C. Howard Nye - Chairman of the Board, President and Chief Executive Officer Anne H. Lloyd - Executive Vice President and Chief Financial Officer.

Kathryn Ingram Thompson - Thompson Research Group LLC L. Todd Vencil - Sterne Agee CRT Garik S. Shmois - Longbow Research LLC Keith Hughes - SunTrust Robinson Humphrey, Inc. Ted Grace - Susquehanna Financial Group LLLP Trey H. Grooms - Stephens, Inc. Craig Bibb - CJS Securities, Inc..

Good day, ladies and gentlemen, and welcome to the Martin Marietta third quarter 2015 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ward Nye, Chairman and Chief Executive Officer. Sir, you may begin..

world-class safety, operational excellence, cost discipline, ethical conduct, sustainability, and customer satisfaction. These pillars should lead to increased shareholder value. If the operator will now give the required instructions, we will turn our attention to answering your questions..

Thank you. Our first question comes from Kathryn Thompson of Thompson Research Group. Your line is open..

Thank you for taking my questions today. I guess, first wanted to focus on your outlook by end market in 2016. And that outlook is a little bit more muted, I think, than we and others had expected.

How should we think about margins, in particular incremental gross margins, on a go-forward basis, given the strong incrementals you reported in the quarter and against the backdrop of maybe a little bit more muted end market growth in 2016? Thank you..

When you have volume, price, and cost all working in the right direction, it's very powerful.

Part of what we said on the incremental margins is when we get to the point that we've recovered half of the volume that we lost in the downturn – and remember, that was 80 million tons – we thought we'd see on average 60% incrementals in the business, and clearly what we're seeing right now on the rolled-up business is far better than that.

If we're back to the notion of being at the beginning innings of a construction-centric recovery, and you're seeing that type of profitability over that small amount of tonnage – and keep in mind what this means, Kathryn. This is not with our most profitable business well yet.

This is with our most profitable business starting to get well in Georgia and Florida and North Carolina.

So if we see the type of acceleration in those markets that I hope we'll see, then the types of margins that you've seen in this quarter and otherwise I believe will continue to replicate themselves, and we're more than comfortable with that 60% margin that we put out there. That's a long answer, but your question's a good one.

I wanted to be thorough with the response..

That's helpful. Toward the end, you were just – I wanted to tag onto that regional focus.

What are you seeing in terms of demand, either on a state-by-state or, broadly speaking, region-by-region basis? And if there are any differences in – maybe you could focus a little bit more on the nonres end market and bifurcate between what's really more heavy industrial versus just traditional light commercial. Thank you..

We're seeing higher gas taxes there. We're going to see DOT dollars up 30%, and we see a farm economy there this year that, while some portions of the farm economy in fairness are down, we are seeing tremendous yields in the farm economy.

So when we come back and look at tremendous yields on what that could mean into Q4 or Q1, again, weather dependent, very good ag lime circumstances. If we transition across the Mississippi River – let's talk about Florida for a second.

Very – very positive, all segments are up, number two in job growth, very strong DOT program, number one in residential, and number four in nonres, which I know you asked me about. We'll hit more about that in just a second. The state of Georgia, I believe, finally, finally is starting to hit its stride.

It's lagged Florida just a bit, but right now, it's number nine in job growth. It's number three in residential. We're seeing a double of the DOT in that state, and we're going to start to feel that impact really even more profoundly late in 2016, and the TSPLOST program in South Georgia puts some much-needed volume in that part of the state.

And then lastly, but certainly not least, is what we're seeing here in our home state of North Carolina. What I would tell you is that state's really up and coming right now, number five in employment. It's just passed Georgia, in fact. It's number eight in single-family.

And what we're looking at right now on a trailing 12 months, at least through August, is we're seeing DOT awards up almost 47%, and we're seeing good work come up on the HOT lanes in Charlotte right now. So, if we look at those six states that are disproportionately important to us right now, I think that gives you a pretty good sense of where it is.

Now, the other part of your question, Kathryn, that I want to try to answer is really what's going on with nonres, because, again, if we're giving the sense that nonres is still, that's not a sense that we're trying to give.

