Vulcan Materials Company (holding Company) · NYSE:VMC
Vulcan Materials Company (holding Company) — Merger or Acquisition (May 2012)
32 slides from Vulcan Materials Company (holding Company)'s merger presentation, May 8, 2012
Slide 1: The Vulcan Value Proposition
1 Shareholder Presentation, May 2012 The Vulcan Value Proposition May 2012 We provide the basic materials for the infrastructure investments needed to strengthen the American economy
Slide 2: Agenda
2 Shareholder Presentation, May 2012 Agenda 1. Vulcan’s Restructuring Initiative and Profit Enhancement Plan Are Expected to Significantly Enhance Shareholder Value 2. Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery 3. De-risked Balance Sheet Enhances Sharehol
Slide 3: Wall Street Analysts Have Embraced Vulcan's Significant Standalone Upside
3 Shareholder Presentation, May 2012 Wall Street Analysts Have Embraced Vulcan’s Significant Standalone Upside Substantial Operating Leverage . “We like the steps taken to lower costs throughout the operation and improve efficiencies which should increase operating leverage through 2012.” (Morgan Ke
Slide 4: Vulcan's Restructuring Initiative and Profit Enhancement Plan Are Expected to Enhance Shareholder Value
4 Shareholder Presentation, May 2012 Vulcan’s Restructuring Initiative and Profit Enhancement Plan Are Expected to Significantly Enhance Shareholder Value
Slide 5: IT Investments and Restructuring Provided the Platform for the $100 Million Profit Enhancement Plan
5 Shareholder Presentation, May 2012 Significant IT Investments and Restructuring Provided the Platform for 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 reduction
Slide 6: Profit Enhancement Plan Is Expected to Create Significant Shareholder Value
6 Shareholder Presentation, May 2012 Vulcan’s Profit Enhancement Plan Is Expected to Create Significant Shareholder Value $55mm Savings 2011 Restructuring Initiatives $100mm Run-Rate Savings 2012 Profit Enhancement Plan $155mm Total Savings Combined Standalone Savings Creates operating efficiencies
Slide 7: Profit Enhancement Plan is On Track
7 Shareholder Presentation, May 2012 Profit Enhancement Plan is On Track Note: All Profit Enhancement Plan (PEP) benefits are in addition to the $55mm previously achieved from the 2011 Restructuring Initiative. Realization of upsides discussed herein is not guaranteed – see .Forward Looking Statemen
Slide 8: Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery
8 Shareholder Presentation, May 2012 Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery Note: Timing and extent of any economic recovery remains uncertain, and realization of upsides discussed herein is not guaranteed – see .Forward Looking Statements. disclosure
Slide 9: Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery
9 Shareholder Presentation, May 2012 Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery Note: Prospective growth in population is from 2010 to 2020. Martin Marietta Lower Profitability and Lower Price and Volume Growth Higher Profitability and Higher Price and Vo
Slide 10: Vulcan's Non-Aggregates Businesses Have Considerable Upside Potential
10 Shareholder Presentation, May 2012 Vulcan’s Non-Aggregates Businesses Have Considerable Upside Potential Source: Company filings Note: Results for 2006 pro forma to include Florida Rock. Historical performance is not a guarantee or assurance of future performance nor that previous results will be
Slide 11: Q1 2012 Results Demonstrate Vulcan's Superior Operating Leverage
11 Shareholder Presentation, May 2012 Q1 2012 Results Demonstrate Vulcan’s Superior Operating Leverage Source: Public filings. (1) Conversion of incremental sales to cash flow calculated as change in EBITDA divided by change in sales for the respective periods. Q1 2012 performance highlights Vulcan’
Slide 12: Trailing Six and Twelve Months Results Demonstrate Superior Operating Leverage
12 Shareholder Presentation, May 2012 Trailing Six Months and Twelve Months Results Also Demonstrate Vulcan’s Superior Operating Leverage Source: Public filings. (1) Conversion of incremental sales to cash flow calculated as change in EBITDA divided by change in sales for the respective periods. Vul
Slide 13: De-risked Balance Sheet Enhances Shareholder Value as EBITDA Grows
13 Shareholder Presentation, May 2012 De-risked Balance Sheet Enhances Shareholder Value as EBITDA Grows
Slide 14: De-risked Balance Sheet Provides Flexibility Through the Business Cycle
14 Shareholder Presentation, May 2012 De-risked Balance Sheet Provides Flexibility Through the Business Cycle Source: IBES as of 4-May-2012 (1) Line of credit is an Asset Based Lending facility: $600 million 5 year facility expiring December 2016. (2) IBES estimates for 2012E: $480 million EBITDA, $
Slide 15: Analysts Expect Vulcan to Generate Significantly Higher EBITDA Growth Based on Mid-Cycle Estimates
