Vulcan Materials Company (holding Company) · NYSE:VMC
Vulcan Materials Company (holding Company) — Investor Day (September 2022)
91 slides from Vulcan Materials Company (holding Company)'s investor day presentation, Sep 29, 2022
Slide 1: 2022 Investor Day
Exhibit 99.1 2022 INVESTOR DAY Materials Company
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Slide 3: Agenda
Strategy and Vision Tom Hill Talent and Sustainability Darren Hicks & Janet Kavinoky Vulcan Way of Selling (VWS) Jerry Perkins Break Vulcan Way of Operating (VWO) Jason Teter Portfolio Management Ronnie Pruitt Raising the Bar Mary Andrews Carlisle Conclusion and Q&A All Agenda
Slide 4: Forward-looking statements
This presentation 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 performance, results of operations, business plans or s
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Slide 6: Strategy & Vision
Materials Company Strategy & Vision = - Well Positioned for vontinug sone and Value ~*~ — on Tom Hill Chairman, President & Chief Executive Officer
Slide 7: Well Positioned for Continued Growth and Value Creation
Well Positioned for Continued Growth and Value Creation Strong Cash Flow Generation and Investment-Grade Balance Sheet Durable Business Model to Extend the Cycle and Sustain Growth Industry Leader with Clear Competitive Advantages
Slide 8: A Strong Foundation for the Future
Note: Trailing-twelve months 2Q’22 figures unless noted otherwise *Non-GAAP measure. See appendix for reconciliation. A Strong Foundation for the Future $1.55 Billion Adjusted EBITDA* (11% CAGR since 2017) $7.45 Per Ton Aggregates Cash Gross Profit per Ton* (5% CAGR since 2017) 1.0 Injuries per 200k
Slide 9: Serving the Right U.S. Markets
Sources: USGS, Woods & Poole CEDDS 2021 and Company estimates Based on population growth from 2020 to 2030 Serving the Right U.S. Markets Well positioned to capture U.S. market opportunities 90% Revenues tied to markets where Vulcan has a #1 or #2 position 20 of top 25 Fastest growing markets served
Slide 10: Aggregates Focus Drives Growth and Durability
Share of gross profit based on trailing-twelve months ending June 30, 2022 Aggregates Focus Drives Growth and Durability Strong fundamentals and lower risk through the cycle Wide logistical moats, barriers to entry, and limited product substitutions Flexible production capacity Diverse demand base A
Slide 11: Aggregates Focus Drives Growth and Durability
Share of gross profit based on trailing-twelve months ending June 30, 2022 Source: Company estimates Aggregates Focus Drives Growth and Durability Selective, strategic footprint in areas complementary to aggregates 92% of gross profit 8% of gross profit ~95% Aggregates by weight Estimated U.S. marke
Slide 12: We Operate the Right Way
We Operate the Right Way 2021 ESG highlights People Health & Safety Environmental Stewardship Neighbors & Community Governance THE WAY FORWARD 2021 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
Slide 13: Experienced, Proven Leadership Team
Experienced, Proven Leadership Team 3 Chairman of the Board, President and Chief Executive Officer J. Thomas Hill Chief Operating Officer Thompson S. Baker II Senior Vice President, Chief Financial Officer Mary Andrews Carlisle Senior Vice President, General Counsel and Secretary Denson N. Franklin
Slide 14: Business Initiatives…
Business Initiatives… Launched strategic disciplines Further strengthened balance sheet Optimized plant efficiency Strengthened portfolio Established Aggregates cash gross profit target
Slide 15: …Are Delivering Superior Results
+11% CAGR in Adjusted EBITDA* growth since 2017 Note: Trailing-twelve months as of 2Q 2022 unless otherwise noted *Non-GAAP measure. See appendix for reconciliation. …Are Delivering Superior Results 15 +210 Bps improvement in Adjusted EBITDA ROIC* (2017-2021) +5% CAGR in Cash Gross Profit / Ton* sin
Slide 16: Two-Pronged Strategy to Drive Future Growth and Sustainable Value
Two-Pronged Strategy to Drive Future Growth and Sustainable Value Supported by foundation of talent, sustainability and innovation Enhance Our Core Expand Our Reach Talent Sustainability Innovation
Slide 17: Enhance Our Core
Enhance Our Core Driving the next horizon of growth and profitability Operational Excellence Strategic Sourcing VWO The Vulcan Way of Operating VWS The Vulcan Way of Selling Commercial Excellence Logistics Innovation
Slide 18: Expand Our Reach
Source: Woods & Poole CEDDS 2021 Based on population growth from 2020 to 2030 Expand Our Reach Ample opportunity for future growth 37% U.S. Aggregates Market ■ Public companies ■ Smaller, non-public companies The 50 Highest Growth MSAs ˜ 35 Vulcan-Served MSAs ˜ 15 Other MSAs ■ Vulcan’s States ~3 Bil
