MARTIN MARIETTA MATERIALS, INC. 
By BIRMINGHAM, Ala., March 30, 2012 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC) has released an updated investor presentation on the Company's compelling value proposition. The presentation is available at www.realaggregatesleader.com and on Vulcan's corporate website at www.vulcanmaterials.com. It is also being filed with the Securities and Exchange Commission ("SEC") and will be accessible on the SEC's website at www.sec.gov.
(Logo: http://photos.prnewswire.com/prnh/20090710/CL44887LOGO )
In the presentation, Vulcan detailed the Company's strong value proposition, including Vulcan's:
1. Premium aggregates operations.
-- Vulcan's aggregates assets are positioned in better and faster growing
markets than those of Martin Marietta Materials, Inc. (NYSE: MLM).
Vulcan's top five states are projected to grow by over 16.1 million
people between 2010 and 2020, 75% more than Martin Marietta's top five
states, which are projected to grow by just 9.2 million people.
-- Vulcan serves 18 of the top 25 U.S. metropolitan areas ranked by
projected population growth; Martin Marietta serves only 9.(i)
-- Vulcan has consistently achieved higher aggregates price growth. Since
2006, Vulcan's aggregates prices have increased at a 5.0% compounded
annual growth rate, compared to just 3.6% for Martin Marietta.(ii)
-- Vulcan's aggregates 2011 cash gross profit unit margin was 32% higher
than Martin Marietta's ($4.08 per ton vs. $3.10 per ton).(ii)
2. Solid SAG and cash flow management.
-- By the end of 2012, Vulcan is on target to have reduced Selling,
Administrative and General (SAG) expenses by at least 32% since
2007.(iii)
-- Vulcan's consistently superior working capital management leads to more
efficient cash conversion than Martin Marietta's.
3. Substantial operating leverage, which drives strong EBITDA growth as markets recover.(iv)
-- Vulcan achieved superior earnings growth during the previous recovery.
Between 2003 and 2006, Vulcan's EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) grew by $555 million, or 70%, compared to
$193 million, or 57%, for Martin Marietta.(iii)
-- Vulcan's non-aggregates businesses are at cyclical troughs and have
considerable upside potential.(iv)
-- Wall Street analysts estimate that Vulcan's EBITDA will grow at more
than double the rate of Martin Marietta's: Vulcan's EBITDA is expected
to grow by 233% from current levels to mid-cycle including expected
savings from the Profit Enhancement Plan, compared to 91% expected
EBITDA growth for Martin Marietta.(v)
4. Outperformance in results and Wall Street expectations since Martin Marietta launched its hostile offer.
-- Vulcan's fourth quarter 2011 results demonstrate Vulcan's superior
operating leverage and early signs of a market recovery.(iv)
-- Vulcan grew gross profit by $23.6 million in the fourth quarter of 2011
(from the fourth quarter of 2010), while Martin Marietta's gross profit
grew only $1.3 million; Vulcan grew EBITDA by $32.3 million in the
fourth quarter of 2011, while Martin Marietta's EBITDA declined by $1.0
million.(vi)
-- Since Martin Marietta announced its hostile offer in December 2011, Wall
Street analysts have raised their consensus estimate for Vulcan's 2012
EBITDA by 15%, compared to a 1% increase for Martin Marietta.(vii)
5. Well-defined Profit Enhancement Plan, which is expected to add significant value that belongs to Vulcan shareholders.
-- Vulcan has already captured $55 million in run-rate cost savings from
its completed 2011 restructuring initiatives.
-- Vulcan's recently announced Profit Enhancement Plan is expected to
generate an additional $100 million of annual EBITDA improvement.
6. Planned Asset Sales that accelerate deleveraging and build value.
-- $500 million in expected net proceeds from Planned Asset Sales will be
used to reduce debt, further strengthening Vulcan's balance sheet and
credit profile.
7. De-risked balance sheet, which will further enhance shareholder value.
8. Commitment to restore a competitive dividend when prudent to do so.
The full basis for the Vulcan Board's recommendation to reject the Martin Marietta offer is set forth in Vulcan's Schedule 14D-9, which was filed on December 22, 2011 with the SEC and is available on the SEC's website at www.sec.gov. Copies of the Schedule 14D-9 may also be obtained on www.realaggregatesleader.com; the Company's corporate website at www.vulcanmaterials.com; or by contacting MacKenzie Partners, Inc. toll free at 1-800-322-2885 or via email at vulcan@mackenziepartners.com.
