Martin Marietta Materials, Inc. · NYSE:MLM
Martin Marietta Materials — Merger or Acquisition (January 2012)
36 slides from Martin Marietta Materials's merger presentation, Jan 11, 2012
Slide 1: New Ideas for the New Year
CJS Securities, Inc. New Ideas for the New Year January 11, 2012 Rock Solid Fundamentals. Positioned for the Long Term. 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 SU
Slide 2: Martin Marietta Materials Today
Martin Marietta Materials Today – Continued Commitment to Strategy Yields New Ideas for the New Year
Slide 3: The Principles of our Strategy Remain Unchanged
Long-term superior performance The Principles of our Strategy Remain Unchanged Positioning Uniquely positioned in an attractive industry Performance Differentiated performance Growth Multiple long-term drivers
Slide 4: Commitment to Strategy Yields Improved Positioning
Commitment to Strategy Yields Improved Positioning Target selective markets — achieve #1 or #2 position Disciplined acquisition strategy — last 3-4 years, walked away from many deals
Slide 5: San Antonio Expansion
San Antonio Expansion • Acquisition of – 6 aggregates quarries – 2 ready mix plants – 1 asphalt plant • High-growth area • Serve additional customers in a larger geographic footprint • Provides long-term reserves to replace current sites (> over 200M tons)
Slide 6: Presence in Colorado
Presence in Colorado Asset Exchange with Lafarge • Acquired Lafarge’s Denver, CO Front Range assets: – 10 aggregates quarries – (200M tons reserves) – 19 ready mix plants – 12 asphalt plants – Road paving business • Swapped River business
Slide 7: The Principles of our Strategy Remain Unchanged
Long-term superior performance The Principles of our Strategy Remain Unchanged Positioning Uniquely positioned in an attractive industry Performance Differentiated performance Growth Multiple long-term drivers
Slide 8: Our Differentiated Performance Profile
1 2 3 4 5 Superior performance and returns to shareholders Our Differentiated Performance Profile Highly disciplined Low cost leader Faster growth than the industry Attractive Specialty Products business Strong financial position
Slide 9: Low Cost Leader
-30% Low Cost Leader • Declining costs • Investment in new technologies increased productivity • Low cost distribution network Significant Headcount Reduction 6,400 5,600 4,500 Note: Headcount equal to average number of employees Hourly Salary even as volume increased 2003 to 2006 32% by rail and wa
Slide 10: Attractive Specialty Products Business
11% of 2010 consolidated net sales 69% 29% $176M Investing $53M to expand capacity by 15% Attractive Specialty Products Business Chemical products (water treatment; pulp and paper) Key end uses / Product lines Dolomite lime (steel manufacturing) 31% Operating Margin Net Sales Operating Margin (%) 26
Slide 11: The Principles of our Strategy Remain Unchanged
Long-term superior performance The Principles of our Strategy Remain Unchanged Positioning Uniquely positioned in an attractive industry Performance Differentiated performance Growth Multiple long-term drivers
Slide 12: Multiple Long-Term Growth Drivers
Multiple Long-Term Growth Drivers Infrastructure renewal Government funding expansion Faster growing markets Growth of Specialty Products business Powerful operating leverage Our long-term value proposition Key Drivers
Slide 13: The Need for Infrastructure Renewal Has Never Been Greater
The Need for Infrastructure Renewal Has Never Been Greater Expanding transit a necessity Gas tax is too low to meet current (and future) infrastructure needs.
Slide 14: Government Funding is Evolving
Federal Highway Bill House Senate Government Funding is Evolving Expired September 30, 2009 Continuing resolution through March 31, 2012 Likely 2013 before new bill 2-year bill $50B annually for highways only Financing – energy production and oil & gas royalties Delayed until 2012 Unanimously passed
Slide 15: Funding at the State Level
State Departments of Transportation Toll Roads & Alternate Financing Tax Initiatives State budgets better than most realize Set to play expanding role — specific funding such as toll roads, gas taxes — examples Texas, North Carolina Funding at the State Level
Slide 16: Long-Haul Distribution Network Serves Critical Markets
Jacksonville Morehead City Tampa/ Pt. Manatee Baltimore Charleston Cape Canaveral Bermuda New York City Long-Haul Distribution Network Serves Critical Markets Nova Scotia Bahamas Savannah Mobile/ Pensacola Lake Charles Beaumont From Nova Scotia From Bahamas
Slide 17: Powerful Leverage with Volume Recovery
Every additional $1 sales adds $0.60 to operating profit Powerful Leverage with Volume Recovery +5% Volume +10% EPS 2010 Increase Every additional $1 sales adds $0.60 to operating profit
Slide 18: Rock Solid Fundamentals. Positioned for the Long Term.
