VMC investor handout

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VMC investor handout

  1. 1. Our strategy is based on our strength. Aggregates Essential Material | Valuable Asset Investor Presentation, November 2013 Investor Presentation
  2. 2. IMPORTANT DISCLOSURE NOTES IMPORTANT DISCLOSURE NOTES Safe Harbor Safe Harbor This presentation contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and This presentation contains forward-looking statements. Statements that relate historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statementsare not to future financial performance, results of operations, business expectations, are forward-looking statements. Generally, these earnings (including EBITDA and other measures), dividend policy, shipment plans or strategies, projected or anticipated revenues, expenses, statements relate to future financial performance, results of operations, business plans or pricing, levels of capital expenditures, intended cost reductions (including EBITDA and other measures), dividend policy, shipment volumes, strategies, projected or anticipated revenues, expenses, earningsand cost savings, anticipated profit improvements and/or planned volumes, pricing, levels of capital forward-looking statements are sometimes identified by the use of terms improvements and/or planned divestitures and asset sales. Theseexpenditures, intended cost reductions and cost savings, anticipated profitand phrases such as "believe," "should," divestitures and asset sales. These forward-looking "intend," "plan," "will," "can," "may" or similar expressions phrases such as document. These "would," "expect," "project," "estimate," "anticipate,"statements are sometimes identified by the use of terms andelsewhere in this"believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," but not limited expressions elsewhere in this competitive statements are subject to numerous risks, uncertainties, and assumptions, including"may" or similarto general business conditions,document. These statements are energy to numerous risks, uncertainties, and assumptions, the reports Vulcan periodically files with the SEC. factors, pricing, subject costs, and other risks and uncertainties discussed inincluding but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC. Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary Forward-looking those expressed in guarantees of future performance statements. The following risks related to Vulcan's business, vary significantly from statements are not or implied by the forward-looking and actual results, developments, and business decisions mayamong others, significantly from those expressed in or implied by the forward-looking forward-looking statements: risks that Vulcan's intentions, among others, could cause actual results to differ materially from those described in thestatements. The following risks related to Vulcan's business,plans and could with actual to cost reductions, profit from those described in sales, as well as streamlining and other strategic actions adopted by and resultscauserespectresults to differ materiallyenhancements and asset the forward-looking statements: risks that Vulcan's intentions, plansVulcan, results be able to be realized to the desired degree or within and asset sales, period and that the results thereof will differ from those anticipated or will not with respect to cost reductions, profit enhancements the desired timeas well as streamlining and other strategic actions adopted by Vulcan, will not be able to be as to the timing and valuations within the realized or attainable with respect to planned asset sales; those associated with desired; uncertaintiesrealized to the desired degree orthat may bedesired time period and that the results thereof will differ from those anticipated or desired; uncertainties as to the timing and valuations that may be of federal, attainable with respect to infrastructure; the those of the general economic and business conditions; the timing and amount realized or state and local funding forplanned asset sales;effects associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; the effects of the sequestration on demand for our products in markets that may be subject to decreases in federal spending; changes in Vulcan’s effective tax rate; the sequestration on demand for our products in markets that may be subject to decreases in federal spending; changes in Vulcan’s effective tax rate; the increasing reliance on technology infrastructure for Vulcan’s ticketing, procurement, financial statements and other processes could adversely affect increasing reliance on such infrastructure does for