicating robust multiyear tailwinds.
And importantly, according to the American Road and Transportation Builders Association or ARTBA, public highway pavement and street construction is expected to continue to grow reaching $128.4 billion in 2025 compared with $119.1 billion in 2024, an 8% increase. Notably, based on recent state and government contract awards, ARTPA's 2025 transportation construction market outlook shows Texas, Florida, North Carolina and South Carolina, Key Martin Marietta states are among the largest markets expected to show growth.
Moving now to nonresidential construction. Artificial intelligence, or AI, continues to drive unprecedented demand for digital and energy infrastructure, as evidenced by recent announcements from Microsoft and the new administration in Washington.
Microsoft expects to invest $80 billion in fiscal 2025 on the construction of data centers that can handle AI workloads with over half of that spend in the United States. Moreover, the new administration recently announced Stargate, which aims to simplify permitting and significantly boost data center construction in the US through a massive investment of up to $500 billion.
The build-out is already underway with the data center in Alvin, Texas, that Martin Marietta is supplying from its December acquisition of [RJs] Gravel Company.
Moreover, dodge construction networks warehouse were footage starts for the 12 months ended November 2024, inflected positively for the first time since December 2022. And Martin Marietta was recently awarded the material supply for two large Amazon warehouse projects in North Texas and Fort Myers, Florida, respectively.
Shifting to residential activity. Affordability and availability remain key issues impacting single-family demand, neither is expected to resolve in the near term given the higher for longer interest rate environment. Relative to the availability issue alone, realtor.com recently estimated that the US housing market is underserved by approximately 7 million homes. That said, when single-family residential construction inevitably rebounds.
Martin Marietta's leading positions in key Sunbelt MSAs provide attractive opportunities to capitalize on structurally underbuilt markets with pent-up demand.
In summary, record state and federal investments, reshoring, the artificial intelligence infrastructure build-out, the long-awaited single-family housing recovery should provide multiyear shipment stability and provide a healthy pricing environment for years to come.
I'll now turn the call over to Jim to discuss our full year financial results and liquidity. Jim?

James Nickolas

Thank you, Ward, and good morning, everyone. The Building Materials business generated full year 2024 revenues of $6.2 billion, a 4% decrease and gross profit of $1.8 billion, a 6% decrease. The decline in both metrics, which are comparing year-over-year results is due to the February 2024 divestiture of our South Texas Cement and related concrete businesses, along with shipment declines in all product lines partially offset by acquisition contributions.
Our aggregates product line achieved all-time record revenues, gross profit, gross margin and unit profitability in 2024. Contributions from acquired operations and strong things more than offset lower shipments. Importantly, this was the second consecutive year of margin expansion. And the fourth year in the last [six] experiencing a price/cost widening. Over those six years, margins have expanded 170 basis points.
In 2024, Aggregates gross profit per ton improved 9% to a full year record of $7.58 per ton. Cement and Concrete revenues decreased 29% to [$1 million] and gross profit decreased 40% to $260 million, again, driven primarily by the divestiture of our South Texas cement plant and its related concrete operations.
While Cement margins held up nicely, the ready-mix business experienced margin compression from Q2 through year end due to higher input costs, including aggregates incidents, outpacing pricing growth. Asphalt and paving revenues decreased 2% to $869 million due to slower market demand.
Gross profit decreased 7% to $101 million due to lower revenues and higher aggregate input costs, partially offset by lower liquid asphalt costs. Magnesia Specialties established all-time records for revenues and gross profit of $320 million and $107 million, respectively, as benefits from strong pricing more than offset lower chemical and lime shipments.
Turning now to capital allocation and liquidity. We achieved record fourth quarter cash flows from operations of $685 million, an increase of 23% compared with the prior year quarter, driven by improvements in working and deferred income tax payments due to the internal revenue service providing disaster tax relief for the line of businesses affected by Hurricanes Debbie and Helene. Our capital allocation priorities remain focused on prioritizing value-enhancing acquisitions, remeasured in our business and returning capital to shareholders.
In 2024, we returned $639 million to shareholders through dividend payments and share repurchases. Even with significant M&A activity, we ended the year with a net debt-to-EBITDA ratio of 2.3 times, well within our targeted range of 2 to 2.5 times. Our strong balance sheet offers ample flexibility to execute on our active M&A pipeline and pursue value-enhancing investment opportunities.
Finally, I will close my prepared remarks with some views on tariffs. The depth, breadth and duration of tariffs actually levied remains highly uncertain. As a result, our 2025 guidance assumes no impact from tariffs.
There are some situations where tariffs might enhance the company's profitability and others, which may lower it. The vast majority of our supply chain is sourced from US locations. The company was served well by that during the supply chain shock of the COVID era and should serve us well going forward.
With that, I'll turn the call back over to Ward.

