C. Howard Nye - Chief Executive Officer, President and Director Anne H.

Lloyd - Chief Financial Officer, Executive Vice President and Treasurer

Arnold Ursaner - CJS Securities, Inc. Garik S.

Shmois - Longbow Research LLC L. Todd Vencil - Sterne Agee & Leach Inc., Research Division Christopher White Adam Rudiger - Wells Fargo Securities, LLC, Research Division Trey Grooms - Stephens Inc., Research Division Ted Grace - Susquehanna Financial Group, LLLP, Research Division Jerry Revich - Goldman Sachs Group Inc., Research Division

Good afternoon, and thank you for joining Martin Marietta Materials quarterly earnings call. With me today is Anne Lloyd, our Executive Vice President and Chief Financial Officer.

As you saw in our press release, our third quarter 2013 results delivered double-digit growth in both net sales and earnings per diluted share. In a few moments, I'll provide the details for the quarter, our outlook for the balance of this year, as well as our preliminary thoughts regarding 2014.

But first, as a reminder, today's discussion may include forward-looking statements as defined by securities laws in connection with future events or future operating or financial performance. Such statements are subject to risks and uncertainties, which could cause actual results to differ materially.

Except as legally required, we undertake no obligation publicly to update or revise any forward-looking statements, whether resulting from new information, future developments or otherwise. We refer you to the legal disclaimers contained in our earnings release related to our third quarter 2013 results and to our other filings with the Securities and Exchange Commission, which are available both on our own and the SEC websites.

Also, any margin references in our discussion are based on net sales, excluding freight and delivery revenues. These and other non-GAAP measures are also explained in our SEC filings and on our website.

Now for our discussion. I'm pleased to report that our results represent a record in terms of sales for any third quarter.

Our consolidated net sales of $600 million were up 12% over the prior-year quarter. This growth was driven by volume and pricing improvements in the aggregate product line and a new third quarter net sales record for the Specialty Products business.

The ability to leverage higher net sales, together with our company's inherent cost-containment culture, resulted in gross margin improvement and a net earnings per diluted share of $1.54, a 13% increase over the prior-year quarter. Our strong overall performance reflects gains in all of our product areas.

Specifically, our Aggregates product line shipments increased 8.1% over the prior quarter, driven by strong private sector construction activity. Notably, 3 of our 4 end-use markets, which, together, comprise slightly more than half of our Aggregates volume, reported double-digit growth in shipments over the prior-year quarter.

The nonresidential market led the way with a 19% increase, with growth in both the commercial construction and energy sectors. In fact, the strength of domestic shale gas production led to a 27% increase in shipments during the quarter.

Estimated full year 2013 production at the Eagle Ford Shale in Texas is 1.4 million barrels. We expect this trend to continue as annual oil production at the Eagle Ford is expected to double in the next 5 years, reaching 3.1 million barrels of oil equivalent per year by 2025.

The residential market continued to benefit from year-over-year improvement in housing starts and permits, experiencing a 15% increase in shipments, highlighting the resiliency of the ongoing housing market recovery in our key markets. Lastly, the ChemRock and Rail market experienced higher ballast shipments and reported a 13% increase in aggregates volume.

We achieved solid third quarter results despite headwinds in public sector construction. Ironically, the public sector infrastructure end-use market, traditionally a strong market, is experiencing a temporary period of stagnation, and shipments to this market were relatively flat compared with prior-year quarter.

This stagnation can be traced to governmental disputes, primarily at the federal level, where budget and deficit disagreements and sequester have led to uncertainty regarding future federal highway funding levels beyond the September 2014 expiration of the Moving Ahead for Progress in the 21st Century Act, or MAP-21. As a result, states and municipalities are reluctant to commit to large-scale infrastructure projects.

While we still expect several of our key states, notably Texas, North Carolina and Florida, to benefit from the Transportation Infrastructure Finance and Innovation Act, or TIFIA, component of MAP-21, the pace of these awards has been slower than expected. To date, only 2 TIFIA awards have been made, likely further delayed by October's government shutdown.

That said, we're cautiously optimistic that this stalemate in Washington is transitory in nature as most Americans want safe and efficient transportation infrastructure. Realistically, though, we're not counting on any meaningful impact from TIFIA before the second half of 2014 and, more notably, in 2015.

As we look forward into 2014 and through the next construction cycle, we believe growth in private sector construction and increased TIFIA awards will lead to increased earnings. Additionally, when there's more clarity on federal funding, infrastructure spending should stimulate complementary public sector construction and, subsequently, our earnings potential.