Slide 19: Robust Outlook for Public Sector Demand
Robust Outlook for Public Sector Demand Infrastructure Investment and Jobs Act (IIJA) funding is driving strong aggregates demand Increasing use of aggregates 2% 6% 18% Mix of $853 Billion in Guaranteed Funding from the IIJA 2% 8% 8% 1% 3% 11% Source: American Road and Transportation Builders Associ
Slide 20: Increasing Highway Projects Underscore Growth
Source: Dodge Data and Analytics and Company estimates Increasing Highway Projects Underscore Growth Growing momentum in public infrastructure work Year-over-Year Change in TTM U.S. Highway Starts
Slide 21: Vulcan-Served Markets Outperform in Highway Funding
Notes: Bars represent CAGR in contract awards from inception of new federal highway bill until beginning of subsequent bill. Sources: Dodge Data and Analytics and Company estimates Vulcan-Served Markets Outperform in Highway Funding Growth in highway project spending is usually greater in Vulcan-ser
Slide 22: Demographics Support Long-Term Residential Outlook
Note: Prior peak represents February 2006, Current represents July 2022; 2030 is an estimate using third-party sources Sources: Dodge Data and Analytics, Woods & Poole, Company estimates Demographics Support Long-Term Residential Outlook …while housing starts still below prior peak… (17%) U.S. Housi
Slide 23: Positive Nonresidential Outlook
TTM starts measured in millions of square feet Source: Dodge and Company estimates Positive Nonresidential Outlook Vulcan markets outperform VMC Markets +30% YoY Other Markets +13% YoY AUG ‘18 AUG ‘19 AUG ‘20 AUG ‘22 AUG ‘21 Private Nonresidential Starts
Slide 24: Demand Growth Has Supported Pricing Momentum
Demand Growth Has Supported Pricing Momentum Aggregates are a unique resource with high barriers to entry Year-over-Year Change in Aggregates Mix-Adjusted Price
Slide 25: Price/Cost Dynamics Reached an Inflection Point in 2Q
Year-over-Year Change in Aggregates (per ton) Price/Cost Dynamics Reached an Inflection Point in 2Q -$0.25 -$0.05
Slide 26: Positioned for Growth and Value Creation
Positioned for Growth and Value Creation Strong Cash Flow Generation and Investment-Grade Balance Sheet Durable Business Model to Extend the Cycle and Sustain Growth Financial capacity to sustain capital reinvestment in current asset base and to fund growth Maintain an investment-grade credit positi
Slide 27: Talent and Sustainability
Talent and Sustainability Darren Hicks Senior Vice President and Chief Human Resources Officer Janet Kavinoky Vice President, External Affairs and Corporate Communications Serafin To Replace
Slide 28: Vulcan's Five ESG Focus Areas
Vulcan’s Five ESG Focus Areas ESG with a Value-Creation Mindset Focus is on ESG Priorities Material to Our Business Health & Safety Environmental Stewardship Neighbors & Community Governance People
Slide 29: Our Top Priority: Keeping Everyone Safe and Healthy
Our Top Priority: Keeping Everyone Safe and Healthy Achieve and maintain zero fatalities at all sites Reduce MSHA reportable/OSHA recordable injuries by 25% by 2025 131,477 Hours of health and safety training delivered to Vulcan employees Health & Safety 94% Vulcan facilities with zero lost-time inj
Slide 30: Honed Approach to Risk Prevention
Honed Approach to Risk Prevention A more sophisticated method of driving safety Reduce Job Risks Avoiding Accidents To Forward Looking Metrics Backward Looking Statistics To
Slide 31: Attracting, Developing and Retaining Our People
Figures for year-ending 2021 Attracting, Developing and Retaining Our People Recruiting and keeping the best talent in the industry 39% Employees with 10+ years tenure 20% Four-year Average Annual Turnover 251,320 Total Training Hours (2021) 52% - 48% Ratio of female to male salaried, non –exempt em
Slide 32: Initiatives Underscore Our Commitment to DE&I
Initiatives Underscore Our Commitment to DE&I Employee Resource Groups (ERGs) Launched four ERGs in 2022 Expanding to include additional groups by 2025 Training Ongoing DE&I awareness training as part of new hire onboarding Unconscious Bias training DE&I Council Established in 2015 to guide on compa
Slide 33: Strong Commitment to Environmental Stewardship
Strong Commitment to Environmental Stewardship A 60+ year record of doing the right thing, the right way, at the right time Environmental Compliance (98% Citation Free) Environmental Stewardship A durable and sustainable business Air Quality Recycling and waste reduction Energy Efficiency Product in
Slide 34: The Way Forward
The Way Forward Creating shareholder value, reducing impacts and mitigating risks 4 New initiatives and partnerships to reduce scope 2 emissions Florida Power & Light solar together program California solar development Texas wind energy Land Use and Business Planning ü Operational Efficiency ü Energ