C. Howard Nye

Thank you, Jim. To conclude, we're proud of our strong fourth quarter financial results and industry-leading safety performance. Thanks to our team's collective commitment to Martin Marietta's vision and strategic priorities, we have deliberately built an increasingly resilient, highly productive coast-to-coast aggregates-led business positioned to grow unit profitability through various end market demand environments.
We are enthusiastic about Martin Marietta's prospects in 2025 and beyond. The fundamental strength and underlying drivers of our differentiated business, proven strategic plan, strong balance sheet with significant opportunities for growth and long history of successfully managing through economic cycles, provide us great confidence in our ability to continue delivering strong financial, operational and safety performance.
If the operator will now provide the required instructions, we'll turn our attention to addressing your questions.

Question and Answer Session

Operator

We will now begin the question-and-answer session.(Operator Instructions) Trey Grooms, Stephens.

Trey Grooms

Thank you. As we look at the '25 guide word, could you walk us through any of the puts and takes around the overall guidance for the year, including your aggregates price and volume outlook?

C. Howard Nye

I'm happy to, Trey. Thanks for the question. Look, at the outset, I'd say we're taking a pretty measured approach to the guide this year. Look, there's uncertainty relative to monetary policy and whatever the other policy fluctuations may be during the course of the year. Look, at the guidance roofs conservative. And frankly, I hope that it is, we can come back and adjust for upside later.
Relative to volume in the first instance, obviously, we're looking at low single digits, and that includes, by the way, Trey, a full year of acquisition contributions. So if you think about what that's going to look like [BWI] I closed last April.
So we'll see that fully in the first quarter. If we're looking at the transactions that we did in West Florida, in Southern California and Texas, those will clearly be additive to quarters one through three. So again, if you're just thinking about the cadence on that.
But if we think about end users right now, I mean, overall, I think we should expect mid- to high single digits growth in infrastructure. I think we're probably looking at low single digits at least right now relative to both nonres and res.
And if we think about what the builders are under those, look, I do think infrastructure should stay strong. I mean there's 70% of the dollars from IIJA that are still yet to come in our sector. And as a practical matter, that has to roll out in '25 and '26. So that should be pretty constructive.
The other thing that we're seeing is nice, steady, consistent and, frankly, growing activity relative to data centers. I know there was some concern. There was a blip the other week relative to DeepSeek. We've actually seen most AI and others come back and double down since then. So we think that should be very healthy this year.
Frankly, we're not planning for notable residential recovery in 2025, given the higher for longer mortgage rates that we're seeing because we think that will just continue to affect monthly affordability. That said, in some instances, we are seeing that homebuyers are simply getting accustomed to this higher interest rate environment. So we're going to see how that plays out.
But here is something that I think is notable, and I mentioned it in my prepared remarks, I mean, clearly, we're seeing green shoots in warehousing. The [Claver in] Texas facility that we have, the Fort Myers facility that we have are both large jobs. And that's not the type of activity that you would have seen for the majority of last year. So we've been waiting for warehousing to find bottom, we think it has.
The other thing that I think is important to keep in mind is, as we go throughout the year, we're going to start lapping pretty weather-impacted quarters last year. I mean if you think about it, Q2 was really a washout in our Southwest division, particularly in Dallas-Fort Worth, which is the company's largest marketplace. And Q3 was a real challenge for us and portions of the East, including the Carolinas, which is a notable marketplace for us as well.
So if you think about the way it rolls up, I mean the gross profit guidance shows double-digit unit profitable growth and nice gross margin expansion, and it's going to be driven by pricing and what we think will be moderating inflation.
Now relative to price, price is going to be a little bit different this year as you simply think about the cadence because particularly in the cement market, we saw most cement producers roll their price increases back to April 1, which meant as a practical matter of a lot of ready-mix players who are looking for that.
So what we've seen in our world is most hot mix and others had price increases effective January 1 as you become accustomed to. Their portions of the ready-mix community, in fact, most of it that are seeing April 1 price increases. So the price increases will be outsized relative to what history has been. Pricing, I'm convinced is still very solid, will be attractive for here.
But your cadence this year is likely to be a little bit different. So don't expect to see that same degree of pop in Q1 that we've seen in the last several years, you'll start seeing it building in two and three, et cetera. So I hope that gives you a sense of it.
One last thing I'd say is if we think about the estimated carryover effect from last year's pricing, it's about 80 bps coming into the year, Trey. So I tried to give you a sense of end markets. I tried to give you a sense of volume, try to give you a sense of pricing and how I think that's going to play relative to margins. So I hope that helped.

