80 slides from Vulcan Materials Company (holding Company)'s investor presentation, Sep 28, 2016
Slide 1: Management Presentation September 29, 2016
MANAGEMENT PRESENTATION SEPTEMBER 29, 2016
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 2 IMPORTANT DISCLOSURES This document contains forward - looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward - looking statements. Generally, these statements relate to future financial perf
Slide 3: Today's Discussion
TODAY’S DISCUSSION 3 THE VULCAN WAY: UNLEASHING OUR BEST MULTI - YEAR RECOVERY AHEAD STRONG PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND CONTINUED GROWTH IN 2017 OUR FOCUS NO
Slide 4: The Vulcan Way: Unleashing Our Best
THE VULCAN WAY: UNLEASHING OUR BEST 4
Slide 5: Aggregates-Centric Strategy 'One Vulcan, Locally Led'
ALL DIRECTLY TIED TO OUR AGGREGATES - CENTRIC STRATEGY ‘ONE VULCAN, LOCALLY LED’ THE VULCAN WAY: UNLEASHING OUR BEST 5 Strong local market leadership and autonomy Prioritized company - wide performance improvements Better sales and service Faster growth Increased profitability Higher returns on capi
Slide 6: Committed to our people, customers, communities, environment, shareholders
THE VULCAN WAY: UNLEASHING OUR BEST 6 We are committed to our people, our customers, our communities, our environment, our shareholders
Slide 7: Commitment to Our People
COMMITMENT TO OUR PEOPLE THE VULCAN WAY: UNLEASHING OUR BEST 7
Slide 8: Commitment to Our People – Safety
MSHA Injury Rate COMMITMENT TO OUR PEOPLE – SAFETY THE VULCAN WAY: UNLEASHING OUR BEST 8 2.2 2.2 2.1 2.1 2.1 2.0 1.4 1.3 1.6 1.2 1.4 1.3 1.2 2010 2011 2012 2013 2014 2015 YTD 2016 Industry Vulcan (A) Note: MSHA and internal safety data, injury rate per 200,000 hours worked. (A) Not available.
Slide 9: The Vulcan Way: Unleashing Our Best
THE VULCAN WAY: UNLEASHING OUR BEST 9
Slide 10: Never Satisfied
NEVER SATISFIED THE VULCAN WAY: UNLEASHING OUR BEST 10
Slide 11: Commitment to Our Customers
COMMITMENT TO OUR CUSTOMERS THE VULCAN WAY: UNLEASHING OUR BEST 11
Slide 12: Commitment to Our Customers
COMMITMENT TO OUR CUSTOMERS THE VULCAN WAY: UNLEASHING OUR BEST 12
Slide 13: Commitment to Our Communities and Environment
COMMITMENT TO OUR COMMUNITIES AND ENVIRONMENT THE VULCAN WAY: UNLEASHING OUR BEST 13 MORE THAN 99% OF INSPECTIONS ARE CITATION - FREE
Slide 14: Commitment to Our Shareholders
COMMITMENT TO OUR SHAREHOLDERS THE VULCAN WAY: UNLEASHING OUR BEST 14 WE RUN THIS BUSINESS ON YOUR BEHALF.
Slide 15: Commitment to Continuous Improvement
COMMITMENT TO CONTINUOUS IMPROVEMENT THE VULCAN WAY: UNLEASHING OUR BEST 15
Slide 16: Multi-Year Recovery Ahead
MULTI - YEAR RECOVERY AHEAD 16
Slide 17: Multi-Year Recovery Ahead - Summary
MULTI - YEAR RECOVERY AHEAD - SUMMARY 17 Reminder: Per - capita aggregates demand in Vulcan - served markets remains well below normal levels The drivers underpinning demand recovery and eventual expansion remain intact; growth in public construction just beginning to contribute to this recovery Pre
Slide 18: Despite Three Years of Shipment Growth…
140 185 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2013 2014 2015 2016 DESPITE THREE YEARS OF SHIPMENT GROWTH… MULTI - YEAR RECOVERY AHEAD 18 Amounts in millions. Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. Aggregates Shipments - TTM 45 million increm
Slide 19: Per Capita Consumption Levels Remain Well Below 40+ Year Trends
MULTI - YEAR RECOVERY AHEAD 19 … PER CAPITA CONSUMPTION LEVELS REMAIN WELL BELOW 40+ YEAR TRENDS… Source: Company estimates as of the beginning of 2016.