Slide 35: In Focus: Climate Change and GHG Emissions
In Focus: Climate Change and GHG Emissions Doing our part to reduce overall GHG emissions and mitigate the effects of climate change Reduce Scope 1 and 2 GHG emissions intensity per ton of product produced by 10% by 2030 Reduce energy intensity per ton of product produced by 6.7% by 2030 Secure 5% o
Slide 36: Vulcan Way of Selling
Vulcan Way of Selling Jerry Perkins Senior Vice President
Slide 37: Competing and Winning Locally
Competing and Winning Locally Supporting near-term performance and longer-term competiveness VWS The Vulcan Way of Selling Commercial Excellence Logistics Innovation Operational Excellence Strategic Sourcing VWO The Vulcan Way of Operating
Slide 38: Better Serving Our Customers and Enhancing Our Profitability
Better Serving Our Customers and Enhancing Our Profitability Variety of customers and projects Highways Infrastructure Nonresidential Residential
Slide 39: Efficient Management and Capture of Job Opportunities
Note: Each dot represents a project quoted Efficient Management and Capture of Job Opportunities Quote activity for six month period California Los Angeles
Slide 40: Vulcan Way of Selling Fundamentals
Vulcan Way of Selling Fundamentals A more strategic approach to selling 0 Drives 1 More time with customers Development of our people 2 Accountability through improved technology, processes and metrics 3 Vulcan Way of Selling Defined Roles Technology Innovation Faster growth than the Industry 4 Trad
Slide 41: Sales Support Model Enables Superior Sales Execution
Sales Support Model Enables Superior Sales Execution Spending time where it counts Customer Data Analytics Market Intel Job Leads Pricing Sales Support Teams Sales Rep Increasing interactions Transactional/ Administrative Tasks Better quality discussions Solutions and value selling
Slide 42: Innovative Tools and Analytics Support Commercial Strategy
Innovative Tools and Analytics Support Commercial Strategy Powerful forward-looking data drives decisions and accountability Customer Visits Job Opportunities Booking Pace Win Percentage Price Momentum
Slide 43: Superior Pricing Performance Across the Portfolio
Note: For comparison purposes, pricing is not freight-adjusted *2022 = TTM ending June 30, 2022 Peers = average growth rate for MLM, SUM, EXP, CRH, CX Superior Pricing Performance Across the Portfolio VWS helps drive best-in-class performance VMC +20% Cumulative growth Peers +15% Cumulative growth
Slide 44: Logistics Sourcing and Technology as a Competitive Advantage
Logistics Sourcing and Technology as a Competitive Advantage A differentiated customer experience Project Productivity Features Delivery ETA Delivery Confirmation Key Performance Indicators Electronic Ticket Reorder Request
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Slide 46: Building for the Future
Building for the Future New Mobile Digital Sales Platform Better employee experience for our sales force New customer website with best-in-class functionality More robust, real-time market information
Slide 47: Delivering an Unmatched Customer Experience
Delivering an Unmatched Customer Experience President and Chief Executive Officer Fred J. Smith, III
Slide 48: Break
Break Investor Day 2022
Slide 49: Vulcan Way of Operating
Vulcan Way of Operating Jason Teter Senior Vice President Serafin To Replace
Slide 50: Competing and Winning, Locally
Operational Excellence Strategic Sourcing VWO The Vulcan Way of Operating Competing and Winning, Locally Strengthening existing capabilities to drive the next horizon of growth and profitability VWS The Vulcan Way of Selling Commercial Excellence Logistics Innovation
Slide 51: Building Our Capabilities for Continued Superior Performance
Building Our Capabilities for Continued Superior Performance Production efficiency Customer service Safety and health of our people
Slide 52: Producing the Right Tons at the Right Time
Producing the Right Tons at the Right Time Starting with a strong foundation 2019 Vulcan Way of Operations Digital Training 2022 Plant Technology 2017 Strategic Sourcing Strive for Continuous Improvement and Better Performance
Slide 53: Enhanced Training Program Improves Consistency Across Operations
Enhanced Training Program Improves Consistency Across Operations Leveraging technology to better equip and train our team Multifaceted proprietary digital library focusing on our major business lines Continuous training resources that support the entire employment life cycle 60+ modules (and countin
Slide 54: Enterprise-Wide Production Performance Tracking