Trey Grooms

Yes. That's extremely helpful. But just for some clarity, and correct me if I'm wrong, that pricing in April movement there for aggregates. If I remember, going back historically, with the exception of the last few years, that's not unusual for the industry.
It seems like that was a normal timing that maybe had shifted a little bit more to January just in more recent years. Is that the right way to think about it?

C. Howard Nye

That is the right way to think of it, Trey. I mean, you've been in this industry for a long time, and I have two. And that's the way that has typically worked. So yes, I don't see anything that's causing me any angst. But again, if you're looking at it and modeling, as I know you are, I just wanted to make sure that I was giving you and your colleagues the ability to model that with degrees of precision.

Operator

Kathryn Thompson, Thompson Research Group.

Kathryn Thompson

I appreciated your -- the color on the tariff impact in your prepared commentary, but I wanted to follow up on that in a two-part way. One just pull the string on what could be impacted from tarrifs from your perspective where you certainly had metals tariffs announced yesterday.
But also, two, what did Martin Marietta do to diversify its supply chain in the wake of the first Trump administration? And how are you a little bit better prepared today versus, say, 2016?

C. Howard Nye

Thanks for the question. I'll take the last part first and say this. If we go back to the COVID years when really supply chains were a mess, we actually came through that pretty well. I mean, we were having record years during that period of time. And we were not running into supply chain issues, largely because, as Jim noted in his prepared remarks, most of our supply chain is domestic.
There were some outliers where we had things coming in from overseas. And to your point, we have moved very carefully in the intervening period of time to make sure that we can look primarily to domestic production. And I think that served us well before. I think if we see something that's ramped up from a tariff perspective, we'll be even better served right now.
To the second part of your question, what are some of the specifics? Look, obviously, steel is something that we're going to watch. Steel tariffs, very frankly, could be pretty helpful to our Magnesium Specialties business. And we're supplying a lot of that material to domestic steel producers. So if they see steel production ramp up in the United States, that's going to help us a lot on volume.
And if we think about the Magnesium Specialties business, look, they just had a record year. And they had a record year with chemical and steel markets in pretty low spots. So again, I think tariffs very selfishly for us on that could be helpful.
That equally, if we think about tariffs potentially on cement, Look, we're a domestic cement producer. We're a long way away from water. But again, I think that would be helpful to our North Texas position. By the way, that business continues to perform extraordinarily well. So I think it would just give that business even more upside.
Imports or tariffs relative to stone has a twofold effect. Number one, I think it actually adds value to what we're doing with our long-haul network, particularly relative to rail.
So keep in mind, we're shipping more rail, more stone by rail than anybody else in the United States. That's about 30 million tons a year. It's going into coastal areas, principally in the United States. We think that could be helpful. To be perfectly transparent about it, we do have an operation in Canada that's coming into the United States by boat.
So that would be one of the headwinds that we could potentially see from that. But again, it's not going to be a material issue to the company. But again, in the just in full disclosure, I think that's fair to say.
If we think about more indirect impacts from tariffs, I mean, we could certainly see it drive more reshoring and more domestic manufacturing demand. And I think that goes back to your question relative to supply chain.
And it could impact inflation in some degrees, and that could lead to maybe higher for longer, and that could have a negative impact on real estate or residential as we look at it. And I think it goes back to the observation that I shared with Trey. I think we have given a very measured guidance approach today.
As if we come back and adjust this, I sure would like to adjust it up. And I hope we put ourselves in the position that that's exactly what we can do, Kathryn.

Operator

Jerry Revich, Goldman Sachs.

