In line with the Strategic Operating Analysis and Review (SOAR) 2025 plan, Martin Marietta Materials, Inc. MLM has inked a deal with CalPortland Company to sell certain California-based West Coast cement and ready mixed concrete operations for $250 million in cash. The operations include the Redding cement plant, related cement distribution terminals and 14 ready-mixed concrete plants. The deal is likely to close in second-half 2022, subject to certain regulatory approvals and other customary closing conditions.

Post the news release, MLM stock fell almost 3.8% on Mar 1.

Ward Nye, the chairman, president and CEO of Martin Marietta, said, "Consistent with our SOAR 2025 plan, we continually look for ways to optimize our portfolio and product mix through asset swaps and divestitures. After thoughtful evaluation, we determined that monetization of these operations is the best avenue to maximize value for all stakeholders."

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The company also intends to sell the Tehachapi cement plant and related cement distribution terminals.

Inorganic Moves Bode Well

Martin Marietta has been banking on long-term strategic plans, commonly known as SOAR. MLM's SOAR 2025 plan includes the ongoing evaluation of aggregates-led opportunities of scale in new domestic markets, expansion through acquisitions that complement the existing operations and divestiture of assets that are not consistent with the stated strategic goals. On that note, it is to be noted that the company invested $3.1 billion in acquisitions in 2021.

On Oct 1, 2021, Martin Marietta completed its largest acquisition of Lehigh Hanson, Inc.'s West Region business for $2.3 billion in cash, thereby propelling growth in California and Arizona.

The company's priorities are focusing on value-enhancing acquisitions, prudent organic capital investment and consistent return of capital to shareholders while maintaining an investment-grade rating profile.

That said, higher diesel and raw material costs along with adverse weather raise concerns for MLM and other Zacks Building Products - Concrete and Aggregates industry players like Vulcan Materials Company VMC, Summit Materials, Inc. SUM and Cornerstone Building Brands, Inc. CNR.

We believe that the recent move and improved pricing as well as disciplined cost management throughout the business will help it to mitigate these risks.

Zacks Rank

Martin Marietta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.