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Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation
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Q4 2012 Earnings Presentation

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  1. 2012 Earnings HighlightsEarnings Conference Call, February 14, 2013
  2. Important Disclosure Notes – Forward Looking Statements This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcans beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as "believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," "may" or similar expressions elsewhere in this document. These statements are subject to numerous risks, uncertainties, and assumptions, including 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 significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcans business, among others, could cause actual results to differ materially from those described in the forward-looking statements: risks that Vulcans intentions, plans and results with respect to cost reductions, profit enhancements and asset sales, as well as streamlining and other strategic actions adopted by Vulcan, will not be able to be realized to the desired degree or within the desired time period and that the results thereof will differ from those anticipated or desired; uncertainties as to the timing and valuations that may be realized or attainable with respect to intended asset sales; those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; the impact of a prolonged economic recession on Vulcans industry, business and financial condition and access to capital markets; changes in the level of spending for private residential and nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions; the outcome of pending legal proceedings; pricing of Vulcans products; weather and other natural phenomena; energy costs; costs of hydrocarbon- based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by Vulcan; changes in Vulcan’s effective tax rate; changes in interest rates; the impact of Vulcans below investment grade debt rating on Vulcans cost of capital; volatility in pension plan asset values which may require cash contributions to the pension plans; the impact of environmental clean-up costs and other liabilities relating to previously divested businesses; Vulcans ability to secure and permit aggregates reserves in strategically located areas; Vulcans ability to manage and successfully integrate acquisitions; Vulcan’s increasing reliance on information technology; the potential of goodwill impairment; the potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions or the definition of minerals; and other assumptions, risks and uncertainties detailed 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 cautionary 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. 4Q 2012 Earnings Results – February 14, 2013 2
  3. 2012 SummaryContinued Improvement in Earnings and Aggregates Profitability • Continued Earnings Improvement on Flat Revenues • Full year gross profit margins improved 210 basis points • SAG expenses decreased $31 million, or 11 percent • Full year Adjusted EBITDA increased $59 million, or 17 percent • Higher Aggregates Profitability in 2012 • Cash unit profitability of $4.21 per ton, up 5 percent from the prior year • Aggregates segment gross profit margin increased 270 basis points • Aggregates pricing increased 2 percent for the full year, including 4 percent in the fourth quarter • Debt Reduction and Asset Sales Strengthen Balance Sheet • Retired $135 million of debt as scheduled • Gross cash proceeds of $174 million were realized from asset sales • Cash balance at December 31, 2012 was $275 million Note: Please see Non-GAAP reconciliations at the end of this presentation. Aggregates Gross Profit Margin calculated using Segment Total Revenues. 4Q 2012 Earnings Results – February 14, 2013 3
  4. Full Year 2012 Financial ResultsMargin Expansion and Earnings Improvement on Flat Revenues Full Year 2012 F(U) Amounts in Millions, except EPS 2012 2011 vs. 2011 Net Sales $ 2,411 $ 2,407 $ 4 Gross Profit $ 334 $ 284 $ 50 % Margin 13.9% 11.8% 2.1 pts SAG $ 259 $ 290 $ 31 EBITDA $ 423 $ 425 $ (2) Adjusted EBITDA1 $ 411 $ 352 $ 59 % Margin 17.1% 14.6% 2.5 pts EPS from Cont. Ops, diluted $ (0.42) $ (0.58) $ 0.16 Adjusted EPS1 from Cont. Ops, diluted $ (0.47) $ (0.93) $ 0.46 Note: Please see Non-GAAP reconciliations at the end of this presentation. Margin calculated using Net Sales. 1 Adjusted to exclude gain on sale of real estate and businesses, recovery from a legal settlement, exchange offer and restructuring costs. 4Q 2012 Earnings Results – February 14, 2013 4