Nonres, particularly on the heavy side – and I think that's where your question was – tend to be good, long-term, multiyear jobs.

So think of it in these terms, that we're looking at nonres construction, again, on a trailing 12-month-basis, Florida is up 40%, North Carolina is up 18%, South Carolina is up 31%, and Colorado, which began its recovery well ahead of others, is up 7%.

At the same time, if we look at some of those states and same percentage over a three-year period – and again I say that because they're multiyear – Florida up 54%, North Carolina up 11%, Georgia up 24%, and Texas up 85%. So, again, if we're looking at heavy construction with years of tail to it, I think it's got a pretty good story.

And then obviously the story of the quarter relative to the light side of it, that tends to follow housing, was really a very attractive quarter. And again in the states that we believe are disproportionately important to us, we think will continue to be a good story.

Did I hit what you needed on that?.

Yep, you did. Thank you very much for answering my questions today. I'll hop back in the queue..

Thank you, Kathryn..

Thank you. Our next question comes from Todd Vencil of Sterne Agee. Your line is open..

Thanks. Afternoon, Ward and Anne..

Hello, Todd..

Hi, Todd..

I want to circle back on that last question and that last answer, Ward, because I hear you on the amount of work that there is on the heavy side. This is specifically with regard to nonres ....

Yeah..

...and on the fact that you're seeing the lighter nonres kind of follow through and certainly a good performance in 3Q.

But, I mean, that is where you trimmed the guidance for the year, and the preliminary outlook for next year has kind of a slower pace of growth implied than what you've seen this year in nonres, going from sort of – we were at high single digits, now we're at low to mid single digits. I can't remember exactly.

And then you're talking about sort of slight growth next year.

So what's the disconnect? I mean, why are we seeing a deceleration there?.

are we seeing a bit of a slowing in the trajectory of some of the growth in Texas? I think the answer is yes. But if you're looking at the numbers and the way growth has been in that state over the last several years, it's been so heady that it almost has to naturally pull back while it's still growing. Now, here's where I think the wildcard is.

If you want to tell me or others want to say, you know what, I think it's getting better in North Carolina and Georgia and Florida and South Carolina more quickly than you're saying, I'll take that, because I think there's going to be nice growth in those states as well.

But, again, if you start seeing a higher rate of growth in heavy nonres in the Eastern United States, that's really going to be the swing factor in some of this. Because I think when we go to Texas and simply look at what's going on there, or Colorado or Iowa or others, it's going to continue to be very healthy.

We're simply talking about rates of growth, and we're already seeing volumes in some of those states that are at very, very good levels. So if you're doing a compare across our geography and trying to sort out where is there, candidly, continued room for growth, it's in the East much more so than it is in the West.

And the East has been a slower, steady growth pattern, really for the last two years, and you can see what the result is on the bottom line this year..

Well, that's – so thanks for that, and that is very interesting and leads us in interesting places. So if you're saying that you're going to basically see a handoff from growth in the West toward growth in the East, remind me, your margins and your average prices on aggregates are much higher in the East in general than they are in the West.

Is that still true?.

That would still be true..

So that, going back to Kathryn's original question, would imply a bit of a, all else equal, a bit of a tailwind on price and margin and things like that next year, if in fact that's happening..

Todd, I think that's true. I mean, the pricing in the East has always been higher than it's been in the West. And, look, do we want to see as much volume go as possible? We absolutely do. The primary thing we really want to do is make sure that we continue to make more money and deliver more value for our shareholders.

And what I would suggest to you, I think the results from the quarter are spectacular. I think what we're having this year is an outstanding year. I think we're going to have a better year next year, and I think the parts of the country, to your point, that have historically been our most profitable parts of the country are continuing to get better.

And I think the level at which they're getting better is starting to outpace other parts of the country. And by the way, they're overdue. That's not a surprise..

Excellent. Thanks for that. Second question, we've heard some other companies and private companies – I've asked this question a couple times today – talk about bottlenecks in parts of their business from labor generally at their customers, whether it's concrete finishing crews or framing crews or what have you.

Is that something that you are seeing in your business?.

