Vulcan Materials Company (holding Company) · NYSE:VMC
Vulcan Materials Company (holding Company) — Merger or Acquisition (March 2012)
40 slides from Vulcan Materials Company (holding Company)'s merger presentation, Mar 30, 2012
Slide 1: The Vulcan Value Proposition
1 Shareholder Presentation, March 2012 The Vulcan Value Proposition March 2012 We provide the basic materials for the infrastructure investments needed to strengthen the American economy
Slide 2: It All Comes Down to Value
2 Shareholder Presentation, March 2012 It All Comes Down to Value 1. Premium Aggregates Operations 2. Solid SAG and Cash Flow Management 3. Substantial Operating Leverage Drives Strong EBITDA Growth as Markets Recover 4. Outperformance in Results and Wall Street Expectations Since Hostile Offer Comm
Slide 3: Vulcan Has a Clear Path to Premium Value for Shareholders
3 Shareholder Presentation, March 2012 Vulcan Has a Clear Path to Premium Value for Shareholders . Vulcan has premium aggregates assets that consistently outperform Martin Marietta’s - Located in better and faster growing markets - Consistently outperforms on pricing in all market conditions - Resul
Slide 4: Vulcan's Premium Aggregates Business Has Greater Earnings Potential than Martin Marietta's
4 Shareholder Presentation, March 2012 Vulcan’s Premium Aggregates Business Has Greater Earnings Potential than Martin Marietta’s
Slide 5: Vulcan's Aggregates Business Outperforms Martin Marietta's on Key Metrics
5 Shareholder Presentation, March 2012 Vulcan’s Aggregates Business Outperforms Martin Marietta’s on Key Metrics Note: Aggregates Cash Gross Profit and Cash Conversion Cycle are 2011 figures, prospective growth in population is from 2010 to 2020. % Vulcan Advantage Higher Aggregates Price Growth 58%
Slide 6: Vulcan's Aggregates Assets are Positioned in Higher Growth Markets
6 Shareholder Presentation, March 2012 Vulcan’s Aggregates Assets are Positioned in Higher Growth Markets than Those of Martin Marietta Service to the 25 Highest Growth MSAs Source: Woods & Poole Economics CEDDS 2011 Notes: Shown are the highest growth 25 MSAs based on projected population growth fr
Slide 7: Aggregates Demand is Driven by Absolute Population Growth
7 Shareholder Presentation, March 2012 Aggregates Demand is Driven by Absolute Population Growth Vulcan’s top 5 states are expected to add nearly 6.9 million or 75% more people than Martin Marietta’s top 5 states from 2010 to 2020 Source: Companies’ 2011 10-K . Moody’s 2010 – 2020 population project
Slide 8: Vulcan Consistently Outperforms on Pricing Growth
8 Shareholder Presentation, March 2012 Vulcan Consistently Outperforms on Pricing Growth Industry* Martin Marietta Vulcan Recent Price Growth Index, 2006 = 100 5.0% 3.6% 4.5% CAGR Note: Martin Marietta and Vulcan pricing based on Company filings. CAGR calculated as growth rate of point-to-point star
Slide 9: Vulcan Generates Higher Cash Gross Profit per Ton than Martin Marietta
9 Shareholder Presentation, March 2012 Vulcan Generates Higher Cash Gross Profit per Ton than Martin Marietta 2009 2008 2011 2010 % of Sales 42% 37% 34% 35% 33% 29% Aggregates Segment Cash Gross Profit $/Ton Vulcan Martin Marietta $0.98 / ton Advantage OR $140 Million at Vulcan’s 2011 Aggregates Vol
Slide 10: Cash Conversion Cycle Days / Working Capital % of Sales
10 Shareholder Presentation, March 2012 Cash Conversion Cycle Days Working Capital % of Sales Source: Thomson Reuters Worldscope Note: Working capital is defined as the sum of average accounts receivables and average inventory less average accounts payable where average is of the previous and curren
Slide 11: Vulcan Has Reduced SAG Expenses More Than Martin Marietta
11 Shareholder Presentation, March 2012 Vulcan Has Reduced SAG Expenses More Than Martin Marietta During the Cyclical Downturn, Despite Considerable Spending on ERP Programs Source: Company filings, as originally reported Note: Historical performance is not a guarantee or assurance of future perform
Slide 12: Solid SAG Management Expected to Accelerate from Cost Savings Initiatives
12 Shareholder Presentation, March 2012 $0 $50 $100 $150 $200 $250 $300 $350 $400 2007 2008 2009 2010 2011 2012E 2012E Run-Rate Solid SAG Management Expected to Accelerate from Cost Savings Initiatives and Leveraging of ERP and Shared Services Platforms ERP, Restructuring and Severance Cost Annual e
Slide 13: Vulcan Achieved Superior Earnings Growth During the Previous Recovery
13 Shareholder Presentation, March 2012 70% Growth ($555mm) $1,344 Vulcan Achieved Superior Earnings Growth During the Previous Recovery Source: Company filings. Note: Vulcan EBITDA includes Florida Rock on a pro forma basis. See Appendix for GAAP/Non-GAAP reconciliation. Note: Historical performanc