Jerry Revich

Ward, Jim, I'm wondering if you could just talk about the per ton cost cadence that you expect obviously makes is moving around on board, you spoke about timing of price increases normally price cost credit is pretty consistent. Do you expect similar gross profit per ton growth in the first quarter as the full year. Can you just give us a bit of color --

C. Howard Nye

Yes, I'll ask Jim to come back and give you some color relative cadence. I want to come back to the very first notion that you raised, and that is -- let's talk about what's happening with respect to cost per tonne because I think this quarter was a really good example of what you can and you should expect going forward.
And if you look at it, I thought we had good cost management. If we're looking, frankly, at organic COGS, they were flat despite revenue being up nicely in the organization. But what I like, Jerry, is when I go back and look at it, I mean clearly, energy was down and energy was down because diesel was better and a host of things.
But what I moved by is I go through the different cost buckets, whether it was supplies or whether it was repairs or whether it was contract services or otherwise, they're all in the green for the quarter. So I like the way that that's shaping up and the fact is we can continue to make these businesses that we bought increasingly efficient relative to ASP, but also relative to the cost profile.
Now the other part of your question was relative to cadence. And so for that, let me turn it over to Jim.

James Nickolas

Yes. Thanks, Ward. Jerry, the cadence is going to be -- there's two dynamics. One is the P&L effects, the temporary P&L effects of our inventory reduction, that will continue through the first half, it's already built into guide, but that will show up more in first half, not in the second half is really as much.
Aside from that dynamic, the underlying COGS inflation are going to be pretty consistent throughout the quarter. So that will be pretty evenly balanced. Q1, Q2, Q3, Q4 -- we're not anticipating anything changing dramatically on the underlying inflation piece. But again, the inventory work down, the temporary P&L effects from that, we'll see in the first half and then that should abate thereafter. Does that answer the question?

Jerry Revich

It does. So just to make sure we're on the same page with you, Jim. So it sounds like you're thinking of gross profit per ton up low single digits, maybe in the first half? And then in the back half, maybe mid-teens given the comps on the inventory destock point. Is that the range of expectations?

James Nickolas

Probably lower variation than what you just described. I would say, low teens consistently, maybe a little bit lower, minus a couple hundred basis points. But low-teens growth, I'd say pretty consistently quarter over quarter.

C. Howard Nye

And Jerry, let me add one more footnote to that because Jim mentioned the inventory reduction or management efforts that we've been going through. I mean for the quarter, that was about a $20 million P&L impact.
And my point with that is if you think about overall cost control and if you think about pricing and you think about the margin expansion that we had in the quarter, given that $20 million headwind on inventory, that's my point. That was a pretty interesting quarter relative to cost control.

Operator

Anthony Pettinari, Citi.

Anthony Pettinari

You referenced the recent acquisitions, and I'm wondering if it's possible to put a finer point on the volume benefit that you expect in '25 either in terms of tons or percentage volume benefit? Or however you be able to frame it.

C. Howard Nye

Happy to, Anthony. As a practical matter, if you're looking just at what would have been organic, it's probably up [percent] and then if you're looking at the balance of it, it's largely acquisition driven. So I think on a percentage basis, that's probably not a bad way to think about it.

Operator

Phil Ng, Jefferies.

Phil Ng

I guess, since Trump has stepped into office, certainly a lot of noise on the funding front on the public side, but it seems to be more centered around EV charging stations and some of these IRA projects. So my question to you, Ward, have you seen any pause in projects and any slowdown in bidding activity for new projects? Just help us think through any choppiness and noise on the public side when we look at '25.

C. Howard Nye

I appreciate the question. We've not seen any slowdown in that. And in fact, we think that's probably going to continue to be pretty constructive, and I want to say for several reasons. One, if we just look at what we think is going to happen relative to nonres square footage starts.
I mean, we're predicting 2025 recovery of somewhere between 8% and 9%. But to contextualize that, that's still down 19% from 2022's peak and still below a 2021 level.
And if we're looking at what we're seeing right now relative to Stargate that I mentioned in my opening comments, the investments that Amazon is making, we're simply not seeing a slowdown in those sectors right now.
If we look in our footprint more specifically, I think Google has activity right now, both in Kansas City, which is an important market for us as well as in South Carolina. Microsoft, we talked about how much investment they have ahead of them. But they've already got projects underway in North Carolina. And obviously, I've already mentioned the Amazon projects in both Claver in Texas and in Fort Myers.
But part of what I'm moved by as we think about the non-res sector is we think industrial construction is going to be pretty healthy. We think health care and education is going to be pretty healthy.
And we think the broad commercial real estate sector is going to be the one that's going to come behind that single-family sector that we said is underbuilt by around 7 million homes today, at least according to realtor.com. So we're not seeing a slowdown in that. We're actually seeing a nice steady pickup in that.
And again, so much of what's going to happen in our business is going to be driven by the locations that we have and the states in which we built leading positions we believe, are going to be in the front end of much of this development.