As noted, aside from federal level concerns, we are encouraged by actions taken at both state and municipal levels to advance investment in the growing infrastructure needs of their citizens. As an example, voters in 3 regions in the southern part of Georgia approved the 10-year special purpose local option sales tax to fund transportation improvements.

This tax went into effect at the beginning of the year, and we anticipate the pace of the projects funded by this initiative to accelerate going into 2014. By further example, infrastructure activity in Indiana is a case study in innovative financing to meet state transportation needs.

In 2005, former Indiana governor, Mitch Daniels, launched a 10-year transportation plan, known as Major Moves. Funded principally by the long-term lease of the Indiana Toll Road, Major Moves committed billions of dollars to infrastructure improvement.

As Major Moves reaches its 2015 expiration, the Indiana Legislature continues to invest in infrastructure. In the recent 2013 legislative session, $215 million was targeted to new road funding from the dedication of a 1% sales tax, together with highway budget changes.

Additionally, $400 million of general fund appropriations are being set aside for Major Moves 2020 trust fund to expand highway projects that enhance the movement of goods. Thus Indiana's vision and implementation of infrastructure investment as the pillar for economic growth provides a solid foundation in our Indianapolis market, as well as a model for others to emulate.

We also expect a significant reconstruction effort along portions of the front range in Colorado in response to recent flooding. The cost to repair and rebuild roads, bridges and homes is estimated in the hundreds of millions of dollars.

At the moment, many of our employees and customers were impacted by this disaster, and we've been working where we can with our friends and colleagues, as well as local communities, municipalities and the state of Colorado to assist in this massive recovery effort. Our pricing momentum continued during the quarter, with each product line at the Aggregates business reporting increases.

The Aggregates product line achieved pricing growth in each reportable segment, leading to an overall price increase of 2.3%. Pricing was strongest in the Mid-America Group, led by the Carolinas and Indiana markets.

Our vertically integrated business has also achieved pricing growth, with the ready-mix concrete and hot mixed asphalt product lines reporting increases of 7% and 1.6%, respectively. Our Specialty Products business continued its strong performance, delivering record third-quarter results with net sales of $55.8 million, an increase of 13% over the prior-year quarter.

Sales growth reflects the increased sales of dolomitic lime provided by our new kiln capacity that became operational in the fourth quarter of 2012. On a consolidated basis, gross margin was 23.8%, a 70-basis point improvement over the prior-year quarter.

We've leveraged net sales growth into a 140-basis point expansion of gross margin for the Aggregates business. All 3 reportable segments achieved margin growth, led by 200-basis point increases for the Southeast and West groups.

Margin growth for the Mid-America Group was led by the Mid-Atlantic Division, where an 8% increase in Aggregates shipments, once again translated into incremental gross margins exceeding our publicly stated expectations. Gross margin improvement for the Aggregates business was tempered by a 2.6% increase in direct production cost per ton for the Aggregates product line.

The primary drivers of the increase were 2 atypical expenses, 1 related to the Colorado flooding and the second to specific workers' compensation matters. We also saw increased repairs in certain districts.

Gross margin for the Specialty Products business was 35.7%, affected by planned maintenance costs at the Woodville, Ohio operation and higher cost for coal when compared to the prior-year period. Selling, general and administrative expenses were $37.1 million for the quarter or 6.2% of net sales.

The increase of $5 million over the prior-year quarter was partially attributable to higher pension expenses and a planned information systems upgrade that was completed in October. This investment in first grade information systems provides an important tool for our managers and has helped to allow us to differentiate ourselves from others in our industry.

Consolidated earnings from operations were $100.8 million compared with $91.5 million in the prior-year quarter. In July, we completed the acquisition of 3 quarries in the Atlanta, Georgia market.

The transaction added more than 800 million tons of permitted aggregate reserves and enhanced our position in this key rebounding market. As we previously stated, our goal is to have a #1 or #2 position in markets with near and long-term attractive economic drivers.

This transaction is wholly consistent with that strategic objective. For the first 9 months of the year, we generated operating cash flow of $165.6 million, an increase of over $40 million.

In addition to the Georgia acquisition, we invested $102 million in capital projects while maintaining our quarterly dividend rate of $0.40 per common share. At September 30, our ratio of consolidated debt to consolidated EBITDA was 3.06x, in compliance with the limits under our debt covenant.

As we head toward 2013's conclusion, we're encouraged by positive trends in our business and markets, especially private sector employment and construction. For the full year 2013, we anticipate Aggregates volume to the nonresidential end-use market will increase in the mid-single digits, given that the Architecture Billing Index, a leading economic indicator for nonresidential construction activity, remains at a strong level.