Slide 14: Vulcan's Non-Aggregates Business is at a Trough with Greater Upside
14 Shareholder Presentation, March 2012 Vulcan’s Non-Aggregates Business is at a Trough and Has Considerably Greater Upside Potential than Martin Marietta’s Source: Company Filings Note: Peak year based on highest historical EBITDA achieved. Results for 2006 pro forma to include Florida Rock. Histor
Slide 15: Analysts Expect Vulcan to Achieve More than Double the Rate of Growth
15 Shareholder Presentation, March 2012 Analysts Expect Vulcan to Achieve More than Double the Rate of Growth as the Economy Recovers Source: IBES median estimates as of March 23, 2012 (1) Excludes unusual items – see reconciliation in appendix. (2) Vulcan’s profit-enhanced mid-cycle estimate is bas
Slide 16: Vulcan's Q4 2011 Results Demonstrate Its Superior Operating Leverage
16 Shareholder Presentation, March 2012 Vulcan’s Q4 2011 Results Demonstrate Its Superior Operating Leverage Martin Marietta Vulcan Q4 Aggregates Gross Profit Change in $mm Vulcan Martin Marietta $21.5 $(4.5) Source: Company filings. See reconciliations in Appendix. (1) Vulcan and Martin Marietta EB
Slide 17: Q4 2011 Results Demonstrate Operating Leverage and Early Signs of Recovery
17 Shareholder Presentation, March 2012 Vulcan’s Q4 2011 Results Demonstrate Its Superior Operating Leverage and Early Signs of Recovery Source: Company filings. Timing and extent of economic recovery remains uncertain. See reconciliations in Appendix. Vulcan’s earnings recovery is clearly underway
Slide 18: Vulcan's Profit Enhancement Plan Adds Significant Value That Belongs to Vulcan Shareholders
18 Shareholder Presentation, March 2012 Vulcan’s Profit Enhancement Plan Adds Significant Value That Belongs to Vulcan Shareholders
Slide 19: Profit Enhancement Plan Creates Significant Value for Vulcan's Shareholders
19 Shareholder Presentation, March 2012 Vulcan’s Profit Enhancement Plan Creates Significant Value, Which Belongs to Vulcan’s Shareholders . Vulcan’s standalone opportunity is significant: 2011 Restructuring Initiative and Profit Enhancement Plan deliver $155 million of incremental EBITDA — Complete
Slide 20: Significant IT Investments and Restructuring Enable the $100 Million Plan
20 Shareholder Presentation, March 2012 Significant IT Investments and Recent Restructuring Actions Enable the $100 Million Profit Enhancement Plan ERP Investment 2011 Restructuring Profit Enhancement Plan . $55 million in run-rate cost savings resulting from actions since 2010 . Overhead reductions
Slide 21: Actions Underpinning the $100 Million in EBITDA Improvement
21 Shareholder Presentation, March 2012 Profit Enhancement Plan: Actions Underpinning the $100 Million in EBITDA Improvement G&A / Support Functions $25mm Sourcing $55mm Transp./ Logistics $20mm $100mm EBITDA Improvement . Transportation / logistics savings opportunities exist in trucking, rail and
Slide 22: Profit Enhancement Plan is Well Underway
22 Shareholder Presentation, March 2012 Profit Enhancement Plan is Well Underway Sourcing . Leadership and governance structure established to drive cost reductions within 18 months, including in categories that will deliver results much sooner . Categories prioritized based on run-rate savings, and
Slide 23: Wall Street Research Analysts Agree Plan Will Create Value
23 Shareholder Presentation, March 2012 Wall Street Research Analysts Agree that Vulcan’s Profit Enhancement Plan Will Create Value for our Shareholders... Realistic and Achievable Targets . “In our opinion, management’s EBITDA target [$500 MM in FY12E] is realistic and achievable in light of $75 MM
Slide 24: Analysts Raised Earnings Estimates and Price Targets
24 Shareholder Presentation, March 2012 ...and Have Raised their Earnings Estimates and Price Targets to Reflect the Benefits of the Plan Increased Margin Outlook . “In our opinion, the company’s substantial upside leverage to a recovery has been enhanced by management’s cost saving initiatives and
Slide 25: Vulcan's Planned Asset Sales Accelerate Deleveraging and Build Value
25 Shareholder Presentation, March 2012 Vulcan’s Planned Asset Sales Accelerate Deleveraging and Build Value
Slide 26: Planned Asset Sales Expected to Generate Cash for Debt Reduction
26 Shareholder Presentation, March 2012 Planned Asset Sales are Expected to Generate Cash for Debt Reduction and Enhance Shareholder Return Broad portfolio of assets under consideration... ...consistent with Vulcan’s strategy... ...and subject to a disciplined selling process . Ready-mix concrete .