Phil Ng

The word, a lot of that commentary was more around private. But I guess on the public side, you haven't seen any choppiness in terms of funding being paused or any of that stuff. And then the RA piece, you just don't have as great of appreciation. How much of a good guy has it been and what it could --

C. Howard Nye

Yes. We're not seeing anything choppy on the public side. We think public is actually going to be really constructive and expected to stay that way for a period of time. I mean the fact is, if we're looking in Texas this year, TxDOT lettings are going to be really robust. They were $13.5 billion last year, and they're expected to be in that same range again this year.
Again, as you recall, Colorado actually has budget of nearly $2.1 billion. North Carolina's budget is going to increase to -- I think it's about $7.6 billion. And part of that is driven by the fact that now we're seeing about 6% of sales taxes going into NCDOT today. We think that's going to be attractive.
Equally, if we go to Georgia, I mean, their budget is up 7%. [VARTA] is at record levels. If you take out onetime supplements that they've had. So if we're looking at our state in our top 10 states on a same-on-same basis, 8 of the 10 year over year are up.
So that's why when we're looking at the heavy side nonres and on big infrastructure, we don't anticipate choppiness there. We expect pretty healthy, good, steady diets of work.

Operator

Garik Shmois, Loop Capital.

Garik Shmois

Just a follow-up question and a new one for me. Just a follow-up just on the inventory drawdown. I was wondering if you could perhaps quantify how much you still have remaining in the first half of the year.
And then just broadly, on the volume outlook, I reckon that you're looking for low single-digit growth. Has any of the components changed either for the better or for the worst, since you provided the preliminary outlook back after the third quarter?

C. Howard Nye

So a couple of things. So I would say relative to the inventory drawdown. If you think about it, it's about a $30 million headwind in Q3, a $20 million headwind in Q4. We do think we're going to be done with that by the time we get to half year.
And you know what, Garik, if you think about bookends, that's probably not a bad way to think about book ending it. And the other part of your question, repeat that again for me, Garik.

Garik Shmois

Yes. I was wondering if the volume outlook has changed at all since last quarter. Recognizing you're still speaking to low single-digit growth, but has any component, not any better or worse. So maybe infrastructure so maybe come out for the year -- better. Yes, any other color there.

C. Howard Nye

So what I would say is I think people generally have felt like interest is higher for longer. So I think overall, there's a sense that degrees of public are probably going to be a little bit more muted now than we would have thought several months ago -- I mean, I'm sorry, private.
But at the same time, I think we feel like public is going to be pretty healthy. And I think we feel like it has to be for several reasons, Garik. Number one, you have to assume this administration is going to be looking at a reauthorization at the end of '26 and having 70% of those dollars still hanging around the hoop doesn't sound like a really good idea.
So our sense is that's probably going to be a pretty aggressive play that we're going to see on public in '25 and '26. So I think that probably feels honestly, a little bit more robust. And I think portions of private probably feels modestly slower for something that feels something like a wash.

Operator

Angel Castillo, Morgan Stanley.

Angel Castillo

I'm sorry to be a dead horse here, but I just wanted to clarify on the organic growth side. You talked about maybe 1% and the rest was -- on the volume side, it was maybe driven by the M&A front. But when you walk through your end markets, you highlighted high single digit for Infra and then low single-digit growth in resi, non-resi.
So it seems to imply that the end markets themselves are maybe growing closer to above that 1% if you put that all together. So just curious, is that just conservatism? Or is there anything that we should consider there as to why maybe that organic growth is only 1%?

James Nickolas

Yes, that was not organic. That was meant to be a year-over-year view, inclusive of the acquisitions.

Angel Castillo

Sorry, the 1% on volume?

James Nickolas

No, no. The slides that show mid-single digit for infra, et cetera, low single digits for the other categories. Those were inclusive of acquisitions.

C. Howard Nye

And I think to your point, look, as I said in my comments, we're trying to be really measured in this guide right now. So if we come back to you, we'd like to be guiding up not sideways or down.

Angel Castillo

Got it. Understood. That's helpful. And then I just wanted to go back to your comments around the industry pricing and in some pockets, perhaps you're turning to April 1 and maybe a little bit more of a smooth cadence through the first half.
Should we take that to mean that midyears were moving as an industry away from midyears? Or do you still expect to see midyears in aggregates?