About Vulcan Materials Company
Vulcan Materials Company, a member of the S&P 500 index, is the nation's largest producer of construction aggregates, a major producer of asphalt mix and concrete and a leading producer of cement in Florida.
ADDITIONAL INFORMATION
This document 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 Materials, Inc., a North Carolina corporation ("Martin Marietta"), Vulcan Materials Company ("Vulcan") has filed a Solicitation/Recommendation statement on Schedule 14D-9 with the U.S. Securities and Exchange Commission ("SEC"). INVESTORS AND SECURITY HOLDERS OF VULCAN ARE URGED TO READ THE SOLICITATION / RECOMMENDATION STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC by Vulcan through the website maintained by the SEC at http://www.sec.gov. Copies of the Solicitation/Recommendation Statement, any amendments and supplements to the Solicitation/Recommendation Statement and other Vulcan materials related to Martin Marietta's unsolicited offer will also be available for free under the "Investor Relations" tab of Vulcan's corporate website http://www.vulcanmaterials.com.
ADDITIONAL INFORMATION ABOUT POTENTIAL PARTICIPANTS
In addition, Vulcan intends to file a proxy statement with the SEC with respect to the 2012 Annual Meeting of Stockholders. Any definitive proxy statement will be mailed to stockholders of Vulcan. Vulcan, its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from Vulcan shareholders in connection with the matters to be considered at the annual meeting. INVESTORS AND SECURITY HOLDERS OF VULCAN ARE URGED TO READ ANY SUCH PROXY STATEMENT, ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of these documents (when available) and other documents filed with the SEC by Vulcan through the website maintained by the SEC at http://www.sec.gov.
Detailed information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with Vulcan's 2012 Annual Meeting. Information regarding the direct and indirect beneficial ownership of Vulcan's directors and executive officers in Vulcan's securities is included in their SEC filings on Forms 3, 4 and 5, and additional information can also be found in Vulcan's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 29, 2012, and its Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended September 30, 2011, filed on May 6, 2011, August 4, 2011 and November 4, 2011, respectively. Relevant information concerning such participants and their potential interests is also contained in the Solicitation/Recommendation on Schedule 14D-9. Shareholders will be able to obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by Vulcan with the SEC for no charge at the SEC's website at www.sec.gov. Copies will also be available at no charge under the "Investor Relations" tab of our corporate website at www.vulcanmaterials.com.
FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's 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 Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: risks that Vulcan's 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; future events relating to Martin Marietta's unsolicited offer to acquire Vulcan; those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; the lack of a multi-year federal highway funding bill with an automatic funding mechanism; the reluctance of state departments of transportation to undertake federal highway projects without a reliable method of federal funding; the impact of a prolonged economic recession on Vulcan's 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 Vulcan's products; incurred and potential costs associated with Martin Marietta's unsolicited takeover attempt and proxy contest; 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 interest rates; the impact of Vulcan's below investment grade debt rating on Vulcan's 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; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; 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. Vulcan notes that forward-looking statements made in connection with a tender offer are not subject to the safe harbors created by the Private Securities Litigation Reform Act of 1995. Vulcan is not waiving any other defenses that may be available under applicable law.
Vulcan Reconciliation
---------------------
Reconciliation of Non-GAAP Financial Measures
Amounts in millions of dollars
Generally Accepted Accounting Principles (GAAP) does not define "cash gross profit" and "Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA)." 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. We do not use these metrics as a measure to allocate resources or as liquidity measures. Reconciliations of these metrics to their
nearest GAAP measures are presented below:
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 Interest, Taxes, Depreciation and Amortization.
