Martin Marietta Materials, Inc. · NYSE:MLM
Martin Marietta Materials — Investor Presentation (2006)
48 slides from Martin Marietta Materials's investor presentation, Oct 17, 2006
Slide 1: Martin Marietta Materials
Martin Marietta Materials 1
Slide 2: Key Investment Considerations
Key Investment Considerations • Great locations serving high growth areas • Scarcity of aggregate supply • Step function change in value of mineral reserves • Accumulation of key strategic assets complete • Free cash flow returned to shareholders 2
Slide 3: Our Strategy – From Plan to Execution
Our Strategy – From Plan to Execution Loading barges at Three Rivers Quarry, Kentucky 3
Slide 4: Strategy
Strategy • Assemble leading set of assets in high growth Southeast and Southwest areas • Focus on long haul transportation to build competitive advantage • Focus on best practices and information systems to drive cost performance 4
Slide 5: Asset Accumulation - 1994
Asset Accumulation - 1994 Aggregates Production and Sales 5
Slide 6: Asset Accumulation - 1995
Asset Accumulation - 1995 $159 million capital invested in acquisitions Aggregates Production and Sales Dravo and Offshore Acquisition 6
Slide 7: Asset Accumulation - 1997
Asset Accumulation - 1997 $279 million capital invested in acquisitions Aggregates Production and Sales American Aggregates Acquisition 7
Slide 8: Asset Accumulation - 1998
Asset Accumulation - 1998 $348 million capital invested in acquisitions Aggregates Production and Sales Redland Acquisition 8
Slide 9: Asset Accumulation - 2001
Asset Accumulation - 2001 $222 million capital invested in acquisitions (1) Aggregates Production and Sales Meridian Acquisition (1) Excludes initial 19% Meridian investment made in 1998 9
Slide 10: Company Profile – 2005
Company Profile – 2005 70% of 2005 net sales from Southeast/Southwest Aggregates Production and Sales 10
Slide 11: Scarcity of Aggregate Supply
Scarcity of Aggregate Supply Limestone Hard Rock Information from the Department of Interior 11
Slide 12: Population Movement
Population Movement NC 18% Rank – #7 TX 18% GA 8% Rank - #4 Rank – #8 FL 5% Rank – #3 Percentage of 2005 net sales Rank of percent change – population 2000 to 2030 (source: Census Bureau) 12
Slide 13: Transportation Mode
Transportation Mode 7% 10% Rail Water 16% Rail 93% 74% Truck Truck 1994 2005 (71.2 million tons) (203.2 millions tons) 13
Slide 14: Transportation Economies of Scale
Transportation Economies of Scale Transportation Mode – Cost Per Ton Mile 20 tons per truck 12 - 18 Cents / Ton Mile 100 tons per rail car 4 - 8 Cents / Ton Mile 1,800 tons per barge 1 - 2 Cents / Ton Mile 45,000 tons per ship .4 - 1.2 Cents / Ton Mile 0 50 135 500 1,000 14
Slide 15: Maturing Distribution Network – Water Markets
Maturing Distribution Network – Water Markets Prince Edward Island Nova Scotia New York City Linden Philadelphia Wilmington, DE Kaskaskia Sparrows Pt. Cave-In-Rock Three Rivers Wilmington, NC Lake Charles Mobile Pensacola Charleston Savannah Producing Locations Beaumont Brunswick Houston Panama City
Slide 16: Scarcity = Increased Pricing
Scarcity = Increased Pricing 250 11.5%-13% 13.0% 12.0% 11.0% 225 (Millions of Tons) 10.0% 8.2% 207-211 9.0% 203 8.0% 200 192 189 192 190 7.0% 6.0% 175 5.0% 3.7% 3.2% 4.0% 2.4% 3.0% 150 1.3% 2.0% 1.0% 125 0.0% 2001 2002 2003 2004 2005 2006 Tons Based on latest guidance Percent increase in ASP (1) of
Slide 17: Demand Segments
Demand Segments 2005 2006 Residential Infrastructure 20% Commercial Residential Other Infrastructure Commercial 45% 26% Other 9% Estimated percentage of 2005 shipments 17
Slide 18: Cost Reduction Initiatives
Cost Reduction Initiatives Lemon Springs Quarry 18
Slide 19: Cost Reduction Initiatives
Cost Reduction Initiatives • Excellent Best Practices Program • Increased Plant Automation • Overhead Reduction • Better Information Systems • Effective Management of Benefits Cost 19
Slide 20: Headcount Reduction
Headcount Reduction 7200 8000 6900 6400 7000 5900 5800 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 Hourly Sales per employee up 45% over five years Salary 20
Slide 21: Capital Initiatives
Capital Initiatives Bahama Rock 21
Slide 22: Three Rivers (KY)
Three Rivers (KY) $45 million budget for the Three Rivers Quarry New plant and load out provide variable cost savings Forecasted after-tax Internal Rate of Return - 23% 22
Slide 23: Three Rivers (KY) – Strategic Location
Three Rivers (KY) – Strategic Location • Key site in long-haul transportation optimization strategy • Shipments and deliveries via barge, ship and rail • Diversified products and transportation modes provide competitive advantage 23
Slide 24: North Troy Quarry (OK)
North Troy Quarry (OK) • $46 million budget for the North Troy Quarry project • Forecasted after-tax Internal Rate of Return - 24% 24
Slide 25: North Troy (OK) - Rail Distribution