C. Howard Nye

I would say a couple of things. One, the guide that we've given you does not assume midyears. but we believe that there will be degrees of midyears just as they were last year. And keep in mind, where we saw them mostly last year, were in the new acquisitions, we think we will likely see that again this year.
And part of what we'll just have to watch for next year is to see, again, how does cement roll out next year because what that did as this year came into play is it really made that January 1 more challenging, specifically relative to ready-mixed concrete.
So again, the January 1 price increases are broadly in for products going into hot mix. So it's really more of a basically a ready-mix issue and a cement issue than anything else. But it does not include midyears in the guide we do think there will be some mid-years. We'll be back to you to talk more about that.

Operator

Tyler Brown, Raymond James.

Tyler Brown

As it relates to capital allocation priorities, can you guys talk a little bit about the M&A pipeline? Does a change in the regulatory environment impact anything there? And if that were not to materialize, what's the appetite on debt paydown versus the buyback, just given the balance sheet health?

C. Howard Nye

So number one, if you think about it, Tyler, $6 billion worth of transactions last year, we ended the year at 2.3 times debt-to-EBITDA ratio. So we're in a very attractive place to continue growing our business, number one.
Number two, still a lot of work to be done in this industry relative to M&A. And I'm going to see it for the rest of my career, my success will see it for the rest of their career. And my bet is my successor, successor will see that for a good part of their career as well.
As we've indicated before, we firmly identified over 200 million tons of businesses on a per annum basis that are in geographies in which we would have an interest in being. And then to your point, that we believe we can get cleared regulatorily.
Look, do I think this is going to be a $6 billion year? No, probably not. If a few things break, could it be? I suppose it always could because it tends to be opportunistic.
But my sense is, Tyler, we're looking just in a year in, year out circumstance that we're doing around $1 billion a year of transactions. And we think that's a good steady number. and there are going to be instances where you may well see it above that because you might have something opportunistically that comes along.
But if we think back to it as well relative to different administrations, et cetera. One thing that Martin Marietta has always been very consistent in doing is being in a position that we look at the markets very thoughtfully.
And we understand businesses that we believe we can buy regulatorily, points that we can't and we tend to move very purposefully on the ones that we can. Now relative to other uses of cash, let me turn it over to Jim, so he can talk to you a little bit about that.

James Nickolas

Yes, good question, Tyler. We do have a bond coming due in December this year. It's quite small, whether that's repaid cash on the balance sheet or refinance, what we'll see going forward, but it is relatively small. And I would anticipate share buybacks to outstrip any debt reduction, if there's any reduction at all.
So we've been in the market last year, bought a fair bit of shares. We'll be in the market again this year as we are every year on buying back stock. But that would come before debt pay down.

Tyler Brown

Yes. Okay. And then super quick, it sounds like there's some -- a few dynamics in first half versus second half FIFO pricing cadence, M&A, et cetera. Can you just shape first half and second half EBITDA mix? Will it slightly skew second half? Just any very helpful remodel.

James Nickolas

Yes. I think it will skew second half as it traditionally does perhaps less so this year than last year, though.

Operator

Michael Dudas, Vertical Research.

Michael Dudas

Yes, great. A little chilly here in Northeast, but we're suffering through it.
Looking at the residential market, just a little bit more thought on it's been frustrating, I think, for most of the industry that we've seen the affordability and the rate issues. Is there sensitivity on like if the economy picks up or rates fall just a little bit that there's this pent-up demand will flow through?
Or are you anticipating that? And is there any shift in the multi versus single that you might say heading in -- I know you got the longer-term numbers, but certainly, as things normalize, what a benefit that could be in the regions that you're in?

C. Howard Nye

Yes. Michael, it's a great question. I would say several things. As we talk to customers and we talk to builders right now, they're focused on buying and entitling land. So number one, I think that's a really good sign.
Number two, that tends to be a really good sign relative to single-family residential. And selfishly, we like to skew toward that because that's 2 to 3 times more aggregate intensive than it's multifamily.
The other thing that strikes me is, while it's been a long slog, builder confidence in places like Texas, Colorado, North Carolina and Georgia is clearly getting better. So we think that's a very good sign. I think they believe starts and permits are expected to pick up broadly across the marketplace today.
And the other thing that I think is worth noting, and I said it in the earlier response as well, I do think to degrees, buyers are adjusting to higher rates. And so I think to your point, I think could actually see a pretty significant surge in demand.
It's all going to be a matter of timing because it's not going to turn on with immediacy. But when we go back to the notion of 7 million homes that are underbuilt and a disproportionate number of them in states in which or MSAs in which we have a leading position, that's a pretty attractive place to be. So I hope that helps.