Slide 27: Planned Asset Sales Enhance Value While Regulatory-Driven Divestitures Can Destroy It
27 Shareholder Presentation, March 2012 Vulcan’s Planned Asset Sales Are Designed to Enhance Value While Regulatory-Driven Divestitures Can Destroy It Vulcan’s Planned Asset Sales Designed to Enhance Value Regulatory-Driven Divestitures Can Destroy Value . We choose the assets . Non-strategic aggreg
Slide 28: It All Comes Down to Value
28 Shareholder Presentation, March 2012 It All Comes Down to Value
Slide 29: It All Comes Down to Value
29 Shareholder Presentation, March 2012 It All Comes Down to Value 1. Premium Aggregates Operations 2. Solid SAG and Cash Flow Management 3. Substantial Operating Leverage Drives Strong EBITDA Growth as Markets Recover 4. Outperformance in Results and Wall Street Expectations Since Hostile Offer Com
Slide 30: Appendix
30 Shareholder Presentation, March 2012 Appendix
Slide 31: Martin Marietta's Claims are Self-Serving and Ignore the Facts
31 Shareholder Presentation, March 2012 Martin Marietta’s Claims are Self-Serving and Ignore the Facts MLM’s Claims The Facts “Continues to Underperform”(1) • Vulcan’s Q4 results reflect strong growth trajectory • Gross profit growth of $23.6 million vs. $1.3 million for Martin Marietta • EBITDA gro
Slide 32: Martin Marietta's Claims are Self-Serving and Ignore the Facts
32 Shareholder Presentation, March 2012 Martin Marietta’s Claims are Self-Serving and Ignore the Facts MLM’s Claims The Facts “Shareholders will benefit from the skills and experience of the respected Martin Marietta management team.”(1) • Martin Marietta lacks any relevant experience acquiring and
Slide 33: Broad Acknowledgement Among Analysts of Achievability of Profit Enhancement Plan
33 Shareholder Presentation, March 2012 Broad Acknowledgement Among Wall Street Analysts of Achievability of Profit Enhancement Plan Source: IBES estimates as of March 23, 2012 Note: Wall Street Consensus based on IBES Median, which may not equal median of brokers shown as IBES excludes certain brok
Slide 34: Risk of Significant Loss of Value as a Result of Regulatory Review
34 Shareholder Presentation, March 2012 $5.27 $4.06 $4.85 $2.12 20 mile radius 21-40 mile radius >40 mile radius Not incl. In DOJ request Risk of Significant Loss of Value as a Result of Regulatory Review Notes: In 2011, Total Company Aggregates shipments were 143m tons, Cash Gross Profit was $584.0
Slide 35: Vulcan and Martin Marietta Aggregates Sites
35 Shareholder Presentation, March 2012 Vulcan and Martin Marietta Aggregates Sites Yard or Distributor Sand & Gravel Stone Potential Site Source: USGS, Vulcan Internal Sources and Martin Marietta website 5
Slide 36: Southern, Midwest, and Mid-Atlantic Sites
36 Shareholder Presentation, March 2012 Southern, Midwest, and Mid-Atlantic Sites Yard or Distributor Sand & Gravel Stone Potential Site Source: USGS, Vulcan Internal Sources and Martin Marietta website 5
Slide 37: Appendix – Vulcan Reconciliation
37 Shareholder Presentation, March 2012 Appendix – Vulcan Reconciliation Reconciliation of Non-GAAP Financial Measures Amounts in millions of dollars Cash gross profit Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. EBITDA EBITDA i
Slide 38: Appendix – Martin Marietta Reconciliation
38 Shareholder Presentation, March 2012 Appendix – Martin Marietta Reconciliation Reconciliation of Non-GAAP Financial Measures Amounts in millions of dollars Cash gross profit Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. EBITDA
Slide 39: Important Disclosure Notes – Forward Looking Statements
39 Shareholder Presentation, March 2012 Important Disclosure Notes – Forward Looking Statements Certain matters discussed in this presentation, including expectations regarding future performance, contain forward-looking statements. Statements that are not historical fact, including statements about
Slide 40: Important Disclosure Notes – Additional Information
40 Shareholder Presentation, March 2012 Important Disclosure Notes – Additional Information ADDITIONAL INFORMATION This presentation does not constitute an offer to buy or solicitation of an offer to sell any securities or a solicitation of any vote, consent or approval. In response to the unsolicit
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