Vulcan’s ticketing, procurement, financial statements the other processes could adversely operations in the event technology infrastructurenot work as intended or experiences technical difficulties; and impact of the state of the global affect operations Vulcan’s businesses and financial condition and intended or experiences technical in the level the impact for private residential and economy onin the event such infrastructure does not work as access to capital markets; changes difficulties; of spendingof the state of the global economy on Vulcan’s construction; the highly competitive nature of the construction materials in the level of spending for private residential private nonresidential businesses and financial condition and access to capital markets; changes industry; the impact of future regulatory or and private nonresidential construction; the highly proceedings; pricing the construction materials industry; the impact phenomena; energy costs; legislative actions; the outcome of pending legalcompetitive nature of of Vulcan's products; weather and other natural of future regulatory or legislative actions; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena; changes in costs of hydrocarbon-based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by Vulcan;energy costs; costs of hydrocarbon-based raw materials; healthcare grade debt rating on Vulcan's debt and interest expense incurred by Vulcan; changes in interest rates; the impact of Vulcan's below investmentcosts; the amount of long-termcost of capital; volatility in pension plan asset values which may interest rates; the impact to the pension plans; the impact of debt rating on clean-up costs capital; volatility in pension plan asset values which require cash contributionsof Vulcan's below investment grade environmental Vulcan's cost ofand other liabilities relating to previously divested may require cash contributions to secure and plans; the impact of environmental clean-up costs and other liabilities relating to previously divested businesses; Vulcan's ability to the pensionpermit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully businesses; Vulcan's ability to secure goodwill or long-lived asset impairment; the potential impact of future legislation or regulations relating integrate acquisitions; the potential ofand permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully to integrate acquisitions; the potential of goodwill or definition asset impairment; the assumptions, risks future legislation detailed from relating to climate change or greenhouse gas emissions or the long-lived of minerals; and other potential impact of and uncertainties or regulations time to time climate change or by Vulcan with emissions or the definition of minerals; in this communication risks and uncertainties detailed this cautionary in the reports filed greenhouse gas the SEC. All forward-looking statementsand other assumptions, are qualified in their entirety by from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this except as statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this documentcautionary statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law. required by law. Investor Presentation, November 2013 Investor Presentation, November 2013 2 2
  3. 3. Notes COMPANY SNAPSHOT Industry-Leading Position in Aggregates Vulcan-Served States Our value proposition and leading position is based upon… 1. Favorable geographic footprint that provides attractive longterm growth prospects 2. Largest proven and probable reserve base 3. Operational expertise and pricing discipline which provides attractive unit profitability 2012 Net Sales: $2.4 Billion Aggregates Facilities: 341 95% Headquarters: Birmingham, AL Ticker: VMC Company 2012 10-K Report Investor Presentation, November 2013 3
  4. 4. Notes BUSINESS STRATEGY Aggregates-led Value Creation Build and Hold Substantial Reserves  Used in virtually all types of public and private construction projects  Strategically located in high-growth markets that will require large amounts of aggregates  Aggregates operations require virtually no other raw material other than aggregates reserves Coast-to-coast Footprint  Diversified regional exposure  Complementary asphalt, concrete and cement businesses in select markets  More opportunities to further enhance long-term earnings growth Profitable Growth  95% of Sales are tied to aggregates  Tightly managed operational and overhead costs  Benefits of scale as the largest producer Effective Land Management  Can lead to attractive real estate transactions Investor Presentation, November 2013 4
