Martin Marietta Materials, Inc. · NYSE:MLM
Martin Marietta Materials — Merger or Acquisition (February 2012)
22 slides from Martin Marietta Materials's merger presentation, Feb 21, 2012
Slide 1: Filed by Martin Marietta Materials pursuant to Rule 425
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
Slide 2: Update on Martin Marietta's Proposed Combination with Vulcan Materials
Update on Martin Marietta's Proposed Combination with Vulcan Materials February 21, 2012 Rock Solid Fundamentals. Positioned for the Long Term.
Slide 3: Recent Vulcan Announcements
Recent Vulcan Announcements • On February 16, 2012, Vulcan announced: — Fourth quarter and full year 2011 earnings that continue to underperform Martin Marietta’s — A vague Profit Enhancement Plan that Vulcan hopes will result in $100M cost savings by 2014 — Planned Asset Sales (including low-margin
Slide 4: Vulcan Continues to Underperform
Vulcan Continues to Underperform Earnings Summary Q4 2011 Full Year 2011 Martin Martin Vulcan Vulcan Marietta Marietta Consolidated % Y/Y growth in net sales +8.0% +5.3% +3.0% 0.0% Gross margin 18.6% 12.9% 19.9% 11.8% Adjusted EBITDAmargin¹ 23.9% 15.6% 23.3% 14.0% Adjusted EPS² $0.52 ($0.16) $2.03 (
Slide 5: Underwhelming Market Reaction to Vulcan's Q4'11 Earnings and Cost Savings Release
Underwhelming Market Reaction to Vulcan’s Q4’11 Earnings and Cost Savings Release Q4 vs. the Street (0.6%) relative Revenues of $615M vs. under-performance consensusof $603M¹ vs. the S&P 500 for Vulcan³ 2 Headline EPS loss of $0.14 vs. consensusestimated loss of $0.37¹ Despite doing better than anal
Slide 6: Vulcan Management Lacks Credibility
Vulcan Management Lacks Credibility Martin Marietta believes: • Vulcan has demonstrated a history of poor responsiveness to the challenges of the last several years, and to shareholder concerns Vulcan’s poor — Since 2007 Vulcan’s margins have decreased every year, while SG&A as % of net sales has in
Slide 7: Vulcan Management Lacks Credibility (continued)
Vulcan Management Lacks Credibility (continued) Martin Marietta believes: • Vulcan’s asset sale “plan” is not the best path -- and may not even be a good path -- to an improved and strengthened balance sheet, a better credit profile and restored dividends. By contrast: Vulcan’s asset — A combination
Slide 8: Vulcan's Organizational Realignment Program Announced on December 19, 2011 is Flawed
Vulcan's Organizational Realignment Program Announced on December 19, 2011 is Flawed — Vulcan management says it expects the realignment to generate an ongoing annualized pre-tax cost savings of approximately $30 million — Key highlights of the plan include: — the consolidation of its eight division
Slide 9: Vulcan Only Arrived at its Latest "Hope Plan" Following Martin Marietta's Proposal
Vulcan Only Arrived at its Latest “Hope Plan” Following Announcement of Martin Marietta’s Business Combination Proposal Vulcan commentary Vulcan plan Martin Marietta proposal APRIL 5, 2011 Improved FEBRUARY 16, 2012 purchasing “Mr. James informed Mr. Nye that $50 – 60M efficiencies from he believed
Slide 10: Vulcan Management's Lack of Credibility is Underscored by its Poor Performance
Vulcan Management’s Lack of Credibility is Underscored by its Poor Performance What Vulcan Said in 2007: Adjusted EBITDA and % Margin ($M) “Anticipated average annual EBITDA of more than $230% billion over the next 3 years, margi enabling n rapid debt reduction.” 30% (Vulcan Investor Presentation, F
Slide 11: SG&A Margins Demonstrate Superior Cost Management by Martin Marietta