Slide 20: Total Company Shipments Remain Well Below Normalized Levels
… AND TOTAL COMPANY SHIPMENTS REMAIN WELL BELOW NORMALIZED LEVELS MULTI - YEAR RECOVERY AHEAD 20 Illustrative: VMC Aggregates Shipments in Context of Cycles Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. Pro Forma Sales Volume Illustrative Shipment G
Slide 21: Review: What Does Normal Demand Look Like?
REVIEW: WHAT DOES NORMAL DEMAND LOOK LIKE? MULTI - YEAR RECOVERY AHEAD 21 Private Demand Public Demand 1.4 million housing starts, versus 45 - year trend of 1.45 million starts 1.0 billion square feet of annual private nonresidential construction, consistent with 45 - year average Mid - single digit
Slide 22: Underlying Demand Drivers Are Firmly in Place
UNDERLYING DEMAND DRIVERS ARE FIRMLY IN PLACE MULTI - YEAR RECOVERY AHEAD 22 Private Demand Public Demand Population growth Total employment Household income and wage gains Household formations Current imbalance of housing stock and housing demand Population growth Multi - year federal transportatio
Slide 23: The Unfolding Recovery
THE UNFOLDING RECOVERY MULTI - YEAR RECOVERY AHEAD 23 Time Construction activity Early - Stage : Private demand (housing, non - res) begins to recover after historic collapse Mid - Stage : Public funding gains begin to convert to construction activity, joining continued private recovery Later - Stag
Slide 24: The Signal Versus the Noise
24 ‘THE SIGNAL VERSUS THE NOISE’: FACTORS IMPACTING THE SHIFTING PACE OF THE RECOVERY OVER TIME
Slide 25: Factors Impacting the Pace of Shipment Recovery
Conversion of pipeline to starts: Pre - construction project pipeline: FACTORS IMPACTING THE PACE OF SHIPMENT RECOVERY 25 Rate of shipment recovery Core demand drivers Construction sector capacity and bottlenecks: MULTI - YEAR RECOVERY AHEAD THESE FACTORS PLAY OUT DIFFERENTLY ACROSS GIVEN MARKETS AT
Slide 26: Factors Impacting the Pace of Shipment Recovery: Core Demand Drivers
FACTORS IMPACTING THE PACE OF SHIPMENT RECOVERY 26 Core demand drivers MULTI - YEAR RECOVERY AHEAD Pre - construction project pipeline: $ Value of backlog Pace of additions End - use mix, geographic mix, and size/ complexity of projects
Slide 27: Strong Growth in New Projects Entering the Pipeline
STRONG GROWTH IN NEW PROJECTS ENTERING THE PIPELINE… 27 MULTI - YEAR RECOVERY AHEAD Source: Dodge Data & Analytics; Company analysis of Vulcan served markets, projects over $50 million in estimated value. $44 $40 $76 $90 $152 $177 YTD Aug 2014 YTD Aug 2015 YTD Aug 2016 Public Private $134 $253 $192
Slide 28: Sustained Strength in Dodge Momentum Index
…MIRRORED BY SUSTAINED STRENGTH IN DODGE MOMENTUM INDEX (NONRESIDENTIAL LEADING INDICATOR) 28 MULTI - YEAR RECOVERY AHEAD 50 75 100 125 150 2011 2012 2013 2014 2015 2016 Source: Dodge Data & Analytics; Total U.S.; Year 2000 = 100; Dodge Momentum Index is a measure of private and public nonresi den t
Slide 29: Factors Impacting the Pace: Conversion of Pipeline to Starts
Conversion of pipeline to starts: Macro - confidence/ uncertainty Complexity of project design, permitting, etc. Developer discipline (e.g. homebuilders deliberate in adding new supply) Views regarding available construction capacity FACTORS IMPACTING THE PACE OF SHIPMENT RECOVERY 29 Core demand dri
Slide 30: Starts Momentum Has Recently Moderated
MULTI - YEAR RECOVERY AHEAD 30 DESPITE PRE - CONSTRUCTION PIPELINE STRENGTH, STARTS MOMENTUM HAS RECENTLY MODERATED TTM Value of Construction Starts, Indexed to January 2012 Source: Dodge Data & Analytics; Total U.S.; January 2012 = 100; TTM = Trailing Twelve Months.