  5. 5. Notes BUSINESS STRATEGY Positioning the Business to Maximize Future Earnings Growth Strategically Positioned 75% Share of U.S. Population Growth Leading Reserve Position Unit Profitability Continues to Grow 15.0 27% Billion Tons of Aggregates Reserves Higher than peak-year in volumes Source: Company 2012 10-K Report. As of December 31, 2012 . Unit Profitability = Cash Gross Profit / Ton. See Non-GAAP reconciliation at end of presentation. Investor Presentation, November 2013 5
  6. 6. Notes SHARE OF TOTAL U.S. GROWTH (2010 – 2020) Strategically Positioned in Attractive Markets Population Growth VMC-Served States CA,FL,TX 43% 69% 38% 62% Household Formation 74% 33% Employment Growth CA, FL and TX accounted for more than 40% of total sales in 2012. Source: Moody’s Analytics as of June 2013 Investor Presentation, November 2013 6
  7. 7. Notes MOST RECENT FULL YEAR FINANCIAL RESULTS Operating Leverage Driven by Higher Pricing and Effective Cost Control Gross Profit Margin Adjusted EBITDA Margin 17.1% 13.9% 14.6% 11.8% 2011 2012 Aggregates Gross Profit Margin 2011 Aggregates Cash Gross Profit per Ton $4.21 20.4% 17.7% 2011 2012 $4.01 2012 2011 2012 Note: Please see Non-GAAP reconciliations at the end of this presentation. Aggregates Gross Profit Margin calculated using Segment Total Revenues. Investor Presentation, November 2013 7
  8. 8. Notes CURRENT YEAR FINANCIAL RESULTS–YTD SEPT. 30,2013 Margin Expansion and Earnings Improvement in Each Operating Segment Net Sales up 8% and Gross Profit up 21%  Broad-based improvement in aggregates pricing, up 3%  Aggregates volumes up 2%, despite extremely wet weather in 1H’13  Concrete and Cement volumes up 13% and 14% respectively Gross Profit Margin up 180 basis points  Aggregates earnings up 11%  Non-aggregates earnings improvement of $24 million EPS Improvement of $0.53 per diluted share Improved Credit Metrics  Net Debt / EBITDA 4.5x, down from 6.9x Note: Please see Non-GAAP reconciliations at the end of this presentation. Margin calculated using Net Sales. Investor Presentation, November 2013 8
  9. 9. Notes CASH GROSS PROFIT PER TON OF AGGREGATES Unit Profitability That Was Maintained Throughout the Downturn, Now Beginning to Grow 2012 Profitability is higher than prior year and 32% higher than peak-year in volumes (2005) Tons in Millions. Note: Please see Non-GAAP reconciliations at the end of this presentation. Investor Presentation, November 2013 9
  10. 10. Notes AGGREGATES PRICE GROWTH (INDEX, 1992=100) Vulcan Consistently Outperforms, Contributing to Higher Unit Profitability CAGR ’92-’02 ’02-’12 Vulcan 3.6% 6.4% Industry* 2.8% 5.3% Note: Historical performance is not a guarantee or assurance of future performance nor that previous results will be attained or surpassed. *Industry = Producer Price Index for Aggregates reported by the U.S. Bureau of Labor Statistics. For comparison purposes, Vulcan price not freight adjusted. Investor Presentation, November 2013 10
  11. 11. Notes SAG EXPENSES Reduced During the Downturn. Well Positioned to Leverage ERP Investment and Shared Services Total SAG down $115 million from 2007 (31% decrease) Millions of $ Source: Company filings Note: 2007 SAG includes Florida Rock on a pro forma basis ($84.5M). Investor Presentation, November 2013 11
  12. 12. Notes 2012 CASH FLOW BRIDGE De-Risking the Balance Sheet Through Higher Cash Generation from Operations and Asset Sales Sources of Cash Uses of Cash Operating activities, less debt service costs, generated $121 million of cash in 2012 Progress on Planned Asset Sales coincidently offset cash used for debt maturities and exchange offer defense costs VPP = Volumetric Production Payment. Exchange Offer = Costs incurred as a result of an unsolicited exchange offer initiated by Martin Marietta Materials on December 12, 2011 and subsequently withdrawn in 2012. Investor Presentation, November 2013 12
  13. 13. Notes BALANCE SHEET Significant Financial and Operational Flexibility With Limited Near-Term Maturities Amounts in Millions, except ratios Total Debt Cash and Cash Equivalents Net Debt Net Debt / TTM EBITDA 2013 As of Sept 30 2012 2011 $ 2,524 246 $ 2,278 $ 2,813 243 $ 2,569 $ 2,821 152 $ 2,669 4.5 6.9 6.6 Favorable debt maturity profile with substantial liquidity  Minimal maturities of $150 million over the next three years  $500 million line of credit (1) Limited financial covenants (1) Line of credit is an Asset Based Lending facility: $500 million 5 year facility expiring March 2018. Investor Presentation, November 2013 13
  14. 14. Notes AGGREGATES DEMAND IN VULCAN MARKETS (1972=100) Vulcan’s Key Markets Are Leveraged to Favorable LongTerm Growth Prospects Aggregate demand significantly below population trend line. Source: Company estimates of aggregates demand using data from Woods & Poole CEDDS. Investor Presentation, November 2013 14
