Martin Marietta Materials, Inc. · NYSE:MLM
Martin Marietta Materials — Merger or Acquisition (December 2011)
24 slides from Martin Marietta Materials's merger presentation, Dec 12, 2011
Slide 1: Martin Marietta's Proposed Combination with Vulcan Materials
FILED BY MARTIN MARIETTA MATERIALS, INC. PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 AND DEEMED FILED PURSUANT TO RULE 14a-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934 SUBJECT COMPANY: VULCAN MATERIALS COMPANY COMMISSION FILE NO. 001-33841 Martin Marietta's Proposed Combination with Vulcan
Slide 2: Background to the Proposal
The Martin Marietta and Vulcan Materials Combination: Background to the Proposal • Due to the strong industrial logic of a potential combination, Martin Marietta and Vulcan Materials began discussions in 2002 • Since these initial discussions, both companies have had periodic conversations, which in
Slide 3: Martin Marietta's Strategies for Success
Martin Marietta’s Strategies for Success Consistent and disciplined execution of business fundamentals • cost management • financial strength and flexibility • pricing performance + Leverage best-in-class locations and teams Our strategic principles + have positioned us for this Strong distribution
Slide 4: Compelling Combination of Two Highly Complementary Businesses
Compelling Combination of Two Highly Complementary Businesses MARTIN MARIETTA MATERIALS Vulcan Materials Total Reserves Total Reserves (billions of tons) 13.6 (billions of tons) 14.7 1 Number of Facilities 315 Number of Facilities 317 2010 Net Sales 2010 Net Sales ($mm) $1,551 ($mm) $2,406 2010 Ship
Slide 5: Combined Company Will Have the Most Extensive Aggregates Footprint
Combined Company Will Have the Most Extensive Aggregates Footprint WA MT ND ME OR MN VT NH Nova Scotia ID SD WI NY MA WY MI CT RI IA PA NJ NV NE OH DE IL IN UT MD CA CO WV KS MO VA U.S. aggregates producers KY (by shipments) ¹ NC TN OK AZ NM AR SC AL GA MS LA TX FL States with Martin Marietta locati
Slide 6: Creates the #1 Aggregates Company in the U.S. and Globally
Creates the #1 Aggregates Company in the U.S. and Globally Aggregates shipments by tonnage U.S. Global Combination creates the “must own” U.S. heavy building materials stock Note: Fiscal year 2010 annual shipments measured in millions of short tons and based on publicly available information. Exclud
Slide 7: Significant Shareholder Value Creation
Significant Shareholder Value Creation Estimated $200 - $250 million Efficiencies gained in annual synergies from size and scale Continued focus on Meaningful dividend operational excellence Significant Balance sheet well- positioned for shareholder value creation Stronger platform cyclical recovery
Slide 8: Compelling Industrial Logic Drives Value Creation for All Shareholders
Compelling Industrial Logic Drives Value Creation for All Shareholders ($ in billions) $9.8B Synergies¹ Vulcan Materials 31% Value creation Vulcan Materials (~$1.3 billion) 58% ownership² Martin Marietta Martin Marietta 20% Value creation (~$0.7 billion) 42% ownership² Capitalized synergy value repr
Slide 9: Realization of $200 - 250M in Annual Cost Synergies
Realization of $200 - 250M in Annual Cost Synergies Improved purchasing efficiencies from greater scale $50 – 60M • Goods and services • Distribution network Duplicative operating functions $50 – 60M • Realigned organizational structure • Management, facility, sales force and production overhead int
Slide 10: Driven By Demonstrated Cost Management Ability
Driven By Demonstrated Cost Management Ability 1 Annual SG&Aas a %of Net Sales 1 2007 – 2011 YTD Annual SG&Aas a % of Net Sales Martin Marietta: 8.4% Vulcan Materials: 11.2% Martin Marietta's consistent cost discipline is expected to generate significant synergies when applied to Vulcan Materials’ c
Slide 11: Expectation to Pay a Meaningful Dividend
Expectation to Pay a Meaningful Dividend Dividend paid per share Martin Marietta ($) Vulcan Materials ($) 1.96 1.84 1.60 1.60 1.60 1.49 1.48 1.48 Vulcan 1.24 1.16 Materials recently cut 1.01 1.00 its quarterly 0.86 dividend to $0.01 per share 0.04 1 2005 2006 2007 2008 2009 2010 Q4 11E 2005 2006 200
Slide 12: Balance Sheet Well-Positioned for Cyclical Recovery and Growth