Long-term superior performance U Y Rock Solid Fundamentals. Positioned for the Long Term. Performance Positioning • Uniquely positioned in attractive industry — barriers, resilient pricing, growing market share Growth • Differentiated performance — low cost leader, disciplined, Specialty Products bu
Slide 19: Martin Marietta's Proposal is Compelling
Martin Marietta’s Proposal is Compelling – Provides Significantly More Value and Less Risk than Vulcan on a Standalone Basis Note: Martin Marietta has prepared presentations for investors, and other information, relating to the proposed business combination that are available on Martin Marietta's an
Slide 20: Compelling Combination of Two Highly Complementary Businesses
V U L C A N M A R T I N M A R I E T T A 13.6 315 $1,551 130 14.7 317 $2,406 148 1 Compelling Combination of Two Highly Complementary Businesses Note 1: As of December 12, 2011. Source: Company filings Nova Scotia Total Reserves (billions of tons) Number of Facilities Total Reserves (billions of tons
Slide 21: Key Economic Terms of the Proposed Transaction
Key Economic Terms of the Proposed Transaction Consideration Premium to Vulcan’s Shareholders Ownership Stock-for-stock tax-free exchange of 0.50 of a Martin Marietta share of common stock for each Vulcan Materials share of common stock • 15% and 18% premiums to the average exchange ratio during the
Slide 22: Vulcan's Valuation is at a Cyclical High
Vulcan is far worse off today than in the past Vulcan’s Valuation is at a Cyclical High Note 1: Please see EBITDA reconciliation in the appendix. Note 2: Between December 31, and December 9, 2011, the change in Martin Marietta’s and Vulcan’s stock price was 57% and (30%), respectively, and change in
Slide 23: Martin Marietta's Proposal is a Premium to Exchange Ratios Implied by Street Estimates
Price Target Analyst Martin Marietta Vulcan Implied Exch. Ratio Martin Marietta’s Offer of 0.50 as a Premium to Implied Exchange Ratio Valuation multiples and stock price reflect the potential margin enhancement that Vulcan relies on in defense of its rejection ($M) Martin Marietta Vulcan Analysts’
Slide 24: Achieving Prior Peak Performance for Vulcan Would Require a Repeat of the Housing Bubble
Housing Bubble... Current ...Future Simply said, hope is not a strategy Achieving Prior Peak Financial Performance for Vulcan Would Require a Repeat of the Housing Bubble 2,273K total housing starts FL: 266K total housing starts CA: 191K total housing starts AZ: 92K total housing starts Vulcan pro f
Slide 25: Martin Marietta Showed Strong Recovery
Relative Performance Coming Out of the 2001 Recession Martin Marietta Showed Strong Recovery Note 1: Based on reported operating earnings from most recent filings for respective periods. Source: Company filings as Evidenced by – CAGRs Gross profit Operating earnings Net income Martin Marietta Vulcan
Slide 26: Martin Marietta is a Much Stronger Company than Vulcan Today
LTM 12/31/02 LTM 9/30/11 Change LTM 12/31/02 LTM 9/30/11 Change M A R T I N M A R I E T TA V U L C A N TEV / NTM EBITDA 7.9x 17.0x 9.1x Leverage 1.5x 9.4x 7.9x FCF / Total Debt 22.3% 3.4% (19.0%) Net Interest Expense / Adj. EBITDA 8.1% 69.9% 61.8% EPS $1.64 ($0.69) ($2.33) Adj. SG&A as % of Net Sale
Slide 27: Significant Shareholder Value Creation
Estimated $200 - $250 million in annual synergies Efficiencies gained from size and scale ~42% ~58% Significant Shareholder Value Creation Meaningful dividend Balance sheet well- positioned for cyclical recovery and growth Continued focus on operational excellence Stronger platform for long-term gro
Slide 28: Appendix
M A R T I N M A R I E T T A M A T E R I A L S Appendix
Slide 29: 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 2002 Net earnings attributable to entity $ 82.3 $ 97.0 $ 85.5 $ 176.3 $ 262.7 $ 86.3 Add back: Interest expense 62.2 68.5 73.5 74.3 60.9 44.0 Income tax expense for co
Slide 30: Martin Marietta Free Cash Flow Reconciliation
Martin Marietta Free Cash Flow Reconciliation Free cash flow calculated as net cash provided by operating activities less capital expenditures. (dollars in millions) LTM For the Year Ended December 31, 9/30/2011 2010 2002 Net cash provided by operating activities $ 247.1 $ 269.8 $ 203.6 Capital expe
Slide 31: Vulcan EBITDA & EBIT Reconciliation
Vulcan EBITDA & EBIT Reconciliation (dollars in millions) LTM For the Year Ended December 31, 9/30/2011 2010 2009 2008 2007 2005 2003 2002 2001 Net (loss) earnings $ (89.9) $ (96.5) $ 30.3 $ 0.9 $ 450.9 $ 389.1 $ 195.0 $ 169.9 $ 222.7 Add back: Interest expense 210.0 180.7 173.0 169.7 41.6 20.5 49.6
Slide 32: Vulcan Free Cash Flow Reconciliation
V ulcan Free Cash Flow Reconciliation Free cash flow calculated as net cash provided by operating activities less capital expenditures. (dollars in millions) LTM For the Year Ended December 31, 9/30/2011 2010 2002 Net cash provided by operating activities $ 196.6 $ 202.7 $ 458.0 Capital expenditures
Slide 33: Vulcan SG&A Reconciliation
Vulcan SG&A Reconciliation For the Year Ended December 31, YTD LTM 2010 2009 2008 2007 2002 9/30/2011 9/30/2011 SG&A, as reported $ 327.5 $ 321.6 $ 342.6 $ 289.6 $ 162.7 $ 221.3 $ 301.4 R&D expense, as disclosed in notes to financials 1.6 1.5 1.5 1.6 1.2 1.2 1.6 Adjusted SG&A $ 326.0 $ 320.1 $ 341.0
Slide 34: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding 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 fi
Slide 35: 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 for 0.500 shares of Martin Marietta common stock. This presentation is for informational purposes only and does not constitute a
Slide 36: Contact Information
Contact Information Corporate Headquarters: Martin Marietta Materials, Inc. 2710 Wycliff Road Raleigh, NC 27607 919-781-4500 Investor Relations: 919-788-4367 Website: www.martinmarietta.com
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