2011 Q4/2011 2010 Q4/2010 2009 2008 2007 2006 2005 2004 2003
---- ------- ---- ------- ---- ---- ---- ---- ---- ---- ----
Net earnings (loss) (70.8) (27.8) (96.5) (46.9) 30.3 0.9 450.9 470.2 389.0 288.7 195.0
Provision (benefit) for
income taxes (78.4) (30.6) (89.7) (28.3) (37.8) 71.7 204.4 223.3 136.6 114.9 97.6
Interest expense, net 217.2 53.4 180.7 46.2 173.0 169.7 41.6 20.1 20.5 34.6 49.6
Discontinued operations,
net of tax (4.5) 1.9 (6.0) 0.9 (11.7) 2.4 12.2 10.0 (44.9) (26.2) 23.7
Cumulative effect of
accounting change - - - - - - - - - - 18.8
--- --- --- --- --- --- --- --- --- --- ----
EBIT 63.5 (3.1) (11.5) (28.1) 153.8 244.7 709.1 723.6 501.2 412.0 384.7
Plus: Depr., depl.,
accretion and amort. 361.7 88.0 382.1 92.9 394.6 389.1 271.5 226.4 222.4 211.3 216.1
EBITDA 425.2 84.9 370.6 64.8 548.4 633.8 980.6 950.0 723.6 623.3 600.8
Goodwill Impairment - - - - - 252.7 - - - - -
Restructuring and
exchange offer expenses 15.2 12.2
Sale of non-strat.
assets and settlements (86.1) - - - - - - - - - -
----- --- --- --- --- --- --- --- --- --- ---
Adjusted EBITDA 354.3 97.1 370.6 64.8 548.4 886.5 980.6 950.0 723.6 623.3 600.8
Florida Rock EBITDA - - - - - - 221.1 394.1 322.2 237.0 188.0
Pro Forma EBITDA 354.3 97.1 370.6 64.8 548.4 886.5 1,201.7 1,344.1 1,045.8 860.3 788.8
*Pro forma to include pre-acquisition Florida Rock
cash gross profit.
2011 Q4/2011 2010 Q4/2010 2009 2008 2007* 2006* 2005 2004 2003
---- ------- ---- ------- ---- ---- ----- ----- ---- ---- ----
Aggregates Segment Cash Gross
Profit
-----------------------------
Aggregates Segment Gross
Profit 306.2 79.2 320.2 57.7 393.3 657.6
Agg. Depr., depl.,
accretion and amort. 277.8 66.3 293.0 70.4 312.2 310.8
----- ---- ----- ---- ----- -----
Aggregates Segment Cash
Gross Profit 584.0 145.5 613.2 128.1 705.5 968.4 1,238.2 1,199.0
Aggregate Tons 143.0 34.5 147.6 33.7 150.9 204.3
Aggregates Segment Cash
Gross Profit Per Ton 4.08 4.22 4.14 3.80 4.68 4.74
Cash Gross Profit, All
Other Segments 56.3 15.0 63.7 14.1 130.2 167.7 359.3 444.7
Total Cash Gross Profit
-----------------------
Gross Profit 283.9 74.4 300.7 50.7 446.0 749.7
Plus: Seg. D,D & A 356.4 86.1 376.2 91.5 389.7 386.4
Plus: Corporate D,D & A 5.3 1.8 5.9 1.4 4.9 2.7
--- --- --- --- --- ---
Cash Gross Profit 645.6 162.3 682.8 143.6 840.6 1,138.8 1,599.9 1,645.7
Selling, Admin. & General
-------------------------
Selling, Admin. &
General, as reported 290.0 71.7 327.5 80.1 321.6 342.6 289.6
FRK pro forma - - 84.5
--- --- ----
Total 290.0 71.7 327.5 80.1 321.6 342.6 374.1
Real estate contribution (9.2) (5.6)
R&D (MLM excl. R&D) (1.1) (0.1) (1.6) (0.4) (1.5) (1.5) (1.6)
---- ---- ---- ---- ---- ---- ----
Adjusted Selling, Admin.
& General 288.9 71.6 316.7 70.5 314.5 341.1 372.5
*The information below is sourced from SEC Filings.
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
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.