Vulcan’s Enterprise-Wide Production Performance Tracking Launched scalable digital process monitoring system to optimize efficiency and improve productivity Aggregates Operations with Production Performance Tracking
Slide 55: Production Performance Tracking: Plant-by-Plant Analysis
Vulcan’s Enterprise-Wide Production Performance Tracking Enables detailed plant-by-plant analysis with mobile capability
Slide 56: Production Performance Tracking: Area Dashboard
Vulcan’s Enterprise-Wide Production Performance Tracking Area dashboard allows quick access to tracking performance
Slide 57: Production Performance Tracking: Plant Dashboard
Vulcan’s Enterprise-Wide Production Performance Tracking Plant dashboard helps monitor efficiencies and KPI’s throughout the day
Slide 58: Production Performance Tracking: Crusher Dashboard
Vulcan’s Enterprise-Wide Production Performance Tracking Crusher dashboard provides visibility into real-time performance
Slide 59: Production Performance Tracking: Crusher Performance
Vulcan’s Enterprise-Wide Production Performance Tracking Crusher Performance
Slide 60: Production Performance Tracking: Crusher Performance
Vulcan’s Enterprise-Wide Production Performance Tracking Crusher Performance
Slide 61: Digital Tracker Generates Measurable Success
Digital Tracker Generates Measurable Success Visibility into real-time performance drives lower unit costs and higher unit margins Productivity Yield Unit Profitability Cost of Production
Slide 62: Superior Cost Performance
*Non-GAAP measure. See appendix for reconciliation. Trailing-twelve months as of 2Q 2022. **PPI for Industrial Commodities Sources: BLS and Company freight-adjusted cash cost …Including Superior Cost Performance Vulcan’s cash cost per ton beats inflation CAGR since 2017 VS. 2.7% Vulcan Cash Cost Per
Slide 63: Strong Momentum Will Continue to Drive Improved Performance
Strong Momentum Will Continue to Drive Improved Performance Exciting developments – and we’re just getting started 1 Continued development of training Leveraging the technology across the enterprise 2
Slide 64: Portfolio Management
Portfolio Management Ronnie Pruitt Senior Vice President Serafin To Replace
Slide 65: Expanding and Enhancing Our Portfolio
Expanding and Enhancing Our Portfolio Guiding principles Foundation in Aggregates 1 Right Market Structure 2 Downstream in Select Markets 3 Disciplined Approach 4
Slide 66: Expanding in Existing Markets Through M&A (2016)
Expanding in Existing Markets Through M&A Powerful combination of scarcity and growth 66 Aggregates Asphalt + 2016
Slide 67: Expanding in Existing Markets Through M&A (2017)
Expanding in Existing Markets Through M&A Powerful combination of scarcity and growth 7 Aggregates Asphalt + Sales Yard Concrete 2017
Slide 68: Expanding in Existing Markets Through M&A (2021)
Expanding in Existing Markets Through M&A Powerful combination of scarcity and growth 68 Aggregates Asphalt + Sales Yard Concrete 2021
Slide 69: Expanding in Existing Markets Through M&A (2022)
Expanding in Existing Markets Through M&A Powerful combination of scarcity and growth 69 Aggregates Asphalt + Sales Yard Concrete 2022
Slide 70: Expanding in Existing Markets Through Greenfields
Expanding in Existing Markets Through Greenfields 70 First Tier of Past Growth Next Tier of Future Growth New Greenfield Operations Will Serve Future Growth
Slide 71: Expanding in New Markets Through Acquisitions
Expanding in New Markets Through Acquisitions Powerful combination of scarcity and growth 71 Quarry Sales Yard 2021
Slide 72: Disciplined Approach to Expanding Our Aggregates Footprint
Disciplined Approach to Expanding Our Aggregates Footprint ● Acquisition ● Greenfield Aggregates Asphalt + Concrete Aggregates Operations Added Since 2016
Slide 73: Disciplined Approach to Expanding Our Aggregates Footprint
Disciplined Approach to Expanding Our Aggregates Footprint ● Acquisition ● Greenfield Aggregates Asphalt + Concrete All Operations Added Since 2016
Slide 74: Disciplined Approach to Expanding Our Aggregates Footprint
Disciplined Approach to Expanding Our Aggregates Footprint ● Acquisition ● Greenfield ● Legacy Aggregates Asphalt + Concrete All Operations Today
Slide 75: Ample Opportunity for Future Growth
Ample Opportunity for Future Growth Aggregates Operations Not Owned by Public Companies
Slide 76: Raising the Bar
Raising the Bar Mary Andrews Carlisle Chief Financial Officer Serafin To Replace
Slide 77: Durable Growth Through the Cycle
Durable Growth Through the Cycle Disciplined approach yields consistent results Operational Execution Cash Generation Capital Allocation Note: Trailing-twelve months as of 2Q 2022 *Non-GAAP measure. See appendix for reconciliation.