Operator

David MacGregor, Longbow Research.

David MacGregor

I apologize, I'm in an airport here. So Ward, I guess, on infrastructure, I hear you when you say that you're not seeing any interruption in orders right now, but I guess some of the elephant in the room is how sales -- federal funding for infrastructure construction projects. And I just wanted you to share with us how you would characterize the risk of federal government deobligating funds for state DOT projects.

C. Howard Nye

David, it's a perfectly good question, and I don't see that as a big threat. And here's one of the reasons why. I mean, if you think about overall IIJA, $1.2 trillion, right? About $350 billion to highways, bridges, roads and streets, the things that you and I look at is hard core construction. And if we think back to when IIJA was going through its debate process in the Senate and in the House.
Then former President Trump was not in favor of IIJA because he did not think enough of it was going toward what he would refer to as real infrastructure. So if we look at what's going on with that and we think about what I believe his marching orders have been to Secretary [Duffy], and that is to build big and both big in this context, I think, means highways, bridges, roads, streets, airports and big heavy infrastructure in the United States.
So I think if they do anything with that, I'm not sure that they will, I think it will be nuanced. And I think if it's nuanced, it's not going to be in those areas that you and I think about as being nicely aggregates intensive and oftentimes countercyclical.
So I think if we think of IIJA through that lens, I think that's probably the right place to be. If we think about our -- range, so many of those funds have already been obligated, obviously, a much smaller program anyway.
So as I'm sitting here measuring risk and thinking about the way the administration may be thinking about a reauthorization. I just view bad things happening there as having a relatively low likelihood. So David, I hope that helps.

Operator

Adam Thalhimer, Thompson Davis.

Adam Thalhimer

Congrats on the Q4 beat.

C. Howard Nye

Thank you, Adam. Good to hear your voice.

Adam Thalhimer

I have two things. I have some confused clients on pricing. And I think you said aggregates pricing up a little bit sequentially in Q1 with a bigger pop in Q2.

C. Howard Nye

Yes.

Adam Thalhimer

And then my other question was vis-a-vis what somebody else said about the weather, it's been a pretty tough winter. Just curious if we should bake in a conservative Q1?

C. Howard Nye

I wouldn't go over your skis on baking in a conservative Q1. I think Q1 is going to be just fine. So I wouldn't lean too hard there. And look, I think you nailed it on the pricing at all worried about pricing as Trey indicated in his question, too. I mean, an -- improvised increase for some portions of the marketplaces where this industry has resided for a long time.
And my only commentary around pricing was I'm trying to measure from a modeling perspective, to your same point, I'm not wanting people to get over their skis on certain components as to go through on a month-by-month basis.
But if I break yours down, no, I don't think you need to build anything Draconian at all into Q1. And I do think if you've got price increases layering in, in a more robust way, post-Q1, your model will hold together in a better fashion.

Operator

Avi Jaroslawicz, UBS.

Avi Jaroslawicz

Given all the volatility and fluctuations with policymaking these days, just curious how that's affecting your own capital planning and strategic decision-making.

C. Howard Nye

The nice thing about this industry is, I can tell you, this company has always been profitable. This company has never cut a dividend. And even when we went through the financial crisis and lost, let's call it, 40%, 45% of our volume, we always had pricing power.
So when we look at history and let some of the history dictate how we look at the future going ahead, look, there are going to be some policy things that will move around. I think the policy issues that I believe will see from this administration relative to public and infrastructure will be constructive to what we're doing.
I think the policy decisions we may or may not see from this administration relative to tariffs, whether it be cement, steel or otherwise, will probably be constructive to what we're doing. When I think about where I think this administration would like to see interest rates and what that can do to single-family housing I think that ought to be constructive to what we're doing.
When I think about a company that has proven itself to be actually very capable at -- I think we're likely to be at a time with availability of potential transactions and administration that's frankly going to be -- will look more favorably upon transactions going forward than we've seen in the more recent past.
So are we watching carefully? Yes. Are we going to remain agile? Yes. But as we look at it, and really start thinking about what are going to be potential plus this year, what are going to be potential minuses here.
We see a lot of pluses here. And we see that relative to what M&A will look like. We see that relative to what we think monetary policy is going to look like. And frankly, I think we're likely to see it in the way a reauthorization works.
And the way that I think about that is I think this administration, while they have control of a House of Representatives and the United States Senate, are likely to want to get a reauthorization done before midterms.
Because it passes prologue, usually midterms don't work terribly well for the party that's in the White House. So if the current administration is looking at having the White House and the Senate and the House of Representatives and is consistent with telling Secretary Duffy to build big, again, as we're watching the policy decisions that have been announced and policy decisions that we anticipate, I think, on a whole, we feel like they're going to be pretty positive from Martin Marietta.