No, Todd, it absolutely, positively is. And probably the parts of the country where you have less labor issues than others might be in parts of South Texas, where you have some of the people who are directly involved in energy not necessarily directly involved in some of that work. But if we're in Colorado, it's tight. If we're in Iowa, it's tight.

If we're here in the Carolinas and Georgia and South Carolina and increasingly in Florida, it's tight. And that's one of the reasons that when we were talking about how much volume we could recover in half 2 relative to those torrential rains that occurred in half 1 in the United States or in Texas, in particular, we had some concerns about that.

It's still a concern in markets like DFW and North Texas, in particular. Because, again, that economy, we talked about the fact that's the best single-family housing market in the United States. So you can imagine the type of activity that can be there. So the supply chain, the ability to deliver, et cetera, is challenged in those marketplaces.

No question, Todd..

And, Todd, I think if there was one uniform message that – as you know, our planning process has us travel around country. The one uniform message that we had, really, from almost every part of the geographies, was dealing with labor, and that impact on the supply chain..

And just to be clear, Anne, labor at your operations or labor at your customers?.

Customers..

Customers. Downstream, Todd..

Got it. Thank you..

Thank you. Our next question comes from Garik Shmois of Longbow Research. Your line is open..

Hi. Thank you. First question is on aggregates pricing. You reiterated your guidance, but we are seeing some, I guess, deceleration in the reported growth in heritage aggregates pricing. Given the context of your volume outlook for 2016, I'm just wondering how maybe we should start thinking about the rate of price growth as we look out to next year..

Sure, Garik. We've actually always been pretty consistent on that, and that is, in a circumstance where you believe you have more muted growth than others, meaning really sub-5%, then pricing as a percent and volume as a percent have – end up being relatively tied to each other, particularly as you go up the ladder right now.

So what I would say is, if I'm looking at pricing across our group right now, you saw the up 5%, at the same time, if I'm looking at it on a group-by-group basis, not surprisingly, we're seeing bigger price increases on a percentage basis in the Western United States, in large part because there's room for that in the West because it's been lower.

But what I would suggest, Garik, is the view that we've shared really for the last couple of years on pricing has not materially changed..

Okay. Thanks. I guess just shifting to cement, couple pricing questions. You indicated that fourth quarter should be likely the last quarter that you'll see some of the low-priced TXI projects come through. And as then they roll off, you should benefit from higher pricing.

Just wondering if you can maybe provide some sequential guidance on cement pricing, how we should think about those low-priced projects rolling off? And then secondly, you indicated some supply that has come onto the market in Texas. You also indicated 4% expected volume growth next year -.

Yeah..

– and there's an announced price increase in the market for the spring.

As you look out, clearly a couple months away, from the price increase being implemented next year, can you talk about some of the puts and takes around supply-demand in Texas and your level of confidence of securing pricing next year, given some of the supply-demand balancing?.

Yeah. Sure, we'll try to do that. I mean, here's the way that I would think about it, first of all. Let's talk about some of the dynamic that simply occurs because we're not going to be in cement in California anymore.

So let's start with that and talk about the picture that you saw for the quarter, because I think that's important to really understand and have context around. So 70% of the volume decline for the quarter was attributable to Riverside in California.

So what you had immediately is when the deal's announced, you had certain customers who were seeing a change in that marketplace, who were seeing a non-vertically integrated player, ourselves, going away, and the downstream customers realigning themselves. So that was what we really saw in the quarter.

If we back away from that, really, you're looking at cement volumes down 4%. Our quick snapshot is of the 4%, about 2% of that is cement that's no longer finding its way to oil or the oil patch or others, trying to find a home for some of that.

And the other, I think, is directly to your point, Garik, and that is you do have a new importer right now in South Texas, and there has been some share that's gone there. What I think we're focused on is value right now. To your point, we're looking at a $12-a-ton price increase in April.

We are the market leader in Texas, and we have a lot of conviction around that. As I look at what Texas capacity is and look at what Texas demand is, both in 2016 and 2017, I'm seeing something in 2016 that's going to be close to 2.8 million tons of deficit.

I'm seeing what people are projecting to be about a 3.2 million ton deficit as we go into 2017. So, as we're sitting here with what I feel like are very attractive and efficient plants, both in North Texas and Central Texas, I mean, here's what I'll tell you.