  5. Full Year Results for ProfitabilityIncrease in Profitability Driven by Higher Pricing and Effective Cost Control Gross Profit Margin Adjusted EBITDA Margin 17.1% 13.9% 14.6% 11.8% 2011 2012 2011 2012 Aggregates Gross Profit Margin Aggregates Cash Gross Profit per Ton 20.4% $4.21 17.7% $4.01 2011 2012 2011 2012 Note: Please see Non-GAAP reconciliations at the end of this presentation. Aggregates Gross Profit Margin calculated using Segment Total Revenues. 4Q 2012 Earnings Results – February 14, 2013 5
  6. Aggregates PerformanceHigher Pricing and Lower Costs Are Driving Earnings Growth Full Year 2012 Change Due To: +$9 $593 $573 +$27 ($12) ($4) Note: Please see Non-GAAP reconciliations at the end of this presentation. 4Q 2012 Earnings Results – February 14, 2013 6
  7. Aggregates PerformanceUnit Profitability Continues to Increase, up 5% from the prior year Trailing Twelve Months Cash Gross Profit Per Ton of Aggregates Note: Please see Non-GAAP reconciliations at the end of this presentation. 4Q 2012 Earnings Results – February 14, 2013 7
  8. Non-Aggregates PerformanceConcrete and Cement Volumes Recovering from Cyclical Lows Year-Over-Year Change in Full Year Volumes • Concrete and Cement segments have benefitted from increased private construction activity. • Asphalt materials margin remain stable despite a decline in volumes. 4Q 2012 Earnings Results – February 14, 2013 8
  9. Fourth Quarter 2012 Financial ResultsMargin Expansion and Earnings Improvement on Flat Revenues Fourth Quarter 2012 F(U) Amounts in Millions, except EPS 2012 2011 vs. 2011 Net Sales $ 575 $ 578 $ (3) Gross Profit $ 79 $ 74 $ 5 % Margin 13.8% 12.9% 0.9 pts SAG $ 67 $ 72 $ 5 EBITDA $ 137 $ 85 $ 52 Adjusted EBITDA1 $ 90 $ 95 $ (5) % Margin 15.7% 16.4% -0.7 pts EPS from Cont. Ops, diluted $ 0.03 $ (0.20) $ 0.23 Adjusted EPS1 from Cont. Ops, diluted $ (0.19) $ (0.15) $ (0.04) Note: Please see Non-GAAP reconciliations at the end of this presentation. Margin calculated using Net Sales. 1 Adjusted to exclude gain on sale of real estate and businesses, recovery from a legal settlement, exchange offer and restructuring costs. 4Q 2012 Earnings Results – February 14, 2013 9
  10. Balance SheetStrengthening the Balance Sheet Through Debt Reduction As of December 31 Amounts in Millions, except ratios 2012 2011 2010 Total Debt $ 2,677.0 $ 2,815.4 $ 2,718.3 Cash and Cash Equivalents 275.5 155.8 47.5 Net Debt $ 2,401.5 $ 2,659.6 $ 2,670.8 Net Debt / Adjusted EBITDA 5.8 7.6 7.2 4Q 2012 Earnings Results – February 14, 2013 10
  11. End MarketsPassage of Federal Highway Bill Should Provide Stability and Predictability to Funding 4Q 2012 Earnings Results – February 14, 2013 11
  12. End MarketsObligation of Federal Highway Funds is Beginning to Recover Obligation of Federal Highway Funds for New Projects Year-over-Year % Change in Trailing Twelve Months Obligation of Federal Highway Funds in the first three months of FY’13 are up more than 90% versus the prior year, resulting in TTM growth for the first time in 15 months. Obligation - FHWA obligates the federal government to pay its share of the cost for an eligible project under the federal-aid highway program. The project can then proceed to bidding and construction. Source: ARTBA and FHWA 4Q 2012 Earnings Results – February 14, 2013 12
  13. End MarketsTIFIA Funding Should Positively Impact Future Aggregates Demand in Our Markets Potential TIFIA Projects in Vulcan-Served Counties From the Fall of 2011 to January 2013, Letters of Interest (LOIs) totaling $77 billion have been filed. Of these LOIs, 43 projects totaling $49 billion, or 64%, are located in Vulcan-served counties. 4Q 2012 Earnings Results – February 14, 2013 13
  14. End MarketsOther Public Infrastructure Supported by Large Projects Through the Downturn 4Q 2012 Earnings Results – February 14, 2013 14
  15. End MarketsPrivate Construction Growth Bodes Well for Continued Recovery in Our Markets 4Q 2012 Earnings Results – February 14, 2013 15
  16. End MarketsPrivate Construction Growth Bodes Well for Continued Recovery in Our Markets 4Q 2012 Earnings Results – February 14, 2013 16
  17. End MarketsKey Vulcan-Served States Continue to Realize Significant Growth in Housing Starts Source: McGraw-Hill and Company Estimates 4Q 2012 Earnings Results – February 14, 2013 17