Slide 78: Consistent Execution Makes the Best Better
Note: Trailing-twelve months as of 2Q 2022 *Non-GAAP measure. See appendix for reconciliation. Consistent Execution Makes the Best Better Industry-leading profitability gap widened, even during macro headwinds 78 5% CAGR
Slide 79: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Clear priorities in place to drive long-term shareholder value creation 79 1 Operating Capital maintain and grow the value of our franchise Growth Capital including greenfields and acquisitions 2 Dividend Growth with Earnings with a keen focus on sustainabilit
Slide 80: Attractive Opportunities to Reinvest and Grow
Attractive Opportunities to Reinvest and Grow A balanced approach 2015
Slide 81: Attractive Opportunities to Reinvest and Grow
Attractive Opportunities to Reinvest and Grow A balanced approach Externally Sourced New Greenfield Operations 2016
Slide 82: Attractive Opportunities to Reinvest and Grow
Attractive Opportunities to Reinvest and Grow A balanced approach 2017 Internally Sourced Acquired Operations
Slide 83: Strong Financial Position
As of June 30, 2022. EBITDA is a non-GAAP measures. See Appendix for reconciliation Strong Financial Position Investment-grade balance sheet supports future growth Financial strength and flexibility to sustain and strengthen business operations Debt amount and structure appropriate to the asset base
Slide 84: Raising the Bar…
Raising the Bar… 84 2019 Goal as outlined at 2019 Investor Day. Cash Gross Profit and EBITDA are non-GAAP measures. $9 $6 ~$8 2019 Investor Day Target 2022 Investor Day Target 260 to 270M tons 230 to 240M tons 236M tons - ~224M (ex. USCR) Cash Gross Profit / Ton $2.0B EBITDA
Slide 85: Raising the Bar…
Raising the Bar… 85 2019 Goal as outlined at 2019 Investor Day. Cash Gross Profit and EBITDA are non-GAAP measures. $9 $6 ~$8 2019 Investor Day Target 2022 Investor Day Target 260 to 270M tons 230 to 240M tons 236M tons - ~224M (ex. USCR) Cash Gross Profit / Ton $2.0B EBITDA $1.7B EBITDA
Slide 86: Raising the Bar…
Raising the Bar… 86 2019 Goal as outlined at 2019 Investor Day. Cash Gross Profit and EBITDA are non-GAAP measures. $9 $6 ~$8 2019 Investor Day Target 2022 Investor Day Target 260 to 270M tons 230 to 240M tons 236M tons - ~224M (ex. USCR) Cash Gross Profit / Ton $2.0B EBITDA $1.7B EBITDA
Slide 87: Raising the Bar…
Raising the Bar… 87 2019 Goal as outlined at 2019 Investor Day. Cash Gross Profit and EBITDA are non-GAAP measures. $9 $6 ~$8 2019 Investor Day Target 2022 Investor Day Target 260 to 270M tons 230 to 240M tons 236M tons - ~224M (ex. USCR) Cash Gross Profit / Ton $2.7B to $3.0B EBITDA $1.7B EBITDA $2
Slide 88: Best Investment Opportunity
Best Investment Opportunity Enhance Our Core Expand Our Reach Products Markets People Technology & Innovation Portfolio
Slide 89: Q&A
Q&A Serafin To Replace
Slide 90: Appendix - Non-GAAP Reconciliations
Appendix - Non-GAAP Reconciliations
Slide 91: Materials Company
Materials Company