What we have done relative to the efficiencies at Midlothian and Hunter during the time that we've been there, I think, is impressive. We can run plants in Texas as efficiently as anybody. If we want to go and get share, we can go and get share.

That's not how I think we're going to put value for our shareholders today, and we're resilient on making sure that we're getting the price in that marketplace. I'm confident that we can. And the fact is, at certain levels, and I think this is where we are, price is more valuable than volume.

So if you come back and take a look at what our performance was in the quarter, remember what I said in my comments. Our cement results were impressive, and we believe that. And I believe we've got a very good team. I think we've got superb locations. I think we've got great operations.

And I think given the dynamic in that marketplace, I feel pretty good about it, if you can't tell..

Okay. Thank you..

Thank you. Our next question comes from Keith Hughes of SunTrust. Your line is open..

Thank you.

Just building on the last discussion on Texas and cement, could we talk about aggregates in Texas? What kind of volume pricing did upi see in the quarter?.

Yeah. I mean, if we're just looking at – we'll talk about the West Group for a second, because what we're really seeing if we look at the West Group is we saw tonnage – 15 million tons versus 14 million in the prior year. One thing to remember is North Troy tonnage is in there for last year, so that's going to throw that off pretty markedly.

Frankly, if we look at what we see in Texas for next year, I think that's probably what you're pretty interested in, too. And I got to tell you I feel pretty good about it.

I mean, if we break it down and look at it this way, Keith, I mean, North Texas, I think the market there next year is better than it is this year, in large part driven by very large projects. The Horseshoe Project in downtown Dallas, as well as I-35 E and W are both going to be under way in North Texas, in the metroplex.

State Highway 183 is very much under way.

Even when we move farther south to Houston, part of what I look at is not just what we have awarded – and by the way, that's I-69 and Farm Market Roads 1488 and 1774, and some of the work that we have at Freeport LNG, but really what's coming – and I'm seeing good work relative to the Harris County Tollway Authority, good TxDOT work, good work also at Bush Airport.

And then when we come down to South Texas, and we're looking at the large energy and infrastructure projects that really, in my view, support a good business in 2016 and beyond at Chenier at the pipe plants, Harbor Bridge, and otherwise, the volume that I think we're going to see in Texas on these long-lived projects is really attractive.

The other thing that I'm moved by in Texas right now is TxDOT already has a big budget, but if you spoke to the people at TxDOT, what they would tell you is it looks good, backlogs are good, going forward with work it looks attractive. And by the way, when we start putting this Prop 7 money to it, it's going to feel like it's some degree of steroids.

So, again, you're talking big numbers in a state that already has big numbers, but what it gives me a sense of, Keith, is it's likely to be healthy there for a good while going forward. Did you need more? I'm happy to talk more about Texas, I want to make sure I'm answering you..

Well, it's a lot of information, and without context it doesn't mean a lot. Basically my question was you saw cement volume down, effectively 4% that you were saying earlier in the call. I assume aggregates would go along with that. Was that the case in the -.

No, that was not the case. So if I'm looking across our Southwest division, I'm seeing aggregate volumes up in almost every district that I'm seeing, and many of them at or close to double digits. And I'm seeing price up without exception in every district, just to be granular on that..

Got it. And the second quarter, we had the torrential rains there. And of course it got better here in the third. Looks like we had, I guess, a little pickup in aggregates there, not in cement.

What's the deviation there?.

I just think you've got some of the supply chain issues with ready mix and otherwise that we were actually talking to previously on the call with Todd. Actually I think in North Texas it was pretty good. I think the issue that we discussed is really some of the import and other issues more focused on Houston right now.

And as I said, did we give up a little bit of share in that part of Texas? Absolutely we did. Do I regret it? No, I don't. Do I think price is more valuable? I do..

And, Keith, if you think about it, Keith, there is still overhang from weather in the second quarter. You'll recall we talked about the fact that the clinker barns are full, the silos are full. So you have that, coupled with some new capacity, particularly coming into that South Texas area.

That, to us, is really some of the dislocation during that period..

