Investor Handout June 2011 We provide the basic materials for the infrastructure investments needed to strengthen the American economy
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Investor Handout
June 2011
We provide the basic materials for the infrastructure investments needed to strengthen the American economy
Headquartered in Birmingham, Alabama, we are the nation’s largest producer of construction aggregates, primarily crushed stone, sand and gravel, a major producer of asphalt and concrete and a leading producer of cement in Florida.
LOCAL MARKETS: Due to the high weight-to-value ratio of aggregates, markets generally are local in nature. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the Eastern Seaboard where there are limited supplies of locally available high quality aggregates.
We focus on serving metropolitan areas expected to experience the largest absolute growth in population in the future. A market often consists of a single metropolitan area or one or more counties where delivery is by truck. Sales yards and other distribution facilities located on waterways and rail lines allow us to reach markets that do not have locally available sources of aggregates. During 2010, we shipped 148 million tons from 317 aggregates production facilities and sales yards.
LOCATION AND QUALITY OF RESERVES: At the end of 2010, we had 14.7 billion tons of permitted and proven or probably aggregates reserves.
Leading Aggregates Producer in the U.S.Aggregates Operational Footprint
DIVERSE END USE MARKETS: Aggregates are used in virtually all types of public and private-sector construction, including highway construction and maintenance, airports, water and sewer systems, industrial manufacturing facilities, residential and nonresidential buildings. Aggregates are also widely used as railroad track ballast, scrubber stone for power plants and in other non-construction end markets..
WIDELY USED IN DOWNSTREAM PRODUCTS; Our downstream products align closely with our aggregates-led strategy. Aggregates are a major component in asphalt mix and in ready-mixed concrete, comprising approximately 95% of asphalt mix by weight and 78% of ready-mixed concrete by weight. At the end of 2009, we had 38 asphalt plants and 126 ready-mixed concrete plants to serve our customers in California, Florida, Texas, Virginia, Maryland, Arizona and New Mexico.
Investor Handout | June, 2011
Notes
1June 2011
Company ProfileVulcan is the largest aggregates producer in the U.S.
Vulcan’s StrategyVulcan-Served States
Sales Tied to Aggregates 2010 Net Sales by Product
95% 95%
96%67%
16%
15%
2%
Aggregates focusAttractive industry fundamentalsBenefits of scale as the largest playerQuality top-line growth converts to higher-margin earnings and cash flow generationComplementary asphalt mix, concrete and cement businesses in select markets
Leverage coast-to-coast footprintStrategically-located aggregates reservesPresence in all top 5 population-growth statesDiversified regional exposure
Profitable growthLong-term demand growthTightly manage costsReinvest in high-return projectsExecute strategic quarry acquisitions
Effective land managementSource: Company data.
Notes2
June 2011
Vulcan’s Aggregates ReservesVulcan has a national footprint with the largest reserve base
95% 95%95%67%
16%
15%
Note: Units in billions of tons. Source: Company data.
10.0(2.2)
+6.9
14.7
2000 Shipments Additions 2010
Notes
3June 2011
Top 5 States based on 2010 Revenue. Source: Moody’s Economy.com
Demographic Trends (2010 – 2020)
0.6% 1.1% 0.8%1.2% 1.6% 1.4%1.5% 1.9% 1.7%
Non-VMC States VMC States VMC Top 5 States
Population Employment Households
Vulcan has a strong presence in states with greatest growth profile
Notes4
June 2011
U.S. Aggregates IndustryFundamentals are attractive
Primarily local markets
High weight-to-value ratio focuses competition locally
Location and quality of reserves are critical
Decline in demand historically followed by solid recovery
Population growth helps drive new peak with each recovery
Diverse end markets
Highways, buildings, housing, erosion control, rail, agriculture
Highly fragmented industry
More than 5,000 companies managing over 9,000 operations
Relatively stable demand due to public funding of long-term projects
Public projects more aggregates intensive than private
Limited product substitution
Used in downstream products
Asphalt mix is 95% aggregates by weight
Ready-mixed concrete is 78% aggregates by weight
Flexible production capabilities
Production scheduling more flexible than continuous process manufacturing
Mechanical production process
No raw material inputs
Naturally occurring resource secured through ownership or long-term leases
Notes
5June 2011
Price = PPI for Aggregates as reported by Bureau of Labor Statistics. 1982 = 100
U.S. Aggregates Pricing
0%
2%
4%
6%
8%
10%
12%
14%
16%
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
50
100
150
200
250
300YoY% Chg (Left axis) Price Index (Right axis)
Aggregates pricing consistently rises in all periods…no decline since at least 1970
Notes6
June 2011
Red arrows denote peak-to-trough decline in demand. Green arrows denote trough-to-peak growth in demand. Source: USGS and Company data.