Slide 31: Factors Impacting the Pace: Construction Sector Capacity
Conversion of pipeline to starts: Macro - confidence/ uncertainty Complexity of project design, permitting, etc. Developer discipline (e.g. homebuilders deliberate in adding new supply) Views regarding available construction capacity FACTORS IMPACTING THE PACE OF SHIPMENT RECOVERY 31 Core demand dri
Slide 32: Construction Employment in Vulcan States Growing but Constrained
MULTI - YEAR RECOVERY AHEAD 32 CONSTRUCTION EMPLOYMENT IN VULCAN STATES GROWING BUT CONSTRAINED IN CERTAIN AREAS 3.45 3.98 January 2013 June 2016 ~4.2% CAGR in initial stages of recovery Remains below peak construction employment In millions. Source: Bureau of Labor Statistics; Vulcan - served state
Slide 33: Recap: Factors Impacting the Pace of Shipment Recovery
Conversion of pipeline to starts: Macro - confidence/ uncertainty Complexity of project design, permitting, etc. Developer discipline (e.g. homebuilders deliberate in adding new supply) Views regarding available construction capacity RECAP: FACTORS IMPACTING THE PACE OF SHIPMENT RECOVERY 33 Core dem
Slide 34: Positive Pricing Climate Early in Cycle
POSITIVE PRICING CLIMATE EARLY IN CYCLE REFLECTS THESE DYNAMICS $10.64 $12.28 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2013 2014 2015 2016 34 MULTI - YEAR RECOVERY AHEAD Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. Aggregates Freight Adjusted Price P
Slide 35: Profitability Improvement Consistent with Longer-Range Goals
PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS 35
Slide 36: Profitability Improvement - Summary
36 Our longer - range goals remain unchanged from our February 2015 Investor Day Core profitability engine strong; results on track with - or ahead of - longer - range goals Profitability gains solid across our portfolio, despite ‘uneven’ shipment growth rates across markets Magnitude of improvement
Slide 37: Longer-Range Goals Unchanged
PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS 37 $600 > $2,000 $1,300 $175 - $60 2014 Adjusted EBITDA Aggregates Volume and Margin Expansion Other Segments Volume and Margin Expansion SAG/Other Cost Increases EBITDA Goal at Normal Demand, Normal Share Review: EBITDA Goal at Normal D
Slide 38: Incremental Margins Consistently Ahead of Longer-Range Goal
INCREMENTAL MARGINS CONSISTENTLY AHEAD OF LONGER - RANGE GOAL… 38 Note: TTM = Trailing Twelve Months. Gross Profit Flow Through = Change in Segment Gross Profit / Change in Freight - Adjusted Reve nues. Excludes impact of acquisitions completed during 2014 and 2015. See Appendix for reconciliation o
Slide 39: Strong Per Ton Profitability Improvements
$4.19 $4.51 $4.99 $6.02 ~$8.25 2Q'13 2Q'14 2Q'15 2Q'16 Goal at Normal Demand … SUPPORTED BY STRONG PER TON PROFITABILITY IMPROVEMENTS 39 Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. See Appendix for reconciliat ion of Non - GAPP measures. PROFITABI
Slide 40: Change in Aggregates Profitability Since Recovery Began
CHANGE IN AGGREGATES PROFITABILITY SINCE RECOVERY BEGAN $358 $883 $525 2Q'13 2Q'16 Change Aggregates Gross Profit – TTM 140 185 45 2Q'13 2Q'16 Change Aggregates Volume – TTM 40 Amounts in millions. Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. Shipm
Slide 41: 'Downstream' Segment Profit Improvement Also on Track
‘DOWNSTREAM’ SEGMENT PROFIT IMPROVEMENT ALSO ON TRACK 41 $61 $72 $101 $149 ~$250 2Q'13 2Q'14 2Q'15 2Q'16 Goal at Normal Demand Amounts in millions. Note: TTM = Trailing Twelve Months. See Appendix for reconciliation of Non - GAPP measures. PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOA
Slide 42: Continuing to Leverage SAG to Sales
10.0% 9.2% 8.7% 8.6% 6.0% 2Q'13 2Q'14 2Q'15 2Q'16 Goal at Normal Demand CONTINUING TO LEVERAGE SAG TO SALES… 42 SAG As Percent of Total Revenues, TTM Note: TTM = Trailing Twelve Months. TTM 2Q’13 represents the cyclical low in aggregates volumes. PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RA
Slide 43: Solid Gains in G&A Productivity
…WITH SOLID GAINS IN G&A PRODUCTIVITY 43 G&A Headcount Total Revenue Revenue/ G&A Employees ‘13 vs. ‘09 ‘16 vs. ‘13 Revenue/ Total Employees 2% 26% 3% 30% 39% 27% 21% 26% PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS Note: 2009 and 2013 figures are FY; 2016 figures are YTD June.
Slide 44: Widespread Profitability Gains by Geographic Operational Area
0% 10% 20% 0% 50% 100% 0% 50% 100% 150% 200% 44 Note: TTM = Trailing Twelve Months. Comparison of TTM 2Q’13 to TTM 2Q’16. TTM 2Q’13 represents the cyclical low in aggregates vo lumes. -15% 15% 45% Unit Margin Price Volume Total Margin $ PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS
Slide 45: Further to Go: Additional Profit Improvement Ahead
FURTHER TO GO: ADDITIONAL PROFIT IMPROVEMENT AHEAD 45 PROFITABILITY IMPROVEMENT CONSISTENT WITH LONGER - RANGE GOALS Constructive pricing climate Operating leverage Efficiencies with better product mix Continued production and cost disciplines Excellence in delivering value for customers Ties to ful
Slide 46: Case Example of Recovery in Action: Metro Atlanta
CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 46
Slide 47: Metro Atlanta Case Example Overview
47 Well positioned to serve customers Great momentum, consistent execution More leverage to come CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA
Slide 48: Vulcan's Position in Metro Atlanta
VULCAN’S POSITION IN METRO ATLANTA CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 48 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganville McDonough Mableto
Slide 49: Norcross – Dec. 1959
Norcross – Dec. 1959
Slide 50: Norcross photo
s6 oO cal i=} N a oO ins Norcross —
Slide 51: Metro Atlanta Position Built Over Time: 1970
VULCAN’S METRO ATLANTA POSITION HAS BEEN BUILT OVER TIME CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 51 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganv
Slide 52: Metro Atlanta Position Built Over Time: 1980
VULCAN’S METRO ATLANTA POSITION HAS BEEN BUILT OVER TIME CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 52 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganv
Slide 53: Metro Atlanta Position Built Over Time: 1990
VULCAN’S METRO ATLANTA POSITION HAS BEEN BUILT OVER TIME CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 53 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganv
Slide 54: Metro Atlanta Position Built Over Time: 2000
VULCAN’S METRO ATLANTA POSITION HAS BEEN BUILT OVER TIME CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 54 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganv
Slide 55: Metro Atlanta Position Built Over Time: 2010
VULCAN’S METRO ATLANTA POSITION HAS BEEN BUILT OVER TIME CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 55 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganv
Slide 56: Vulcan's Position in Metro Atlanta: 2016
Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganville McDonough Mableton Kennesaw VULCAN’S POSITION IN METRO ATLANTA CASE EXAMPLE OF RECOVERY IN ACTION: METRO