  15. 15. Notes U.S. AGGREGATES DEMAND (MILLIONS OF TONS) Privately Funded Construction Accounts for Most of the Cyclicality Source: Company estimates of aggregates demand. Investor Presentation, November 2013 15
  16. 16. Notes U.S. HOUSING STARTS Growth Bodes Well for Continued Recovery in Our Markets Year-over-Year % Change in TTM – September 2013 Notes: States sorted high to low by largest absolute change in TTM housing starts.. For example, of the Vulcan-served states shown, FL had the largest absolute change and TX the next largest. Source: McGraw-Hill and Company Estimates. TTM = Trailing Twelve Months. Includes both Single-family and Multi-family Investor Presentation, November 2013 16
  17. 17. Notes U.S. PRIVATE NONRESIDENTIAL Growth in Residential is Helping Drive Growth in Private Nonresidential Buildings YoY Chg. TTM Housing +23% Private NR +10% Source: McGraw-Hill and Company Estimates. TTM = Trailing Twelve Months. Investor Presentation, November 2013 17
  18. 18. Notes PRIVATE NONRESIDENTIAL Another Leading Indicator, the ABI, Has Remained Above 50 for 11 of the Last 12 Months Architectural Billing Index – Monthly Value A value greater than 50 indicates an increase in billing activity from the prior month. Note: The Architectural Billings Index (ABI) is a diffusion index derived from the monthly Work-on-the-Boards Survey conducted by the AIA Economics & Market Research Group Investor Presentation, November 2013 18
  19. 19. Notes PUBLIC CONSTRUCTION - HIGHWAYS More Stabile and Predictable Funding Environment Leads to Improving Construction Activity Growth in TTM Contract Awards for New Highway Projects  U.S. +7% and Vulcan-served states +11% Growth in Obligation of Regular Highway Program Funds  Obligated $ greater than any year since 2009 (last year of SAFETEA-LU) Increased State-led Highway Funding Initiatives TIFIA Funding Authorization Expanded in MAP-21  $1.75 billion of funding authorization could support up to $50 billion of new construction 1 As of June 2013. Sources: The American Road & Transportation Builders Association, McGraw-Hill and Company Estimates. Investor Presentation, November 2013 1 U.S. Department of Transportation Secretary July 27, 2012 19
  20. 20. Notes PUBLIC CONSTRUCTION Vulcan States Should Get a Disproportionate Number of TIFIA-funded Projects $74Bn of Potential Projects Submitted 12 projects $14 billion >60% Share of Total Project $ in Vulcan Markets 5 projects $9 billion 3 projects $3 billion 4 projects $3 billion  Enacted in 1998 to provide Federal credit assistance for eligible transportation projects and stimulate private capital investment.  Each dollar put into TIFIA can provide approximately $10 in loans and support up to $30 in infrastructure investment.  MAP-21 Funding Authorization: $1.75 billion over two years (FY’13 & FY’14). Signed into law July 2012. Investor Presentation, November 2013 14 projects $13 billion LA, FL and GA 4 projects $4 billion 59 projects submitted for approval as of August 2013 totaling $74 billion. Includes FY 2011-FY 2013 20
  21. 21. Notes SUMMARY – VULCAN’S VALUE PROPOSITION Well Positioned to Capitalize on Market Recovery Superior Aggregates Operations Strong Operating Leverage  Largest reported reserve base  Attractive unit profitability  Favorable long term growth prospects  Cost reduction initiatives resetting mid-cycle EBITDA to new, higher level  Benefits of scale  Operational expertise and pricing growth  Attractive real estate opportunities Investor Presentation, November 2013  Favorable trends in private construction activity De-Risked Balance Sheet  Substantial liquidity  Moderate debt maturity profile  Commitment to strengthening balance sheet  Commitment to restore a meaningful dividend  New multi-year Federal Highway Bill 21
  22. 22. Supplemental Information Follows
  23. 23. Notes APPENDIX Reconciliation of Non-GAAP Financial Measures Amounts in millions of dollars, except per ton data Generally Accepted Accounting Principles (GAAP) does not define "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)" and "aggregates segment cash gross profit." Thus, they should not be considered as an alternative to any earnings measure defined by GAAP. We present these metrics for the convenience of investment professionals who use such metrics in their analysis, and for shareholders who need to understand the metrics we use to assess performance. The investment community often uses these metrics as indicators of a company's ability to incur and service debt. We use cash