Balance Sheet Well-Positioned for Cyclical Recovery and Growth 9/30/2011 Martin Vulcan 1 Our balance sheet will have ($ millions) Combined Marietta Materials Sufficient liquidity Cash $57 $152 $209 No maintenance-based covenants Minimal near-team Debt $1,045 $2,821 $3,867 maturities LTM Adj. 3 Combi
Slide 13: The Combination Provides Significant Scale Advantages
The Combination Provides Significant Scale Advantages Martin Vulcan 1 Combined Marietta Materials Total Reserves2 13.6 14.7 28.3 (billions of tons) Number of Facilities3 315 317 632 Number of 29 19 35 States Served LTM Net Sales $1,566 $2,378 $3,943 ($ in millions) LTM Adj. EBITDA4 $350 $301 $851 –$
Slide 14: Focus on Operational Excellence
Focus on Operational Excellence Note 1: Martin Marietta's SG&A includes R&D expenses for comparative purposes. Note 2: Please see EBIT reconciliation in appendix. Note 3: Net income excludes discontinued operations. Note 4: Calculated as Net Income over average shareholder’s book value of equity in
Slide 15: Provides an Enhanced Platform For Long-Term Growth
Provides an Enhanced Platform For Long-Term Growth 1 U.S. aggregates estimated market share ~15% combined market share 2 Vulcan Materials 7% 3 Martin Marietta 7% CRH 6% Others 69% 4 HeidelbergCement 6% Lafarge 3% Cemex 2% Enhanced future growth opportunities in a fragmented market Note: Market share
Slide 16: Key Terms of the Proposed Transaction
Key Terms of the Proposed Transaction • Stock-for-stock, tax free exchange of 0.50 Martin Marietta Consideration shares of common stock for each Vulcan Materials share of common stock Premium to Vulcan Materials’ • 15% and 18%premiums to the average exchange ratio during the 10 and 30 day periods en
Slide 17: Martin Marietta's Steps to Advance Transaction
Martin Marietta’s Steps to Advance Transaction Delivered a letter today to Vulcan Materials outlining the terms of Martin Marietta's proposal for a business combination with Vulcan Materials Commenced an exchange offer for all outstanding Vulcan Materials shares of common stock Intend to nominate fi
Slide 18: Highlights of the Proposed Transaction
Highlights of the Proposed Transaction • Combination creates a U.S.-based company that is the global aggregates leader – establishes a “world-class” U.S.-based company – significantly increases scale – complementary geographic footprint • Estimated annual run-rate cost synergies of $200 – $250 milli
Slide 19: Appendix
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Slide 20: Martin Marietta EBITDA & EBIT Reconciliation
Martin Marietta EBITDA & EBIT Reconciliation (dollars in millions) LTM For the Year Ended December 31, 9/30/2011 2010 2009 2008 2007 Net earnings attributable to entity $ 82.3 $ 97.0 $ 5.5 $ 176.3 $ 262.7 Add back: Interest expense 62.2 68.5 73.5 74.3 60.9 Income tax expense for controlling interest
Slide 21: Vulcan Materials EBITDA & EBIT Reconciliation
Vulcan Materials EBITDA & EBIT Reconciliation (dollars in millions) LTM For the Year Ended December 31, 9/30/2011 2010 2009 2008 2007 Net (loss) earnings $ (89.9) $ (96.5) $ 30.3 $ 0.9 $ 450.9 Add back: Interest expense 210.0 180.7 173.0 169.7 41.6 Income tax (benefit) expense (72.6) (85.7) (30.1) 7
Slide 22: Vulcan Materials SG&A Reconciliation
Vulcan Materials SG&A Reconciliation (dollars in millions) For the Year Ended December 31, YTD LTM 2010 2009 2008 2007 9/30/2011 9/30/2011 SG&A, as reported $ 327.5 $ 321.6 $ 342.6 $ 289.6 $ 221.3 $ 301.4 R&D expense, as disclosed in notes to financials 1.6 1.5 1.5 1.6 1.2 1.6 Adjusted SG&A $ 326.0
Slide 23: Forward-Looking Statements
Forward-Looking Statements This presentation may include "forward-looking statements." Statements that include words such as "anticipate," "expect," "should be," "believe," "will," and other words of similar meaning in connection with future events or future operating or financial performance are of
Slide 24: Important Additional Information
Important Additional Information This presentation relates to the Exchange Offer by Martin Marietta to exchange each issued and outstanding share of common stock of Vulcan Materials for 0.500 shares of Martin Marietta common stock. This presentation is for informational purposes only and does not co
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