North Troy (OK) - Rail Distribution NorthTroy 5 million ton rail Mill Creek connection to DFW market TX Chico • 4 hour load/unload Frisco • 24 hour train turn • Replicates coal model 0 Dallas Corsicana DFW Market 25
Slide 26: Aggregates Financials ($M) – Quarter
Aggregates Financials ($M) Quarter Ended Percent June 30, Change 2006(1) 2005(1) Net Sales $ 482 $ 447 8% Operating Earnings $ 113 $ 98 15% Operating Margin 23.4% 22.0% (1) All amounts presented are from continuing operations. Prior period amounts have been recast for current year discontinued opera
Slide 27: Aggregates Financials ($M) – Six Months
Aggregates Financials ($M) Six Months Ended Percent June 30, Change 2006(1) 2005(1) Net Sales $ 865 $ 754 15% Operating Earnings $ 157 $ 115 36% Operating Margin 18.1% 15.3% (1) All amounts presented are from continuing operations. Prior period amounts have been recast for current year discontinued
Slide 28: Aggregates Financials ($M) – Year
Aggregates Financials ($M) Year Ended Percent December 31, Change 2005(1) 2004(1) Net Sales $1,625 $1,411 15% Operating Earnings $ 299 $ 224 34% Operating Margin 18.4% 15.8% (1) All amounts presented are from continuing operations as presented in 2005 Annual Report. 28
Slide 29: Magnesia Specialties
Magnesia Specialties 29
Slide 30: Market Overview – Industrial
Market Overview – Industrial 30
Slide 31: Market Overview - Environmental: Thioguard
Market Overview - Environmental Thioguard® 31
Slide 32: Market Overview – Rubber & Plastics
Market Overview – Rubber & Plastics 32
Slide 33: Market Overview - Other
Market Overview - Other Der ae Lf aN: A gil 1 Sy 4 om ee Be |
Slide 34: Magnesia Specialties Financials ($M) – Quarter
Magnesia Specialties Financials ($M) Quarter Ended Percent June 30, Change 2006 2005 Net Sales $ 36 $ 30 21% Operating Earnings $ 10 $ 6 56% Operating Margin 27.6% 21.4% 34
Slide 35: Magnesia Specialties Financials ($M) – Six Months
Magnesia Specialties Financials ($M) Six Months Ended Percent June 30, Change 2006 2005 Net Sales $ 73 $ 60 23% Operating Earnings $ 18 $ 11 59% Operating Margin 24.9% 19.2% 35
Slide 36: Magnesia Specialties Financials ($M) – Year
Magnesia Specialties Financials ($M) Year Ended December 31, 2005 2004 2003 Net Sales $ 123 $ 106 $ 86 Operating Earnings $ 24 $ 18 $ 6 Operating Margin 19.4% 16.6% 7.0% 36
Slide 37: Restructured Magnesia Specialties
Restructured Magnesia Specialties 2000 2005 Lime 21% Chemicals Refractories 65% 44% Chemicals 35% Lime 35% 37
Slide 38: Structural Composite Products
Structural Composite Products 38
Slide 39: Composites – Change in Focus
Composites – Change in Focus From To Commercial Military Truck Trailers Panel Products 39
Slide 40: Composites – Change in Focus
Composites – Change in Focus 40
Slide 41: Financial Information
Financial Information Pensacola Yard 41
Slide 42: Selected Balance Sheet Data
Selected Balance Sheet Data $1,000 90% $802 $800 $745 $718 $719 $715 $710 60% ($ Millions) $600 44% 41% 37% 34% 34% $400 32% 30% $200 152 114 69 5 $0 0% 2001 2002 2003 2004 2005 At 6/30/06 Debt Net Cash in Banks Net Debt to Capitalization (1) (1) The calculation of net debt to capitalization is avai
Slide 43: Materials Financials ($M) – Quarter
Materials Financials ($M) Quarter Ended Percent June 30, Change 2006 2005 Net Sales(1) $ 518 $ 477 8.6% Operating Earnings(1) $ 120 $ 100 19.8% Net Earnings $ 76 $ 61 23.3% Earnings per Diluted Share $ 1.63 $ 1.30 25.4% (1) Net sales and operating earnings are from continuing operations. Prior perio
Slide 44: Materials Financials ($M) – Six Months
Materials Financials ($M) Six Months Ended Percent June 30, Change 2006 2005 Net Sales(1) $ 943 $ 815 15.6% Operating Earnings(1) $ 171 $ 119 43.2% Net Earnings $ 107 $ 69 55.8% Earnings per Diluted Share $ 2.29 $ 1.44 59.0% (1) Net sales and operating earnings are from continuing operations. Prior
Slide 45: Materials Financials ($M) – Year
Materials Financials ($M) Year Ended Percent December 31, Change 2005 2004 Net Sales(1) $1,755 $1,521 15.4% Operating Earnings(1) $ 309 $ 230 34.0% Net Earnings $ 193 $ 129 49.2% Earnings per Diluted Share $ 4.08(2) $ 2.66 53.4% (1) Net sales and operating earnings are from continuing operations as
Slide 46: Cash Flow from Operations ($M)
Cash Flow from Operations ($M) Six Months Ended June 30, 2006 2005 Capital investment $ 158 $ 101 Share repurchase $ 83 $ 81 Dividends $ 21 $ 19 No plan to delever 46
Slide 47: Cash Returned to Shareholders
Cash Returned to Shareholders $216 225 200 175 In millions 150 125 $111 100 75 $49 50 $28 $20 25 Dividends 0 Share 2001 2002 2003 2004 2005 Repurchases 47
Slide 48: The document attached represents one part of a presentation which has been or will
The document attached represents one part of a presentation which has been or will be made. It is not a complete record of the presentation because it does not reflect the lengthy oral comments which will be part of the presentation. This document is not intended to be a substitute for our Form 10-K
Martin Marietta Materials — Investor Presentation (2006) on 6ix