And – thank you for that. I guess final question. It was talked about in the initial question on the call, the delta between your commentary on nonresidential and the growth – the forecast in the press release of low single digits or modest growth, whatever you want to call it..

Yeah..

I guess Texas trajectory, is that the difference there versus what I think many would've expected you to say about nonresidential, or were there other -.

Yeah. Yeah, I think it probably is. I think when you go back – and I think it's trajectory and multiyear nature of it. I think that's probably what people are reading or not reading into it, because if the sense is that we feel like nonres is going off a cliff in Texas, that's not what we're seeing.

I think it's the bigger issue is what kind of pop are you going to see east of the Mississippi? I think there's going to be one. I think the question is we're going to quibble over how much and when, and at some point we'll all look at it in our rearview mirrors and be right..

Okay. Thanks very much..

Okay..

Thank you. Our next question is from Ted Grace of Susquehanna. Your line is open..

Good afternoon..

Hi, Ted..

Ward, just as a point of clarity, you framed your outlook for 2016. You mentioned that it was done in conjunction with McGraw-Hill's forecasts, and I very much interpret it to be Martin's outlook for those end markets. But obviously McGraw-Hill kind of models stuff nationally..

Yeah..

Is there a very specific Martin overlay so that those are very specific to your markets? And really the gist of the question is, is there potential for you to outgrow the markets, or should we very much interpret those as your volume guidance at this point in time?.

Again, this is very, very preliminary guidance, Ted. So we'll obviously come back in February and give you what we feel like is a much more detailed snapshot of it.

I mean, what we do as we go through a budgeting process is we're going to use basically Dodge and we're going to use PCA as markers that we'll have, and then we'll come back and say, let's talk about what form of deviation we may or may not see from that in any given market.

Because if you've got a lot of bridge work in a market, that from a dollar perspective could pop a market pretty considerably. So we use those as markers and then we use what we're seeing in the field as something to really adjust and tune that a little bit with.

Does that help?.

Yeah. That's very helpful. On the Texas cement topic, I know you talked about the markets running in deficit of about 3 million tons in 2016 and 2017 -.

Yeah..

– based off the most current analysis.

I guess, what's the clearing mechanism for the market? I mean, is this a scenario where new imports find themselves into Texas to kind of clear the market? Is it demand destruction because pricing goes up? I mean, just – I think – we've gotten a lot of question on, I think, people's concerns that there will be more imports into Texas.

So it'd be helpful just to get your guys' kind of perspective on that issue, and if you think that's a likely source of incremental supply..

I guess, my sense is – obviously Argos is coming into South Texas right now with probably – let's call it a half a million tons of cement. I do think that's a tough move for a lot of people to make simply because of logistics. Clearly, that's not something that's going to have any significant impact, for example, on a Dallas-Fort Worth type market.

I think you need to remember, too, that the vast majority of players who are in that market are also domestic producers. So the short answer is unless some cement comes in, you simply can't meet the market demand. That said, I think the plants that are in that state are good, efficient plants.

I think in large part the need for much advanced imports in that state will not be particularly acute. I'd be surprised if we saw that. So I don't see a marked change coming in that marketplace, Ted, at least from a logistics and a practical perspective..

Okay. Thanks. And then the last question's for Anne. Anne, slide 5 of your deck, you outline a $10 million headwind from net cost increases. You talked about energy being an $11 million tailwind in the quarter, I think.

Can you just bridge us on the key components of that cost increase, just so we appreciate what they are?.

Yeah, Ted. You're looking at some increased repair and maintenance costs, some increased overtime costs of your employees as you ramp that up versus adding a lot of new heads. Those are probably the two principal drivers..

So net think about those being about $20 million of headwind, offset by roughly $10 million of diesel benefit?.

Round numbers, yeah..

Okay. All right. Super. I'll leave it there. I know there are other people in the queue. Good luck this quarter, guys..

Thank you, Ted..

Thank you. Our next question comes from Trey Grooms of Stephens. Your line is open..

Hey. Good afternoon..

Hi, Trey..

So, a quick – I guess this would be a follow-up to Ted's question.