Slide 57: Great Momentum, Consistent Execution
57 GREAT MOMENTUM, CONSISTENT EXECUTION
Slide 58: Improvement in Aggregates Profitability
Aggregates Results – Unit Profitability Sales and Production Mix Operating Efficiency and Leverage Price for Service Effective Management Drives Growth in Unit Profitability IMPROVEMENT IN AGGREGATES PROFITABILITY CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 58 Gross Profit Continuous improveme
Slide 59: Further Opportunities for Operating Leverage Ahead
59 CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA FURTHER OPPORTUNITIES FOR OPERATING LEVERAGE AHEAD Revenue has increased 108% since 2Q’13 TTM Costs have decreased 11% per ton since 2Q’13 TTM 90% 100% 110% 120% 130% 140% 150% 160% 170% 180% 0% 20% 40% 60% 80% 100% 120% 2Q'06 2Q'07 2Q'08 2Q'09 2Q
Slide 60: More Leverage to Come
60 MORE LEVERAGE TO COME
Slide 61: Metro Atlanta Aggregates Demand Still 30% Below Normal
METRO ATLANTA AGGREGATES DEMAND STILL 30% BELOW NORMAL - 0 0 0 0 0 0 0 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Source: Company Estimates 61 CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA Note: Company estimate of total aggregates market demand. Population in 1981: 2.4 million
Slide 62: Underlying Demand Drivers in Metro Atlanta
UNDERLYING DEMAND DRIVERS IN METRO ATLANTA CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 62 Private Demand Public Demand Atlanta population growth forecasted at twice the US average from 2016 to 2025 18 Georgia Companies on Fortune 500 list Cost of living 1.7% below the national average Ranked i
Slide 63: Year Over Year Construction Starts Are Rising
63 CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA Source: Dodge – For Atlanta, trailing twelve month total dollar of construction starts , indexed to January 2012. YEAR OVER YEAR CONSTRUCTION STARTS ARE RISING TTM Value of Construction Starts in Atlanta 2012 2013 2014 2015 2016
Slide 64: Georgia DOT Budget, Including Federal Funds
GEORGIA DOT BUDGET, INCLUDING FEDERAL FUNDS 64 CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA $2.1 $2.2 $2.2 $2.3 $3.1 $3.3 $3.3 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Billions of Dollars Source: Georgia Department of Transportation and US Department of Transportation, Federal Hi
Slide 65: More Than $12 Billion in Transportation Investments Planned
MORE THAN $12 BILLION IN TRANSPORTATION INVESTMENTS PLANNED OVER THE NEXT 10 YEARS CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 65 SR400 Express Lanes $2.4 Billion I - 285/I - 20 West Interchange $910 Million I - 75 Truck Lanes $2.06 Billion Atlanta Marietta Canton Woodstock Alpharetta Roswell
Slide 66: Vulcan's Position in Metro Atlanta
VULCAN’S POSITION IN METRO ATLANTA CASE EXAMPLE OF RECOVERY IN ACTION: METRO ATLANTA 66 Atlanta Marietta Newnan Douglasville Griffin Rockmart Cartersville Canton Woodstock Alpharetta Roswell Dunwoody Tucker Lawrenceville Forest Park Cumming Buford Tyrone Carrollton Redan Loganville McDonough Mableto
Slide 67: Implications and Expectations for Balance of 2016 and 2017
IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND CONTINUED GROWTH IN 2017 67
Slide 68: Implications and Expectations for 2016 and 2017
IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND CONTINUED GROWTH IN 2017 68 2016 aggregates shipments likely to fall short of 190 million tons as headwinds in TX and CA have continued through August. Due to improved profitability, still trending toward full year adjusted EBITDA of $1 billi