gross profit, EBITDA and other such measures to assess the operating performance of our various business units and the consolidated company. Additionally, we adjust EBITDA for certain items to provide a more consistent comparison of performance from period to period. We do not use these metrics as a measure to allocate resources. Reconciliations of these metrics to their nearest GAAP measures are presented below: EBITDA EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. Aggregates Segment Cash Gross Profit Aggregates segment cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. EBITDA and Adjusted EBITDA Net earnings (loss) Provision (benefit) for income taxes Interest expense, net Discontinued operations, net of tax EBIT YTD YTD 12/31/12 12/31/11 (52.6) (66.5) 211.9 (1.3) 91.5 (70.8) (78.4) 217.2 (4.5) 63.5 Plus: Depr., depl., accretion and amort. 332.0 361.7 EBITDA Legal settlement Restructuring charges Exchange offer costs Gain on sale of real estate and businesses Adjusted EBITDA 423.5 9.5 43.4 (65.1) 411.3 425.2 (46.4) 12.9 2.2 (42.1) 351.8 Trailing 12 Months EBITDA Net earnings (loss) Provision (benefit) for income taxes Interest expense, net Discontinued operations, net of tax Depr., depl., accretion and amort. EBITDA Q3 2013 Q3 2012 Q3 2011 18.9 (21.2) 205.7 (3.6) 309.2 509.0 (83.9) (97.7) 212.4 (0.4) 341.4 371.8 (89.7) (76.2) 210.1 (5.5) 366.4 405.1 Trailing 12 Months Aggregates Segment Cash Gross Profit Aggregates segment gross profit Agg. Depr., depl., accretion and amort. Aggregates segment cash gross profit Aggregate tons Aggregates segment cash gross profit per ton Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009 352.1 240.7 592.8 141.0 4.21 350.0 247.7 597.6 142.1 4.20 338.5 255.1 593.6 145.3 4.08 329.5 261.8 591.3 145.8 4.06 306.2 267.0 573.2 143.0 4.01 284.6 272.5 557.1 142.2 3.92 296.4 279.3 575.7 143.0 4.03 315.5 284.8 600.3 146.8 4.09 320.1 288.6 608.8 147.6 4.12 332.2 293.1 625.3 147.4 4.24 340.2 295.9 636.1 148.6 4.28 345.0 298.6 643.6 146.2 4.40 393.3 303.9 697.1 150.9 4.62 451.2 304.9 756.1 160.7 4.70 503.2 304.4 807.6 172.6 4.68 594.3 302.7 897.0 190.8 4.70 Aggregates segment gross profit Agg. Depr., depl., accretion and amort. Aggregates segment cash gross profit Aggregates tons Aggregates segment cash gross profit per ton Q4 2008 657.6 299.8 957.4 204.3 4.68 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 2008 2008 2008 2007 2007 2007 2007 2006 2006 722.3 775.2 808.2 828.7 846.3 849.7 826.9 819.0 772.8 298.8 283.2 266.4 248.0 228.3 220.8 213.1 206.6 205.1 1,021.1 1,058.4 1,074.6 1,076.7 1,074.6 1,070.4 1,040.0 1,031.1 977.8 217.4 224.4 228.5 231.0 234.5 239.8 246.7 255.4 258.8 4.70 4.72 4.70 4.67 4.58 4.46 4.22 4.05 3.78 Q2 2006 732.4 203.0 935.3 263.6 3.55 Q1 2006 690.4 202.7 893.1 265.3 3.37 Q4 2005 650.0 201.6 828.7 259.5 3.20 Q3 2005 591.9 197.7 789.7 255.0 3.10 Q2 2005 565.5 194.4 759.9 252.6 3.01 Q1 2005 524.1 191.8 715.9 245.8 2.91 Source: Company filings Investor Presentation, November 2013 22
  24. 24. Notes APPENDIX – SIMPLIFIED GEOLOGY MAP Below the Geological Fall Line, Little or No Hard Rock Aggregates Reserves Suitable for Mining Investor Presentation, November 2013 23
  25. 25. Notes APPENDIX Comprehensive Distribution Network to Serve Attractive Markets With Reserves 65 truckloads per barge $0.02-0.03 per ton mile Geological Fall Line 4-5 truckloads per rail car $0.04-0.12 per ton mile 20-25 tons per truck $0.15-0.35 per ton mile 2,500 truckloads per ship Less than $0.01 per ton mile Investor Presentation, November 2013 Note: Per ton mile costs exclude loading and unloading. 24
  26. 26. Notes APPENDIX South Region Map Investor Presentation, November 2013 25
  27. 27. Notes APPENDIX Central Region Map Investor Presentation, November 2013 26
  28. 28. Notes APPENDIX East Region Map Investor Presentation, November 2013 27
  29. 29. Notes APPENDIX West Region Map Investor Presentation, November 2013 28
  30. 30. Notes APPENDIX Other Information Registrar and Transfer Listing: Computershare Shareowner Services LLC Shareholder Services: (866) 886-9902 (toll free inside the U.S. and Canada) (201) 680-6578 (outside the U.S. and Canada, may call collect) (800) 231-5469 (TDD, hearing impaired) Internet: computershare.com/investor Independent Auditors: Deloitte & Touche LLP Birmingham, Alabama Investor Relations: Mark Warren Telephone: (205) 298-3191 Email: ir@vmcmail.com Media Relations: David Donaldson Telephone: (205) 298-3220 Email: media@vmcmail.com Investor Presentation, November 2013 1200 Urban Center Drive Birmingham, AL 35242-2545 Telephone: (205) 298-3000 Fax: (205) 298-2963 29

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