Residential construction is experiencing growth not seen since late 2005, with seasonally adjusted starts ahead of any period since 2008, driving our residential end-use market to the high-single digit volume growth. By contrast, the weather-related slowdown in Aggregates shipments experienced in the first half of the year, coupled with government austerity and the hesitancy created by the uncertainty of federal highway spending, leads us to expect Aggregates shipments to the infrastructure end-use market to be down in the mid-single digits for the full year.

Our ChemRock/Rail end-use market is expected to be flat for [ph] 2012. Cumulatively, dependent on fourth quarter weather, we anticipate Aggregates product line shipments will be flat to slightly up compared with 2012 levels.

We also expect Aggregates product line pricing to increase 2% to 4%, although this increase will not be uniform across the company. Aggregates product line direct production cost per ton are expected to be slightly up compared with 2012.

Our vertically integrated businesses should generate between $335 million and $355 million of net sales and $18 million to $20 million of gross profit. Net sales for the Specialty Products segment should range from $220 million to $230 million, generating $81 million to $85 million of gross profit.

Steel utilization and natural gas prices are 2 key drivers for this segment. SG&A expenses, excluding costs in 2013 and 2012 related to the information systems upgrade as a percentage of net sales, are expected to remain relatively flat.

Interest expense should remain consistent with 2012. Our estimated income tax rate is 26%, excluding discrete events.

Capital expenditures are forecasted to be $155 million. While still early, we started to frame our initial outlook for 2014.

Based on McGraw-Hill Construction's recent economic forecast, together with our own market view, we expect shipments for all Aggregates end-use markets to increase compared with 2013. Infrastructure market shipments should increase slightly.

We anticipate the nonresidential market will experience mid- to high-single digit volume growth, with continued strength in both the commercial component and the energy sector. We expect shipments to the residential market to have double-digit growth based on the trend in housing starts.

Finally, we expect the ChemRock and Rail market to increase slightly. To conclude, we believe significant upside exists in our markets and Martin Marietta has demonstrated an ability to translate this improved macroeconomic environment into increased sales, earnings, earnings per share and cash flow.

As noted, our future confidence is underscored by the growth of private sector construction activity that's spreading geographically. Nonresidential growth is predicted to accelerate, especially as more states and municipalities get support and votes from their constituents to make infrastructure improvements, thus providing what is typically a greater proportion of more aggregates-intensive projects.

We're also cautiously confident that public sector activity will begin to grow and then expand as the overall economy recovers. Historically, infrastructure investment has been an area of political consensus.

And while we've not factored any meaningful growth in federally funded infrastructure programs, all told, we are well positioned to capitalize on these opportunities and thereby enhance long-term value for our shareholders. Thanks very much for you interest in Martin Marietta.

The operator will now give the required instructions. We'll turn our attention to addressing your questions.

Ward, in your prepared remarks, you mentioned atypical costs. Could you expand a little bit on what they were and discuss the impact it may have had on your margin?

Absolutely, Arnie. Really, it may fall in several key buckets.

I guess, number one, we can look at some money that we spent typically bringing the acquired businesses that I spoke to in Atlanta really up to the type of level that we would expect. We spent a little bit over $3 million doing that in that market.

If we take a look at what happened in Denver, you heard me reference the historic flooding that occurred there. We spent around $800,000 in repairs and other things in Colorado along the front range attributable to that single event, but I'll tell you perhaps even more notably is we think the profit impact for the quarter was probably $2 million down for us in Colorado, around $0.04 per share.

So that's notable all by itself. And then lastly, and this one was odd for us, Arnie, we had about a $2.6 million debt on workers' compensation.

As many of you have heard me say in the past, safety is the core function here in Martin Marietta and we've had 2 incidents earlier in the year that were serious that are atypical for us. And it's not the way that we do business, and it's not the way we like to go about doing the things that we do, because it affects people's lives.

It also affects your bottom line and that had about a $2.6 million effect. If we go back to and really take those atypical items and then I try to outline, Arnie, what we would see is cost per ton would line up more with about 6.54 [ph] this quarter versus 6.56 [ph] in the prior quarter.

So you can actually see, they had a rather profound effect on the cost to the quarter.

And then my other question, if you will, on the asphalt tons to external customers, that was down 14% in the quarter. Is that more just driven by highway work or was there some other factor, weather or some other factor that may have caused that big a drop in asphalt tons?

I think what you hit is the weather piece of it, Arnie. Remember, we picked up a much, much bigger piece of asphalt paving when we bought the assets in Colorado.

If you go back to prior year, what you'll see is our asphalt tonnage was around 3.2 million tons, external was around 1.6 and internal around 1.5. So when we're watching asphalt tonnage go down, it's really the flooding that's in Colorado that hit that in the most profound way.