Slide 69: 2016 Update
2016 UPDATE 69 Full year aggregates shipments unlikely to reach 190 million tons - Southeast shipments remain strong - But California and Texas shipments running ~12% below prior year through August year - to - date Pricing momentum remains strong, in - line with expectations Core profitability cont
Slide 70: Broad View of Dynamics for 2017: Recovery Continues
BROAD VIEW OF DYNAMICS FOR 2017: RECOVERY CONTINUES IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND 2017 70 Core demand drivers Pre - construction project pipeline Conversion of pipeline to starts Construction sector capacity and bottlenecks Intact, continuing to strengthen across nearly a
Slide 71: Broad View of Geographic Trends for 2017
BROAD VIEW OF GEOGRAPHIC TRENDS FOR 2017 IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND 2017 71 Strong growth continues 2016 shipment declines in CA and TX should reverse Solid growth in AZ continues Moderate growth in 2017 VA/MD growth aided if sequestration pressures ease Recent shipmen
Slide 72: Broad View of End-Use Market Trends for 2017
BROAD VIEW OF END - USE MARKET TRENDS FOR 2017 IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND 2017 72 Continued recovery across most markets Entry - level segment seeing some early recovery Continued recovery in most markets, but a few weak spots Pipeline indicators strong, but recent awa
Slide 73: Pricing Climate Should Remain Favorable Overall
PRICING CLIMATE SHOULD REMAIN FAVORABLE OVERALL IMPLICATIONS AND EXPECTATIONS FOR THE BALANCE OF 2016 AND 2017 73 Confidence in and visibility to multi - year recovery Emphasis on improving returns on capital Certain markets ‘supply - constrained’ from a total construction sector perspective Momentu
Slide 74: Our Focus Now and Moving Forward
OUR FOCUS NOW AND MOVING FORWARD 74
Slide 75: Our Focus Now and Moving Forward - Summary
OUR FOCUS NOW AND MOVING FORWARD - SUMMARY 75 Aggregates - led strategy Small actions, big results: continuous, compounding improvement Consistent capital allocation priorities Disciplined investment in organic and acquisition - led growth Continued emphasis on capital returns and costs
Slide 76: Continued Emphasis on Capital Returns and Costs
CONTINUED EMPHASIS ON CAPITAL RETURNS AND COSTS OUR FOCUS NOW AND MOVING FORWARD 76 Return on Invested Capital Weighted Average Cost of Capital Source: Bloomberg. Up ~500 bps from Q2’13 Down ~160 bps from Q2’13
Slide 77: Why Vulcan
WHY VULCAN OUR FOCUS NOW AND MOVING FORWARD 77 Domestic aggregates focused business with several years of double - digit revenue growth potential – Shipment growth – Pricing growth Earnings leverage at each stage of the P&L – 60% flow - through and improving unit margins in aggregates – SAG leverage
Slide 78: Appendix
APPENDIX Is Company
Slide 79: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES APPENDIX 79 Cash Gross Profit Cash Gross Profit Q2 Q2 Q2 Q2 Trailing Twelve Months (in millions) 2016 2015 2014 2013 Aggregates segment Gross Profit 883.1$ 618.9$ 461.6$ 358.1$ DDA&A 232.9 228.9 223.3 229.2 Aggregates segment cash gross profit 1,116.0$
Slide 80: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON - GAAP FINANCIAL MEASURES APPENDIX 80 Aggregates segment gross profit as a percentage of freight-adjusted revenues Trailing 12 Months (in millions) Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Aggregates Incremental Margins (GAAP) 2012 2013 2012 2013 2013 2014 2013 2014 2013 2014 2013 2