15 Shareholder Presentation, May 2012 Wall Street Analysts Expect Vulcan to Generate Significantly Higher EBITDA Growth Based on Analyst Mid-Cycle Estimates Source: Public filings, Wall Street research Note: Timing and extent of any economic recovery remains uncertain, and realization of upsides dis
Slide 16: Analysts Expect Vulcan to Achieve More than Double Martin Marietta's EBITDA Growth Rates
16 Shareholder Presentation, May 2012 Analysts Expect Vulcan to Achieve More than Double Martin Marietta’s EBITDA Growth Rates as the Economy Recovers Source: IBES median estimates for 2012 and 2013 as of 4-May-2012 Note: Timing and extent of any economic recovery remains uncertain, and realization
Slide 17: De-risked Balance Sheet Further Enhances Shareholder Value as EBITDA Grows
17 Shareholder Presentation, May 2012 + + + + De-risked Balance Sheet Further Enhances Shareholder Value as EBITDA Grows Source: IBES median estimates as of 4-May-2012 Note: Timing and extent of any economic recovery remains uncertain, and realization of upsides discussed herein is not guaranteed –
Slide 18: Market Uplift and Vulcan Performance Support Vulcan's Recent Stock Price Levels
18 Shareholder Presentation, May 2012 Market Uplift and Vulcan Performance Support Vulcan’s Recent Stock Price Levels
Slide 19: Market Uplift and Vulcan Performance Support Vulcan's Recent Stock Price Levels
19 Shareholder Presentation, May 2012 Market Uplift and Vulcan Performance Support Vulcan’s Recent Stock Price Levels . Vulcan’s stock price is up 23% since December 9, 2011, generally in-line with the stock price performance of its peers . Vulcan’s shares are trading higher driven by the Company’s
Slide 20: Vulcan's Current Trading Level is Generally in Line with Peer Performance
20 Shareholder Presentation, May 2012 $30.00 $35.00 $40.00 $45.00 $50.00 12/09/11 01/14/12 02/20/12 03/28/12 05/04/12 Vulcan’s Current Trading Level is Generally in Line with Peer Performance Since Martin Marietta’s Offer Commenced Source: FactSet as of 4-May-2012 (1) Selected companies reflect indu
Slide 21: Greater Increases in Analyst EBITDA Expectations Suggest Stronger Stock Performance
21 Shareholder Presentation, May 2012 Vulcan Martin Eagle Heidelberg Holcim CRH Lafarge Texas Cemex Marietta Materials Cement Industries 15% (1%) 2% 2% 0% (2%) (2%) (2%) 39% (5%) 0% 5% 10% 15% 20% 25% Greater Increases in Analyst EBITDA Expectations Suggest Stronger Stock Price Performance for Vulca
Slide 22: Vulcan's Price Target Is Up 37% Since Martin Marietta's Offer
22 Shareholder Presentation, May 2012 Dec. 9, 2011 Current $35 $48 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 Source: IBES as of 4-May-2012 (1) Reflects change from 9-December-2011 through 4-May-2012. Median Vulcan Price Target (per IBES)1 Vulcan’s Price Target Is Up 37% Since the Day Prior to Mart
Slide 23: Conclusion
23 Shareholder Presentation, May 2012 Conclusion
Slide 24: Summary
24 Shareholder Presentation, May 2012 Summary 1. Vulcan’s Restructuring Initiative and Profit Enhancement Plan Are Expected to Significantly Enhance Shareholder Value 2. Vulcan Has Superior Aggregates Operations, Poised to Outperform in the Current Recovery 3. De-risked Balance Sheet Enhances Shareh
Slide 25: Appendix
25 Shareholder Presentation, May 2012 Appendix
Slide 26: Historical LTM EBITDA Multiples
26 Shareholder Presentation, May 2012 Annual Average Cyclical Period Average Mid Peak Trough 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Apr '02 - Jan '07 Feb '07 - Aug '08 Sep '08 - Current Vulcan 8.4x 8.4x 8.6x 10.6x 11.1x 11.5x 11.8x 12.9x 19.6x 22.5x 9.5x 11.6x 18.1x Martin Marietta 7.5 8.
Slide 27: Value Creation / (Destruction) for Vulcan Shareholders
27 Shareholder Presentation, May 2012 Value Creation / (Destruction) for Vulcan Shareholders Relative to Vulcan's Value Proposition 0.50x Exchange Ratio / 58.0% Ownership Run-Rate Synergies Midpoint of Vulcan View Midpoint of Martin Marietta Claim (17%) $88 $225 $0 (7%) (3%) $50 (12%) (8%) $100 (17%
Slide 28: Mid-Cycle Valuation Suggests Even Greater Potential Value Destruction
28 Shareholder Presentation, May 2012 Source of Comparable Mid-Cycle VMC MLM Key Assumptions EBITDA $1,188 $677 Multiple 1 9.5x 9.0x Implied Enterprise Value $11,286 $6,093 Per Share Value 2 $73 $109 Synergies – $88 mm Run-Rate Capitalized Value of Synergies 3 $593 Costs to Achieve 4 (88) Total Valu
Slide 29: Appendix – Vulcan Reconciliation
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 is an acronym for Earnings Before Interes
Slide 30: Appendix – Martin Marietta Reconciliation
30 Shareholder Presentation, May 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 E
Slide 31: Important Disclosure Notes – Forward Looking Statements
31 Shareholder Presentation, May 2012 Important Disclosure Notes – 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
Slide 32: Additional Information
32 Shareholder Presentation, May 2012 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 unsolicited exchange offer commenced by Martin Marietta Materia