So if I step back and simply measure it, what I can tell you is, on a year-to-date basis, 58% of our asphalt tonnage has been in Colorado. So when you've got that kind of a headline number in that market that has a 500-year event, it will certainly hit that percentage pretty hard.

First question is on pricing. Ward, you've offered a preliminary view for 2014 of volumes.

Just wondering how you're beginning to think about the rate of pricing growth for next year?

Garik, that's a fair question. Obviously, you've heard us say in the past how we feel like once we get some significant volume growth, pricing on a percentage basis, we believe, will start to follow that volume growth on a percentage basis as well.

And I think that's very much what we've seen this year. What I like about what we've seen in this year, in particular, Garik, is we're looking at a very, very flat year.

And the types of pricing that we thought we'd see, frankly with more volume, and I think we would've had it but for the Q2 weather effect has actually held up very nicely. And I think to underscore that, and I think this helps you build toward next year.

You are looking at 2.6% pricing up in the quarter. But if you really go and take a look at the mix effect that we had, it really would have a great handle on it if it was more normalized, because what I will tell you is we saw some big jumps in the quarter in base and in sand and in screenings.

And we actually saw some pretty notable drops in riprap. So in other words, we're selling more lower-priced products and less higher-priced products.

Remember, too, that during the last call, I spoke to the fact that we had seen midyear price increases in around 11% of our markets versus really that 2% in the prior year. So when you take what I feel like has been the type of growth that we've seen this year and the mix effect that we've seen, I think when you come back and try to start modeling yourself on what that's going to look like next year, hopefully, that's giving you some direction.

We'll obviously talk in much more detail about the pricing when we come out with the full year results in February. But I think that should give you at least an eye on it.

Okay. Just a follow-up on the mix effect.

As you look out over the next, call it, 2 to 3 quarters, should we think that the mix effect that you saw in Q3 is going to continue, just given the timing and the size of the projects carrying a lower mix in backlog is going to persist?

I think you might see some of that. But I think you might see some of that for good reasons, and here are the good reasons that I would go to, Garik, and that is, if I'm really looking at some of the major projects that we either have or that I think we're coming up.

There is the moment [ph] . I'd really break it down into 2 different buckets, and I'll give you a drive across the geography, but I think this helps you get a mix piece of it.

And right now, in Dallas, there's $5 billion of highway projects that we think will be there in 2014. That's up from $3 billion in 2013.

To put things in perspective, the North Carolina's DOT budget is $3 billion. We're talking more than that just in DFW.

I think when we go back to what we talked about in Colorado, I mean, the numbers that I'm saying coming out of Colorado are in excess of $400 million relative to just the work that has to be done to repair the flooding. That doesn't have anything to do with the RAMP program that's there as well.

Even as we suddenly turn and come Eastern Mississippi and take a look at $1.2 billion of upgrades at the Orlando airport, or the I-4 project in Florida, all these will be starting, in many respects, with base and they're working their way up. Same issues with a $1.2 billion light-rail program in Charlotte, a lot of work at Douglas Airport.

And then -- that's just in infrastructure. If we come across and look at what's going on in nonres, we're seeing considerable work in a number of geographies right now.

What Boeing is doing in South Carolina is of major significance. Both MetLife and Citrix are coming here to the Triangle.

What we've seen as far as data storage in Nebraska and Iowa has been absolutely amazing. I mean, big, big projects at Facebook, Google and Microsoft.

And in Iowa, by itself, MidAmerican Energy's announced a $1.9 billion wind investment in that state. The reason that I go through that, Garik, because if you've got that degree of new projects starting, I think you can expect to see a higher degree of base going to a number of those.

But the good news is, you're also going to see, during the fullness of those projects, clean products going through as well. So I think that's just important color for you to have as you think about the pricing trends and what the volume mix may be.

Okay. Just one final question on residential construction.

Your volumes into the residential end market lagged the broader market in the third quarter. You're expecting double-digit growth into residential next year, which would imply that the gap between your shipments and broader housing starts would narrow.

Is that a fair assumption? Should we think that the residential volumes for you in 2014 will look closer to what housing starts do next year?

Garik, if you think back to it, I mean think of it in this terms. Residential housing segment for us at its low, let's call it 7-ish, 6%, 7%.

Res for us at peak back in 2006 was around 21%. For the quarter, this quarter, res was around 13%.

For the same quarter last year, res was around 8%. But here's what I think is happening, Garik, as we look at res.

You've seen mostly a large explosion in multifamily residential over the last, let's call it, 18 months. You're seeing more and more single-family residential right now.