A Comparison of SG&A Margins Demonstrates Superior Cost Management by Martin Marietta Annual SG&A as a % of Net Sales¹ 1 2007 – 2011 SG&A as a % of Net Sales Martin Marietta: 8.4% 13.5% Vulcan: 11.3% 12.6% 12.0% 10.7%3 9.3% 9.9% 9.3% 8.1% 8.6% 8.0% 8.2% 2007 2008 2009 2010 2011 2012E ¹ SG&A ($M) $15
Slide 12: Vulcan's Plan to Sell Assets is Flawed
Vulcan’s Plan to Sell Assets is Flawed Martin Marietta believes: — Vulcan is ignoring an opportunity to more quickly and more effectively strengthen its Not the optimal balance sheet and restore its dividend through a combination with Martin Marietta strategy to de-risk — There is absolutely no assu
Slide 13: Vulcan Has Failed to Explain How or When it Would Provide its Dividend
Vulcan Has Completely Failed to Explain How, on What Basis, or When it Would Provide its So-Called “Competitive” Dividend • When asked on the February 16, 2012 call to provide “some color or some metrics” that Vulcan's board looks at when determining a higher dividend, Vulcan management gave a decid
Slide 14: Vulcan Management Ignores Martin Marietta's Superior Proposal
Vulcan Management Ignores Martin Marietta's Superior Proposal in Favor of Their Flawed “Plan” It is Martin Marietta’s position that: Vulcan wants its shareholders to Martin Marietta's proposal provides: ignore the facts: Vulcan management was unwilling to engage Credible plan to achieve during prior
Slide 15: Questions Vulcan Shareholders Should Ask Themselves
Questions Vulcan Shareholders Should Ask Themselves Why should Vulcan shareholders. . . . . . have faith in Vulcan’s ability to implement its cost-savings plan, given its history of negative earnings, bloated cost structure and high SG&A margins? . . . trust Vulcan, given years of unresponsiveness t
Slide 16: Bottom Line Hasn't Changed: Proposal is Compelling to Vulcan Shareholders
Bottom Line Hasn’t Changed: Martin Marietta’s Business Combination Proposal is Compelling to Vulcan Shareholders • Significant benefits to a combination beyond synergies include: – meaningful dividend restoration (20x improvement over the current Vulcan dividend) – participation in the eventual cycl
Slide 17: Appendix
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Slide 18: Martin Marietta EBITDA & EBIT Reconciliation
Martin Marietta EBITDA & EBIT Reconciliation For the Quarter Ended (dollars in millions) December 31, For the Year Ended December 31, 2011 2011 2010 2009 2008 2007 Net earnings attributable to entity $ 14.8 $ 82.4 $ 97.0 $ 85.5 $ 176.3 $ 262.7 Add back: Interest expense 13.3 58.6 68.5 73.5 74.3 60.9
Slide 19: Vulcan EBITDA & EBIT Reconciliation
Vulcan EBITDA & EBIT Reconciliation For the Quarter Ended (dollars in millions) December 31, For the Year Ended December 31, 2011 2011 2010 2009 2008 2007 Net (loss) earnings $ (27.9) $ (70.8) $ (96.5) $ 30.3 $ 0.9 $ 450.9 Add back: Interest expense 53.3 217.2 180.7 173.0 169.7 41.6 Income tax (bene
Slide 20: Vulcan SG&A Reconciliation
Vulcan SG&A Reconciliation (dollars in millions) For the Year Ended December 31, 2011 2010 2009 2008 2007 SG&A, as reported $ 290.0 $ 327.5 $ 321.6 $ 342.6 $ 289.6 R&D expense, as disclosed in notes to financials N/A 1.6 1.5 1.5 1.6 Adjusted SG&A $ 290.0 $ 326.0 $ 320.1 $ 341.0 $ 288.0 Net Sales $ 2
Slide 21: 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 22: 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 0.50 shares of Martin Marietta common stock. This presentation is for informational purposes only and does not constitute an
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