Investor Presentation March 2013
Our strategy is based on our strength
Aggregates Essential Material | Valuable Asset
2 Investor Presentation, March 2013
Important Disclosure Notes
Certain matters discussed in this presentation, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with: cost reductions, profit enhancements and asset sales, as well as streamlining and other strategic actions we adopted will not be able to be realized to the desired degree or within the desired time period and that the results there of 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; general economic and business conditions; the impact of a prolonged economic recession on our 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 our 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 the Company; changes in Vulcan’s effective tax rate; changes in interest rates; the impact of our below investment grade debt rating on our 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; the Company’s ability to secure and permit aggregates reserves in strategically located areas; the Company’s 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 Company’s SEC reports, including the report on Form 10-K for the year. Forward-looking statements are made as of the date hereof, and Vulcan assumes no obligation to publicly update such statements.
3 Investor Presentation, March 2013
Company Snapshot Vulcan is the Leading Aggregates Producer in the U.S.
95% 2012 Net Sales: $2.4 Billion Aggregates Facilities: 341
Headquarters: Birmingham, AL Ticker: VMC
Company 2012 10-K Report
Vulcan-Served States
Our leading position in aggregates is based on…
1. Favorable geographic footprint that provides attractive long-term growth prospects
2. Largest proven and probably reserve base
3. Operational expertise and pricing discipline which provides attractive unit profitability
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Positioning the Business to Maximize Future Earnings Growth
Strategically Positioned
Leading Reserve Position
Unit Profitability
Continues to Grow
75% Share of U.S. Population Growth
27% Higher than peak-year in volumes
15.0 Billion Tons of Aggregates Reserves
Unit Profitability = Cash Gross Profit / Ton. See Non-GAAP reconciliation at end of presentation.
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Aggregates-Led Value Creation
95%
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 to meet construction demand 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 manage portfolio of locations to further enhance
long-term earnings growth
Profitable Growth Tightly managed operational and overhead costs Benefits of scale as the largest producer
Effective Land Management Can lead to attractive real estate transactions
95 Percent
Sales Tied to Aggregates
6 Investor Presentation, March 2013
Source: Moody’s Analytics as of November 2012
Share of Total U.S. Growth – 2010 to 2020 Vulcan’s Aggregates Assets are Strategically Positioned in Attractive Markets
75% in VMC-served states
70% in VMC-served states
63% in VMC-served states
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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$
Full Year
Recent Financial Results Demonstrate Operating Leverage Margin Expansion and Earnings Improvement on Flat Revenues
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.
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$4.01
$4.21
2011 2012
17.7%
20.4%
2011 2012
11.8%
13.9%
2011 2012
14.6%
17.1%
2011 2012
Recent Financial Results Demonstrate Operating Leverage Increase in Profitability Driven by Higher Pricing and Effective Cost Control
Note: Please see Non-GAAP reconciliations at the end of this presentation. Aggregates Gross Profit Margin calculated using Segment Total Revenues.
Adjusted EBITDA Margin
Aggregates Cash Gross Profit per Ton
Gross Profit Margin
Aggregates Gross Profit Margin
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Attractive Profitability Unit Profitability That Was Maintained Throughout the Downturn, Now Beginning to Grow
2012 profitability is higher than prior year and 27% higher than peak-year in
volumes (2005)
Trailing Twelve Months Cash Gross Profit Per Ton of Aggregates
Note: Please see Non-GAAP reconciliations at the end of this presentation.
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Track Record for Price Growth Vulcan Consistently Outperforms, Contributing to Higher Unit Profitability
Aggregates Price Growth Index, 1992 = 100
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
6.4%
5.3%
CAGR ’92-’02 ’02-’12
Industry*
Vulcan 3.6%
2.8%
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SAG Expenses Have Been Reduced During the Downturn Well Positioned to Leverage ERP Investment and Shared Services Platforms
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).
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De-Risked Balance Sheet Higher Cash Generated from Operations and Asset Sales
2012 Cash Flow Bridge 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.
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De-Risked Balance Sheet Significant Financial and Operational Flexibility With Limited Near-Term Maturities
(1) Line of credit is an Asset Based Lending facility: $600 million 5 year facility expiring December 2016.
Favorable debt maturity profile with substantial liquidity:
— Minimal maturities of $290 million over the next three years
― $275 million cash on hand with no borrowing on $600 million line of credit (1)
Debt maturities to be funded from available cash and free cash flows
Limited financial covenants
Debt Maturity Profile (Millions $)
Amounts in Millions, except ratios 2012 2011 2010
Total Debt 2,677.0$ 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
As of December 31
Debt Summary
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Aggregates Demand Vulcan’s Key Markets Leveraged to Favorable Long Term Growth Prospects
Source: Company estimates of aggregates demand using MSA population data from Woods & Poole CEDDS.
2012 aggregate demand 47% below population trend line.
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Aggregates Demand Privately funded construction accounts for most of the cyclicality
Source: Company estimates of aggregates demand.