You're seeing considerable lot absorption. And what's going to end up having, I believe, is you're going to see more and more single-family housing and you're going to see more subdivision development.

Remember, part of what I discussed before, relative to housing is, we would end up being a laggard in housing this time because you have so many subdivisions that have the infrastructure built into them, that in the early phases of it, it would be about sticks and bricks. And what we have right now is western construction is not so much about sticks and bricks, but it's starting to be more about subdivisions.

And now what we're starting to see, and I think certainly in the markets here in the East Coast anecdotally, you'd notice as well, it's becoming more mature and we are seeing subdivisions. So I would expect to see res go up, but what I would tell you, in normalized time, I wouldn't really expect residential to be much more than 14%, 15%, 16% of our volume anyway.

So when we're getting in that 13% frame, that's not a bad place to be. But we will get the knock-on effect in nonres from it.

So if I look at your guidance for the rest of this year, it looks like you brought the resi volumes -- that residential volume set is down a little bit. Did something shake out of the quarter there?

Yes, I think we just brought it on a smidge. I think part of what we're trying to sort out, too, Todd, is really what can we expect in some of the markets that has had better residential activity.

I mean think about Colorado right now. I mean, that's one of the markets on res that's doing considerably better than others.

And I think part of what we're trying to sort in our minds is how long can we expect that season really to last in that type of market. So we're just trying to measure that out very carefully right now.

In Atlanta where you guys picked up the quarry, I mean how is that market developing? Is it starting to pick up?

No, it is starting to pick up. And we actually saw some decent volume growth there.

Kind of the biggest single issue in a market like Atlanta is it fell so far. I mean, we're operating in the teens as far as recovery on volumes in that market right now.

So it's just a very volume-challenged market. But we are seeing North Georgia getting considerably better.

What I can tell you for example from the Lafarge quarries that we picked up during the quarter, we sold almost 380,000 tons of material from those quarries just in Q3. And what you will have noted in the comments that I had is I did refer to Atlanta as a rebounding market and I do think that's where it is.

Again, we're seeing good -- a lot absorption there and we're seeing much better volumes. It's got a long way to go.

But the nice thing about the Southeast right now is a little bit of volume in that market is really very, very powerful. And you can see that a little bit of volume, actually, from a changing gross margin added 200 basis points to that market right now.

So yes, it's getting better and we think it will continue to get better. We don't think it's going to get explosively better, but we think it's on the right trajectory right now, Todd.

Got it. Switching to highway side.

Your comments on TIFIA that only 2 projects have been approved from the, I guess the latest bill for '13 and '14, but you're looking for the volumes to pick up significantly in the back half of '14 and then even more in '15. What needs to happen between now and then for that outcome to occur?

They need to start running projects, Todd. It's inconceivable in so many respects that we're sitting here today and 2 projects that've been led [ph] .

And, by the way, they're both in Chicago. As we sit here and simply do our topside math, there are $46 billion worth of applications that are in right now, $46 billion.

If we come back and take a look at the Martin Marietta markets, it's nearly $16 billion worth of work that we're going to have a very, very good and legitimate shot at right now. I guess my sense is we're probably going to see 2 or 3 more TIFIA projects, probably come out before the end of the year.

But everything that we're hearing tends to indicate we're going to start seeing it come out in much more healthy chunks as we go into the New Year. But what has to happen, Todd, is they need to put some contracts out there and get it done.

As I'm looking at the list that I have right now, I see there's 1, 2, 3, 4, 5, 6, 7 projects right now under review. And again, as we've said, only 2 of them had, had the credit agreements actually executed.

And again, this is under the new TIFIA projects as you noted.

Got it. And final question, this is probably for Anne.

Anne, looking at the SG&A in the Aggregates segment, I guess it's been running right at $28.4 million a quarter, really, all year. Is that a good run rate to think about?

Yes, that's not an inappropriate run rate. Because most of the excess costs have been at the corporate level with whether it be our information systems project or other initiatives that we've been working on.

So the aggregate SG&A should stay relatively constant.

Nothing seasonal in the fourth quarter there?

There shouldn't be anything seasonal, not when it comes to that type of -- there are some per capita charges that go through there, but it's not materially consequential, Todd.

Okay. And then if we think about the $6 million-plus corporate line, is that coming in with the end of the IT project?

That should come in as we move into 2014 with the end of the IT project as well as some other initiatives that we had going on this year.

So maybe kind of continue at that run rate in the fourth quarter and then start coming in first quarter?

That's not an unreasonable assumption.

This is Chris calling in for Kathryn today. Just one question.