As we look into next year, can you talk about – Anne, can you talk about some cost headwinds or tailwinds that you may be facing, outside of diesel, looking into 2016? So any other raw materials or SG&A or pension or just anything that we could kind of be aware of and watch as we enter next year?.

I think we'll start with pension, because that one is really what's going to be – the corporate AA bond rate at the end of 2015 will set whatever that pension cost is going to be.

So you can look at the sensitivity that we have disclosed for 25 basis points movements there to tell you whether or not there should be anything that happens on the pension side. I think we will see – I don't think that we'll have big general wage inflation. I do think we'll potentially see some increase in overtime.

I think as we continue to invest in our rolling stock, we should see maintenance and repair stabilize. I would also expect that for some what I would call energy derivative consumables, we consume a lot of rubber, we consume a lot of lubricants and other types of energy derivative costs, explosives.

I would expect that the benefit we've seen from diesel in 2015 begin to carry its way through those types of products as we move into 2016..

Okay. Good. That's helpful.

And then switching gears to the legacy TXI cement contracts that are rolling off this year, where are we in that process of these contracts rolling off? I guess, how much more do we have as we're going here and going through the 4Q?.

I mean, Ted, they'll be substantially gone by the end of the year. I mean – Ted, I'm sorry, Trey. They'll be substantially gone by year-end..

Yeah..

And it was – as far as kind of how they rolled off, was 3Q a big chunk of it and then less in 4Q, or how do we measure that?.

Yeah. Yes. The bigger chunk was in Q3..

Okay. And then my last question is, I just want to make sure I understand some of the discussion around maintenance expense on the cement side..

Sure..

Am I accurate in taking that you guys have lowered your maintenance expense a little bit for the – I guess, taking into account 3Q and then 4Q? Because I think the guidance was $6 million in 3Q, $14 million in 4Q, and I think you did just under that and expect that to double. So maybe it's a few million less in the 4Q than you originally expected.

Is that accurate?.

Yes. That's correct..

Yeah. That is accurate. Yes..

Okay. Thanks a lot. I'll jump back in queue. I know there's more. Thanks..

Thanks a lot, Trey..

Thank you. Our next question comes from Craig Bibb of CJS Securities. Your line is open..

Hi. And I hope not to hammer on the same point too much, but I guess I'm trying to really understand what changed from the second quarter to the third quarter. The first half, you had lots of rain that was suppressing volumes. And you have a lot less rain in the third quarter, but volume growth slowed, price growth slowed.

From what I've heard so far, it sounds like energy volumes in Texas is a chunk of that, or what am I missing here?.

I think in large part, what – I'm not sure you're missing anything per se, Craig. I think a lot of it goes back to how much can the market absorb right now, given logistics and other downstream constraints that I think the market is just generally faced with as we speak.

And I think a lot of the makeup – if you can give me a good sense of how long weather will at least be warm and dry into Q4, honestly, I think that's your big swing factor. So what I'm more focused on is when I come back and take a look at pricing for the quarter, I'm not disappointed on pricing in the quarter.

And again, I think pricing next year is going to be a very good story. And if we can run effectively through Thanksgiving, you can have a Q4 that could make up some of that volume. That's really your swing factor, Craig. I don't think we ever anticipated Q3 was going to be a period of time where you'd see a lot of makeup on that..

Okay.

And when you're looking at nonresidential, your forecast of a slight or modest growth in 2016, is that based more on your bottoms-up process or the external data that you're using?.

No, it's pretty broadly macro with a dash of what we're seeing, again, very preliminarily relative to some of the local markets. I mean, obviously, we're going to come back when we get in Q1 and we roll up the full year and give you a sense of how we feel like all of that's going to roll up.

But the fact is, if you look at the way that we've done it over the years, I think what you're going to find, Craig, is we tend to be relatively conservative in the way that we roll that up. And I think that's one of the reasons that we're good on costs as well.

I think good, slow, steady growth helps us relative to how we spend our dollars, how we hire people, and how we plan. So I think if there's a bias there built in, in Martin Marietta, it's one toward conservatism..

Okay. Well, I guess the disconnect is we kind of – we entered the year and – expecting to be on the cusp of an upturn in the construction cycle, and I think people are surprised to see volume growth expectations tapering down at this point..