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Private Construction – Residential Growth Bodes Well for Continued Recovery in Our Markets…
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Private Construction – Residential …Evident by the Significant Growth in Housing Starts in These Key Vulcan-Served States
Source: McGraw-Hill and Company Estimates
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Private Construction – Nonresidential Growth in Residential is Helping Drive Growth in Private Nonresidential Buildings
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Private Construction – Nonresidential Buildings Important End Use Categories Like Stores and Office Buildings Growing Again
Source: McGraw-Hill and Company Estimates
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Public Construction – Other Public Infrastructure Supported by Large Projects Through the Downturn, Contract Awards Have Turned Positive
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Public Construction – Highways Passage of Federal Highway Bill Should Provide Stability and Predictability to Funding
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Public Construction - Highways Obligation of Federal Highway Funds is Beginning to Grow
Obligation of Federal Highway Funds for New Projects Through January of Fiscal Year (Billions $)
Obligation of Federal Highway Funds in the
Regular Highway Program are again growing - up
58% versus the prior year
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 Fiscal Year ends September 30. Source: ARTBA and FHWA
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Public Construction – Highways Vulcan states should get a disproportionate number of TIFIA-funded projects
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.
Enacted in 1998 to provide Federal credit assistance for eligible transportation projects and stimulate private capital investment. Since enactment, 13 states and the District of Columbia have used $9.2 billion of TIFIA credit assistance to help fund more than $36 billion in projects (mostly large-scale highway projects).
24 Investor Presentation, March 2013
Attractive unit profitability
Cost reduction initiatives resetting mid-cycle EBITDA to new, higher level
Favorable trends in private construction activity
New multi-year Federal Highway Bill
Vulcan’s Value Proposition Well Positioned to Capitalize on Market Recovery
Superior Aggregates Operations
Strong Operating Leverage
De-Risked Balance Sheet
Largest reported reserve base
Favorable long term growth prospects
Benefits of scale
Operational expertise and pricing growth
Attractive real estate opportunities
Substantial liquidity
Moderate debt maturity profile
Commitment to strengthening balance sheet
Commitment to restore a meaningful dividend
25 Investor Presentation, March 2013
Appendix - Reconciliation of Non-GAAP Financial Measures
Source: Company filings
Amounts in millions of dollars, except per share data
EBITDAEBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.
Cash gross profitCash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization to gross profit.
Q42012
Q42011
YTD12/31/12
YTD 12/31/11
YTD 12/31/10
EBITDA and Adjusted EBITDANet 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 53.4 211.9 217.2 180.7Discontinued 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 84.9 423.5 425.2 370.6Legal settlement - - - (46.4) 40.0Restructuring charges 0.5 10.0 9.5 12.9 0.0Exchange offer costs 0.0 2.2 43.4 2.2 0.0Gain 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
Q42012
Q42011
YTD12/31/12
YTD 12/31/11
EPS and Adjusted EPSAs reported 0.03 (0.20) (0.42) (0.58)Legal settlement - - - (0.22)Restructuring charges 0.00 0.05 0.05 0.06Exchange offer costs 0.00 0.01 0.20 0.01Gain 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 2012
Q32012
Q22012
Q12012
Q42011
Q32011
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q32008
Aggregates segment gross profit 352.1 350.0 338.5 329.5 306.2 284.6 296.4 315.5 320.1 332.2 340.2 345.0 393.3 451.2 503.2 594.3 657.6 722.3Agg. 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 1,021.1Aggregate 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
Q22008
Q12008
Q42007
Q32007
Q22007
Q12007
Q42006
Q3 2006
Q2 2006
Q1 2006
Q4 2005
Q3 2005
Q2 2005
Q1 2005
Q4 2004
Q3 2004
Q2 2004
Q1 2004
Aggregates segment gross profit 775.2 808.2 828.7 846.3 849.7 826.9 819.0 772.8 732.4 690.4 650.0 591.9 565.5 524.1 517.0 519.1 513.7 510.8Agg. 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 1,029.3 977.8 935.3 893.1 856.4 789.7 759.9 715.9 708.1 710.2 705.5 703.4Aggregates 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
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 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 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:
Trailing 12 MonthsAggregates Segment Cash Gross Profit
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Appendix – Simplified Geology Map Below Geological Fall Line, Little or No Hard Rock Aggregates Reserves Suitable for Mining
Simplified Geology Map
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Appendix - Comprehensive Distribution Network to Serve Attractive Markets With Limited Aggregates Reserves
4-5 truckloads per rail car $0.04-0.12 per ton mile
65 truckloads per barge $0.02-0.03 per ton mile
2,500 truckloads per ship Less than $0.01 per ton mile Note: Per ton mile costs exclude loading and unloading.
Geological Fall Line
20-25 tons per truck $0.15-0.35 per ton mile
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Appendix - South Region Map
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Appendix - Central Region Map
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Appendix - East Region Map
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Appendix - West Region Map
1200 Urban Center Drive Birmingham, AL 35242-2545 Telephone: (205) 298-3000
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: bnymellon.com/shareowner/equityaccess
Investor Relations: Mark Warren
Telephone: (205) 298-3191 Email: [email protected]
Independent Auditors: Deloitte & Touche, LLP Birmingham, Alabama
Registrar and Transfer Listing: Computershare Shareowner Services LLC