I wanted to follow-up a bit on Colorado if I could. Can you tell us what type of overlap Martin has in those areas that are expecting a lot of the rebuild due to the flooding?

If you think about putting all the flooding lies, I mean it was truly in Denver Metro and principally north of there. I mean, some of the worst flooding was in Boulder.

If you're at our single largest quarry in that market, specification aggregates, you are looking right into Boulder. So what I would tell you is we're in a very good place to be able to supply those projects.

The other thing that I like about it, Chris, is we've got good, hard rock in that market. A lot of what's being fed in that market, the farther north you go are from Louisville deposits.

And some of the Louisville deposits I think were probably hit pretty hard with that flooding. So I think it's twofold.

Number one, I think we'll have a nice place to be very helpful and supply materials going forward. And I do think in many respects, there's going to be some depletion plays that will benefit us from Boulder.

I just had kind of a big picture question. If I think about people investing in Aggregates stocks the last few years, really the biggest question seems to have been, besides pricing power, just when the volume is coming back.

And so we're seeing a little bit signs of that and there's reasons to be a little more optimistic. My question was, outside of simply volume recovering to the industry, what kind of opportunities are you looking at or do you see or should we focus on for you to continue to drive value in the underlying business?

I'm just trying to understand just beyond cyclicality what the opportunity is.

I think it's 2 different opportunities. I think the opportunity number one is where you position your business relative to markets.

You've heard me say in my prepared comments that our long-term aim is to have a #1 or #2 position in markets that we think have near-term and long-term economic attractiveness. So if we pause and reflect on what that means for us, as we look at the swap that we did last year, Denver, Colorado for the River business, we think from our business, that was really a very constructive thing for us to do.

We think that added considerable shareholder value. I think you can and should expect us to continue to look for swaps and to engage in asset exchanges on a tax free basis.

It's a very efficient back of transaction to improve our market position. So I think that's one thing you can expect.

I think as we turn our attention here to the corporate office, as part of what Anne was saying in response to an earlier question, is we had made some investments here in different functions. Part of what we're talking about regularly is functional excellence in this organization, in the corporate office, throughout our business as well.

And we think that we can continue to get better, faster, cheaper at everything that we do. Part of what we're sensitive to, pricing, to your point, Adam, has been a great story.

But we're still selling the product for less than $11 a ton. And at the end of the day, when that's the world that you operate in, you better be good on cost, because if you aren't, you're going to be out of business.

So improving our markets, moving our business the way that we need to and being focused on functional excellence in addition to the volumes are the types of things that I think you should headline for us.

Just a few questions real quick. Ward, could you touch on the progress with midyear price increases that you had this year and how it compares to some of the traction you've gotten, say, like in last year, for example?

Yes, absolutely. Trey, as you would recall, during the last teleconference, we spoke about the fact that we were seeing double-digit markets with midyear price increases on them.

And we also said that as a practical matter, you're only going to capture a portion of that in the back half of the year because you're going to end up protecting customers on larger jobs on which you quoted them. So the midyear price increases that we discussed during the last conference call are in place, and they're going forward, as you would imagine.

The primary thing that, that does, I believe, is it raises the bar on what your pricing can be going into the New Year. Obviously, we haven't given you any pricing guidance yet for '14, and we'll do that very, very early in '14.

But the midyear price increases that we discussed were far more -- they're wider and more in dollars and cents than they were in the previous year, and we think that bodes well for next year in particular.

How did that compare, Ward, to 2012? You said double-digit markets, what was that in '12?

In '12, it's 2. If we go back and recall, we have gotten midyear price increases in San Antonio and we've gotten midyear prices in Houston, and that was really good.

So you're talking double digits versus 2 markets last year. So it was a dramatic change year-over-year.

Okay. And then, Anne, on oil and gas, I mean, obviously big for you guys this quarter.

What percent of your overall shipments go into what you would consider oil and gas?

Here's the way you can think of it, Trey. Last year, we sold a little bit over 6 million tons to these different shale plays, and we think it will be slightly up versus where it was last year.

What's fascinating though is to watch the way the movement works between these different plays. What I would tell you, Eagle Ford for us is clearly the single largest one, and we're looking at tonnage there that's relatively flat.

Now, when we were having this conversation at the beginning of the year, we thought it would be relatively flat in Eagle Ford. I think people were dismissive of that.

But now as we've come back and taken a look, part of what I really like to see is the plays like Marcellus, they've gotten much better this year. We're seeing about 0.5 million tons up year-over-year into the Marcellus.