2011 Q4 2011 2010 Q4 2010 2009 2008 2007 2006 2005 2004 2003
---- ------- ---- ------- ---- ---- ---- ---- ---- ---- ----
Consolidated Net
Earnings 83.6 15.1 98.7 15.2 88.2 179.8 263.3 245.4 192.7 129.2 93.6
Provision for Income
Taxes 21.0 0.9 30.9 4.3 26.0 72.1 115.4 106.7 74.2 57.7 46.9
Interest Expense 58.6 13.3 68.4 16.9 73.5 74.3 60.9 40.4 42.6 42.7 42.6
Discontinued
Operations, net of
tax (4.0) (3.8) 0.2 0.3 (3.5) (4.7) (2.1) (2.0) 5.8 1.1 8.9
Accounting Change - - - - - - - - - - 6.9
EBIT 159.2 25.5 198.2 36.7 184.1 321.4 437.5 390.5 315.3 230.7 198.9
Depreciation,
depletion, and
amortization expense 173.4 43.7 181.5 45.6 179.4 171.1 150.3 141.4 138.3 132.9 139.6
EBITDA 332.6 69.3 379.7 82.3 363.5 492.6 587.8 531.9 453.5 363.5 338.5
Unsolicited exchange
offer expenses 12.0 12.0 - -
Restructuring
charges 4.4 - - -
Adjusted EBITDA 349.0 81.3 379.7 82.3
2011 Q4 2011 2010 Q4 2010 2009 2008 2007 2006 2005 2004 2003
---- ------- ---- ------- ---- ---- ---- ---- ---- ---- ----
Aggregates Segment Cash Gross
Profit
-----------------------------
Aggregates Segment
Gross Profit 230.0 52.7 264.3 57.2 289.6 432.8 529.4 496.8
Agg. Depr., depl.,
accretion and amort. 157.2 163.9 160.3 149.3 131.6 122.6
----- ----- ----- ----- ----- -----
Aggregates Segment
Cash Gross Profit 387.2 428.2 449.9 582.1 661.0 619.4
Aggregates Tons 125.1 29.9 130.0 30.8 123.4 159.4 182.3 198.5
Aggregates Segment
Cash Gross Profit Per
Ton 3.10 3.29 3.65 3.65 3.63 3.12
Specialty Products
Cash Gross Profit 82.5 70.1 53.1 49.9 50.3 41.2
Total Cash Gross
Profit
----------------
Gross Profit 302.0 321.7 331.6 470.5 568.2 522.5
Plus: Seg. D,D & A 164.3 172.2 167.8 157.3 138.5 130.3
Plus: Corporate D,D
& A 9.2 9.3 11.6 13.8 11.8 11.2
Cash Gross Profit 475.4 503.3 511.0 641.6 718.5 664.0
(i) Sources: Companies' 2011 10-Ks, Moody's 2010 - 2020 population projections, Woods & Poole Economics CEDDS 2011. Top 25 Metropolitan Statistical Areas (MSAs) are based on projected population growth from 2010 to 2020. "Served" is defined as having an aggregates-related facility inside of the MSA boundary.
(ii) Based on Company filings. Historical performance is not a guarantee or assurance of future performance nor that previous results will be attained or surpassed.
(iii) Based on Company filings. Note: Vulcan SAG and EBITDA includes Florida Rock on a pro forma basis.
(iv) Timing and extent of any economic recovery remains uncertain, and realization of upsides discussed herein is not guaranteed.
(v) IBES median estimates as of March 23, 2012. Vulcan's profit-enhanced mid-cycle estimate is based on the median of mid-cycle broker estimates prior to announcement of the Profit Enhancement Plan ($1,079mm), adjusted for expected run-rate savings of $100mm. Mid-cycle estimates from the following brokers were used for Vulcan: D.A. Davidson: $1,263mm, Jefferies: $1,079mm, KeyBanc: $1,076mm. Martin's mid-cycle estimate is based on the median of the latest available mid-cycle broker estimates. Mid-cycle estimates from the following brokers were used for Martin Marietta: D.A. Davidson: $540mm, Jefferies: $707mm, KeyBanc: $665mm.
(vi) Based on Company filings. Vulcan and Martin Marietta EBITDA excludes restructuring charges, gains / losses from sale of non-strategic assets, gains / losses from legal settlements, and expenses related to Martin Marietta's unsolicited exchange offer.
(vii) IBES median estimates as of March 23, 2012.
SOURCE Vulcan Materials Company