  18. Full Year 2013 Outlook – CommentaryEarnings Growth Again in 2013 • Mid-single digit aggregates demand growth • Solid growth in private construction demand led by residential • Includes disproportionate number of large, discrete highway and industrial projects • Aggregates volume up 1 to 5 percent • Growth weighted towards 2H of 2013 • Driven mostly by continued recovery in private construction • Aggregates pricing up approximately 4 percent • Geographic breadth of pricing gains expected to continue • Earnings in each non-aggregates segment should improve • On track to achieve goal of $100 million of run-rate profit enhancement by mid-year from various initiatives underway • Continuing progress on Planned Asset Sales Note: Please see Non-GAAP reconciliations at the end of this presentation. 4Q 2012 Earnings Results – February 14, 2013 18
  19. Question & Answer Session
  20. Reconciliation of Non-GAAP Measures Amounts in millions of dollars, except per share data Generally Accepted Accounting Principles (GAAP) does not define "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)" and "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 and to monitor our cash and liquidity positions. The investment community often uses these metrics as indicators of a companys 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 and provide the earnings per share (EPS) impact of these for the convenience of the investment community. 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. Cash gross profit Cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit. Q4 Q4 YTD YTD YTD 2012 2011 12/31/12 12/31/11 12/31/10 EBITDA and Adjusted EBITDA Net earnings (loss) 3.5 (27.8) (52.6) (70.8) (96.5) Provision (benefit) for income taxes 0.6 (30.6) (66.5) (78.4) (89.7) Interest expense, net 52.9 53.4 211.9 217.2 180.7 Discontinued operations, net of tax 1.0 1.9 (1.3) (4.5) (6.0) EBIT 58.0 (3.1) 91.5 63.5 (11.5) Plus: Depr., depl., accretion and amort. 78.6 88.0 332.0 361.7 382.1 EBITDA 136.6 84.9 423.5 425.2 370.6 Legal settlement - - - (46.4) 40.0 Restructuring charges 0.5 10.0 9.5 12.9 0.0 Exchange offer costs 0.0 2.2 43.4 2.2 0.0 Gain on sale of real estate and businesses (46.8) (2.5) (65.1) (42.1) (39.5) Adjusted EBITDA 90.4 94.6 411.3 351.8 371.1 Q4 Q4 YTD YTD 2012 2011 12/31/12 12/31/11 EPS and Adjusted EPS As reported 0.03 (0.20) (0.42) (0.58) Legal settlement - - - (0.22) Restructuring charges 0.00 0.05 0.05 0.06 Exchange offer costs 0.00 0.01 0.20 0.01 Gain on sale of real estate and businesses (0.22) (0.01) (0.30) (0.20) Adjusted EPS (0.19) (0.15) (0.47) (0.92) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Trailing 12 Months 2012 2012 2012 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 2009 2009 2009 2008 2008 Aggregates Segment Cash Gross Profit Aggregates segment gross profit 352.1 350.0 338.5 329.5 306.2 284.6 296.4 315.5 320.1 332.2 340.2 345.0 393.3 451.2 503.2 594.3 657.6 722.3 Agg. Depr., depl., accretion and amort. 240.7 247.7 255.1 261.8 267.0 272.5 279.3 284.8 288.6 293.1 295.9 298.6 312.2 304.9 304.4 302.7 310.8 298.8 Aggregates segment cash gross profit 592.8 597.6 593.6 591.3 573.2 557.1 575.7 600.3 608.8 625.3 636.1 643.6 705.5 756.1 807.6 897.0 968.4 1,021.1 Aggregate tons 141.0 142.1 145.3 145.8 143.0 142.2 143.0 146.8 147.6 147.4 148.6 146.2 150.9 160.7 172.6 190.8 204.3 217.4 Aggregates segment cash gross profit per ton 4.21 4.20 4.08 4.06 4.01 3.92 4.03 4.09 4.12 4.24 4.28 4.40 4.68 4.70 4.68 4.70 4.74 4.70 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2008 2008 2007 2007 2007 2007 2006 2006 2006 2006 2005 2005 2005 2005 2004 2004 2004 2004 Aggregates segment gross profit 775.2 808.2 828.7 846.3 849.7 826.9 819.0 772.8 732.4 690.4 650.0 591.9 565.5 524.1 517.0 519.1 513.7 510.8 Agg. Depr., depl., accretion and amort. 283.2 266.4 246.9 228.3 220.8 213.1 210.3 205.1 203.0 202.7 206.4 197.7 194.4 191.8 191.1 191.1 191.8 192.6 Aggregates segment cash gross profit 1,058.4 1,074.6 1,075.6 1,074.6 1,070.4 1,040.0 1,029.3 977.8 935.3 893.1 856.4 789.7 759.9 715.9 708.1 710.2 705.5 703.4 Aggregates tons 224.4 228.5 231.0 234.5 239.8 246.7 255.4 258.8 263.6 265.3 259.5 255.0 252.6 245.8 242.3 240.8 239.5 236.2 Aggregates segment cash gross profit per ton 4.72 4.70 4.66 4.58 4.46 4.22 4.03 3.78 3.55 3.37 3.30 3.10 3.01 2.91 2.92 2.95 2.95 2.98 Source: Company filings 4Q 2012 Earnings Results – February 14, 2013 20

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