And then we also have a new entry into the [indiscernible] play, which is more in Oklahoma, and we think we're going to pick up nearly 200,000 tons there. So year-over-year, last year, slightly over 6 million.

This year, a smidge more than that. But keep in mind, the thing that we haven't really seen yet, we're about to see it, is going to be the follow-on effect of DOT linings to come back and start to cure these roads, particularly farm-to-market roads in South Texas that have been destroyed by this heavy traffic.

I've seen some bidding activity literally just this week on that. So that's been a very quiet issue that's been out there, but we know it's been building, and I think that's something that you're likely to see the knock-on effect out as we go into 2014.

Okay. And then, Ward, I know you don't have a crystal ball but you're pretty well plugged in, what's your best guess or gut on kind of what we could see coming out of Washington as we approach the expiration of the current highway bill?

Do you think that there's a chance we could get another short-term build put in place? Do think we'll be in a similar situation where we'll see a series of CRs or where do you -- what's your best guess on how that could shake out?

Trey, you're right. I mean, that's a crystal ball that I wish had because I could do something else, not that don't love this.

Trey, I guess I think of this. I think there's more consensus around at this time than there was last time.

Let's start with that notion. At the same time, for me to sit here and suggest to you that I think there's going to be a single [indiscernible] from MAP-21 to the next highway bill, I just don't think it's genuine, because I don't think Washington can do that, frankly.

Do I think they'll go through 9 CRs like they did last time? No, I don't think they'll go through 9 CRs.

But I think Barbara Boxer is taking a very constructive role in the Senate to try to push this along right now. At the same time, we've got new leadership in the House and I think Congressman Shuster is taking a very, very productive approach on that.

I think the bipartisan spirit that we're starting to see around highway funding is a very different conversation than we were seeing 2 years ago. So my sense would be, Trey, do I think we'll have a CR or 2?

Yes, I think we probably will. Do I think we'll have 9?

No, I don't. Do I think we might see more than a 2-year bill?

Yes, I think we probably will. So again, if that's worth what you're paying for right now, Trey, I guess that's probably where I would be.

A couple of just housekeeping questions. You went through some of the transient items, $3 million in acquisition, $2.6 million on workers' comp, $800,000 on Denver.

Can you just help us understand where those costs actually flowed through? Was the $3 million a P&L cost that flowed through Aggregates?

It was the Aggregates line of product production costs.

Yes. It's primarily a direct production cost.

Almost all of it is costs, Ted.

Okay. And Denver would've been there, too, so you're looking like $3.8 million of add back?

Correct.

Yes.

Okay. And what about the workers' comp?

Same thing.

Same thing.

All production costs.

Okay. And you called out some transient costs in Specialty Products.

I think it was maintenance work on the kiln.

Yes, that's exactly right. It's about $1 million, Ted.

That's the quick way to think about that. We've taken a #4 kiln and #7 kiln and had some work also on #6 kiln all during the quarter and [indiscernible] spent about $1 million.

Okay. So when you add those back kind of incremental look like, what we would've expected and kind of what you've been putting up?

Yes, and then you also look at coal. Coal is about $1.5 million.

As we get that $2.5 million in the Specialty Products business, that's really completely reconciled prior third quarter to this third quarter.

Okay. So I guess, and I realize you're not giving the '14 guidance, but you're going to start getting decent volume absorption, knock on wood that we get this kind of like mid-single digit or better volume growth.

Is there any reason to think we won't see the incrementals that you've historically talked about in Aggregates of being 50% to 60% in 2014?

Ted, the biggest single driver that's going to be if we get the growth across the business. If we get it widespread across the business, I don't think there's any reason that you shouldn't expect to see that.

Yet again, if the West continues to be disproportionately better than the East, it's more challenging, because the Eastern markets tend to be higher priced and more profitable. But if we really see these Eastern markets start to get some traction, and we are starting to see places like Charlotte get well and we're starting to see places like Atlanta get better, if we see that type of trajectory, I think what you're saying is right in the target zone.

Okay, that's really helpful. And then on your 2014 framework, I recognized you cited a couple of different sources for perspective.

Where would you have the -- I guess where would you see the best upside risk or biggest concern? And where's your confidence greatest among those kind of 4 end markets that 2014 is going to look better than '13?

As we come back, I think the places that I have the most resilience around, we've got a good looking backlog at least as a projects that I'm looking at are nonres in potential -- I mean, in particular. So I think we'll continue to see nonres grow and I think we'll see that growth across the United States.

And again, I tend to believe, Ted, that on the housing piece of it, where we are again, primarily a Southeast and Southwest company, the type of housing growth that we're going to see particularly as we start making that transition from less multifamily to more single-family, I think those 2 places add up a pretty good punch. And again, when you come back with nonres at 30% of the business and you come back at res, let's call it 13%, 14% of the business.