Operator

Michael Feniger, Bank of America.

Michael Feniger

Just, of course, Jim, you mentioned price versus cost spread has widened in recent years. I'm just curious, Ward, if we are in a higher for longer rate environment and that private side is still somewhat under pressure is it inevitable that as you turn the page to 2026 that pricing comes back down to that long-term 3% to 4% average or just qualitatively, do you think that price versus cost spread remains wider than maybe what we historically seen outside of just the last three years?

C. Howard Nye

So I'm going to answer your last question first. Look, I think the price cost spread continues to work in our favor. And I think for a couple of reasons, I think actually two hold on the sentence. One, and Jim can talk to what we're seeing broadly on inflation, I think inflation is moderating inflation is coming down. So that's going to help.
But I think the bigger driver is pricing is going to remain in a fundamentally better place going forward than pricing was, at least in my view, for all the years up until let's call it the last two or three. And I think that's a fundamental change. I don't see that changing.
Look, if you look at the face of financial statements as I am, you're seeing ASPs around $22 a ton for aggregates, that's had a nice run but Michael, I'm going to say again what you've heard me say in the past, there are very few things that you want in your line that you can buy for $22 a ton except our product.
And I continue to believe that we're going to be in a position that we can get appropriate value for our product going forward. I think we'll see that spread continue. I'll ask Jim to give you a little bit of color relative to what we're seeing with respect to inflation.

James Nickolas

Yes. So as we indicated late last year, we're still of the same view COGS per ton inflation mid-single digits and then trailing by a fair bit of the ASP growth we're expecting. So based on our guidance, I would say we would expect gross margins to widen that spread by another 100 basis points.
In 2025, over 2024, that's even after overcoming the temporary P&L effects of the inventory reduction. So I think that bodes well for 2025, both well for 2026 and beyond.
So over the arc of history, we've widened the price cost spread. It's not a straight line, but it's pretty consistent over time, and I don't see why that would end.

Michael Feniger

Great, Jim. And Ward, maybe just to one of your earlier comments, I think you said in Q4, the cement margin was healthier relative to the -- what you saw in ready mix. Just how is that evolving in 2025? I mean I think nat gas prices are a bit higher. Just curious how we should think about that cement versus ready mix in 2025.

C. Howard Nye

I would tell you, I think, considerably better than about ready mix in 2025. Even as we're looking at cement for the quarter, I mean, pricing was constructive. The fact is the business really performed well despite pretty significant headwinds from a weather perspective in both November and December. We saw nice revenues in cement.
We saw good gross profit. We saw good gross margins, good EBITDA. Importantly, that [FM 7] operation that we opened it was running at greater than 90% of availability there in the fourth quarter. After we opened that up. So again, we're not going to be cement every place.
We're going to be cement where it's really strategic to us and in Dallas-Fort Worth that is really strategic. And mid loading is a fantastic cement plant.
Now if you think about what's happening relative to ready-mix, volumes relatively flat there. The delimit that ready-mix has -- is ready mixing significant aggregate price increases. It's taking cement price increases, and it's hard for ready-mix to keep pricing ahead of that.
So if we think about what the combination is going to look like, you're going to see some margin compression in ready-mix. But again, if we think about ready-mix, it's so much of a shock absorber for our company.
We have it in very select markets. It's important to us in places like Dallas-Fort Worth in Arizona. Your question really was geared around cement, and I wanted to make sure I gave you a good robust snapshot of the way cement is performing because if you could really see it at a granular basis, you'd be very comfortable with it as are we.

Operator

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

C. Howard Nye

Thank you, Christine. Thank you all for joining today's earnings conference call. As we close the chapter of our 30th year as a public company and look forward to the next 30 years, you should expect Martin Marietta to continue building on its solid foundation of past successes.
With our world-class teams and proven strategic priorities, underpinned by our resilient aggregates-led business and unparalleled markets, Martin Marietta is well poised to deliver sustainable growth and shareholder value for years to come. We look forward to sharing our first quarter 2025 results in a few months.
As always, we're available for any follow-up questions you may have. Thank you again for your time and continued support of Martin Marietta.

Operator

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.