Oh, yeah, I think the important thing to remember is we're talking about volume growth expectations, and I think the other thing to keep in mind is what we're doing with those volume growth expectations is putting some very serious money on the bottom line.

So if you're looking at the performance of this business and what our people do, if there's anything in the performance of the business that's disappointing to people, I'm at a loss on what that can be. We can control a lot of things at Raleigh, Atlanta, Dallas, Denver, other places.

Volume isn't necessarily one of them, but when it comes our way, we can make money with it. And that's very much what we're doing. And, again, we're talking about growth. We're only quibbling over what the amount of growth is going to look like.

And, again, if we're tending toward conservatism and we have downstream markets that are tough to take increased volume simply because you've got trucking and other issues that are under some degree of duress, I'm not sure that that's a fair view of a problem with the market, because we don't see that right now..

Okay. And could there be other issues in the fourth quarter related to weather from South Carolina or any -.

Well, I mean, look, weather has been a challenge. I mean very candidly, we've got a quarry north of Columbia, South Carolina, that has 4 billion gallons in it. I mean, the Broad River came out of its banks and filled it up. And we'll pump it out, and we'll put it right back in the Broad River. The quarry happens to be a rail-connected quarry.

And as you'll recall, Craig, we've got the largest rail-connected quarry system in the United States in the Aggregates business. So we can go into the marketplaces that can now not be served by north Columbia by rail from other quarries, and we can equally come into markets by boat.

So from a market service perspective, I don't think we're going to be that affected by it. From an efficiency perspective, can we be affected by it? Yeah. And I guess the other thing that I would say is insurance in circumstances like that is pretty difficult to have. So you, in large part, tend to be relatively self-insured.

And so what I would tell you is there's going to be some capital that's going to be utilized in that as we go forward. And the other thing, just in fairness, we did experience over the weekend pretty considerable rain events in Central and South Texas as well.

And at our Webberville facility outside of Austin, we got a lot more water there than we typically would. And at Garwood Sand & Gravel which is typically a wet operation, we've had more water there than usual. Again, do I view these as material? No, I don't. Are they issues that can affect pure efficiencies in some markets? Sure.

But, as we said in the commentary, relative to Q4, weather is the single most important variable on the way that quarter's going to play out..

And you'll have the water back in the river by the end of the fourth quarter?.

No, we will not. I mean, when you've got a quarry that's got several billion gallons – and that's what it has, several billion gallons of water in it – you can expect that to take the better part of half a year as opposed to a matter of weeks or months..

Okay. Well, thanks a lot, guys..

You're welcome. Thank you..

Thank you. Our next question comes from Trey Grooms of Stephens. Your line is open..

Hey, thanks for sneaking me in again here at the very end. I just wanted to get some color on the net proceeds.

Can you remind us what were the net proceeds of the sale of Oro Grande?.

Well, we sold OG for $420 million. We've got basically the $25 million that we referenced relative to some environmental indemnities and some inventory write-downs. So there's your quick math, Trey..

All rights, so that's it, there wasn't anything else. Okay. And you bought back $158 million of stock in the quarter, and I think you mentioned using the net proceeds from the sale to repurchase stock.

This sale didn't occur until the end of the quarter, so how should we think about that net roughly – just call it rough numbers, $400 million? Is that still incremental, or was that $158 million kind of – should we take that out as we look forward, just as purely as the net as it relates to the proceeds from the sale of Oro Grande?.

Yeah. Trey, as we indicated, in anticipation of the sale, we went ahead and accelerated the purchase against that $420 million..

So just net it out, Trey..

So you should net it out, and it will have the expectations that we should complete the balance of that..

Okay. Perfect. Thanks a lot for clearing that up..

Absolutely, Trey..

Thank you. I'm showing no further questions. I would like to turn the call back to Ward Nye for closing remarks..

Thanks again for joining our third quarter earnings call. We're enthusiastic about the opportunities to generate strong cash flow and return value to shareholders through our dividend and the repurchase program that we were just discussing. We look forward to talking with you more about our fourth quarter and full-year results with you in February.

Thanks for your time today and your continued support of our company..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day..