Again, I liked what I saw in trajectory in ChemRock and Rail. I was seeing balance volumes going up with BN [ph] , with UP and with Kansas City Southern.

And with the type of footprint we have there, suddenly, we're well over half of our volumes right there in those 3. And I have a -- and I feel pretty good about that, Ted.

Okay, that's great. And the last thing I'll ask, I promise.

When we look forward to SG&A, I mean you mentioned about IT upgrades over in October. If you can help us understand what that kind of year-over-year benefit looks like next year?

And then when we just think about headwinds and tailwinds, I'm guessing the pension expense should be down next year, we're kind of estimating $5 million to $10 million tailwind for you.

Here's the way to think of it, Ted. I mean we've really been spending about $1 million a quarter on the information system.

Really, if we come back and look at Q3, it's probably about $1.5 million, and we're bringing in for landing here so as we ramp that up. The pension expense, if you got a good sense of what discount rates will be at year end, that's going to be really your driver on what that's going to look like.

And again, as we look at this year, we had $1.5 million for the quarter professional expenses tied back to that notion of functional excellence. And those are all costs that I wouldn't think would be repeating into next year.

And the fact is, we anticipate getting benefit from those investments next year.

I recognize that none of us are, like you, have bought a crystal ball that I can forecast interest rates. I wouldn't be on this call with you.

But would you expect that should be a tailwind sort of something dramatic happening in the next 7 weeks?

Absolutely, you would. I mean, particularly at a minimum, the IF [ph] call.

Ward, can you just talk about besides energy, which verticals, if you have the visibility, which verticals are driving the strength in your backlog for private nonres? And can you just talk about is it early-stage project work that you're seeing?

Just so we can use what you're seeing us a way to read across through other industrial markets with nonres exposure.

Jerry, I think that's exactly what it is. I do think it's early on, on that end and I think going back to that mix conversation that I was having early on the call, if part of what I think, when I'm seeing sand volumes up, let me give you a sense of it, Jerry.

Sand volumes were up almost 630,000 tons in the quarter. That's a big number.

What that tells me were a lot of [ph] ready mixed going out the door in some respects. And again, that's going to all be structural type of work, and I think it's disproportionate on that, if that's going to be into nonres projects right now.

So when we're seeing let's start thinking about markets like Denver, start thinking about markets like Des Moines, start thinking about markets like Houston and San Antonio and even back in places like Dallas. And again, what we're seeing in markets today like Charlotte or even heading down into Charleston, South Carolina is a very, very different field as you and I would have been having at the same time a year ago.

So I think your notion around commercial and product mix and ready mix in those markets, and either us supplying ready mix to some of them or the products to ready mixed players is a good way to think about it.

And your downstream business, can you just talk about at which point do you expect to see pricing power, especially in concrete ahead of material inflation? Do you think you might get to that next year, once the cement capacity for some of your suppliers and competitors becomes fully utilized?

Is that the tipping point that you're looking for to get better gross margin expansion for your downstream businesses?

The short answer is absolutely, Jerry. What's remarkable about the concrete business, if I look at the 2 principal geographies, which we're in the concrete business, here's a pretty big austerity in average for selling price between one and the other.

And the ones that really has the higher selling price, we also have the ability to do more with pricing in the period. And I think you'll continue to see that market get much better.

Remember in my prepared remarks, I talked about ready mix pricing being up 7.1%. And my sense has always been that's the single weakest link in the heavy building materials side, and when you're starting to see that type of pricing growth in ready mix, I think that's a very, very good sign for the balance of the industry.

And in terms of the overall volumes, obviously, nice performance in the third quarter. I think your guidance implies more muted year-on-year performance in the fourth quarter.

Is that just a function of comps or any moving pieces for us to think about in the fourth quarter? Any residual impacts from the government concerns or anything like that?

You know what, it's really more looking at something that we just had to say may feel normal like in weather. What I remember last year in particular, our team in Colorado was doing some downstream work into December.

And that's a great result and that's great for them and maybe they do that again this year, but my guess is, it's a rare year where you're paving in December in places like Colorado. I was there yesterday in the morning, it was 20-some degrees.

So if it's a normal weather, I think that's at least how we're having to plan for it right now. And we're going to pray for better.

Listen, thank you again for joining our third quarter earnings call and for your interest in our company. We're dedicated to our disciplined approach to managing our business and increasing long-term value for our shareholders, and we look forward to talking with you about the fourth quarter and full year when we're together in February.

Thanks so much. Bye-bye.