U.S. Aggregates DemandHistorically, demand characterized by short, steep declines followed by sustained growth periods
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
(18%)(30%)
(13%)
(2%)
(37%)
+27%+56%
+62%+16%(Billions of Tons)
Notes
7June 2011
-
0.5
1.0
1.5
2.0
2.5
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
End Markets - Residential ConstructionCurrent level of housing starts at unsustainable low levels
Annual Level of Residential Housing StartsMillions of Units (Single + Multi-Family)
Average 1970Average 1970--201020101.5 Million Starts1.5 Million Starts
Sources: McGraw-Hill and Company data
Notes8
June 2011
-
200
400
600
800
1,000
1,200
1,400
1,60019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
End Markets - Private Nonresidential ConstructionPeaked 18 months after residential. Rate of decline slowed in 2010
Average 1970Average 1970--201020101,053 Million Square Feet1,053 Million Square Feet
Private Nonresidential Contract AwardsMillions of Square Feet
Sources: McGraw-Hill and Company data
Notes
911June 2011
End Markets - Private Nonresidential Construction
Institutional
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Office
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Stores
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Manufacturing
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Year Over Year Change in Trailing Twelve Months of U.S. Contract Awards. Sources: McGraw-Hill and Company data
Recent strength in manufacturing and slowing declines in other categories
Notes10
June 2011
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,00019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Private Power/Utilities
Public Sewers,Runways and Waterways
End Markets – Non-highway Infrastructure ConstructionPrivately funded projects more cyclical than publicly funded sewers, waterways and airports
Sources: McGraw-Hill and Company data
Annual Level of Contract Awards Millions of Nominal $
Notes
11June 2011
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
End Markets - Highway ConstructionStable growth in highway construction, Vulcan’s largest end market for aggregates
Annual Level of Contract Awards Millions of Nominal $
Sources: McGraw-Hill and Company data
Notes12
June 2011
End Markets - Federal Highway Funding
Average Annual Outlays per Highway Bill ($ Billions)
$0
$10
$20
$30
$40
$50
$6019
83
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
STAASTURAAISTEATEA-21SAFETEAPresident's FY'12 Budget
Successive highway bills have provided consistently higher outlays over time
Projected HTF Receipts
Senate
Sources: Environmental & Public Works Committee press release dated May 25, 2011; CBO projection for Highway Trust Fund receipts dated January 20, 2011 and President’s FY 2012 Budget proposal.
Administration
Average Annual Federal Funding Level for Highways $ Billions
Notes
13June 2011
Status of ARRA Funds Apportioned for Highways (Millions $)
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000
CaliforniaTexas
FloridaNew York
PennsylvaniaIllinois
OhioGeorgia
MichiganNorth Carolina
VirginiaIndiana
New JerseyMissouri
WashingtonTennesseeWisconsinMinnesota
ArizonaAlabama
OklahomaSouth Carolina
KentuckyMassachusetts
LouisianaMarylandColoradoArkansas
KansasIowa
MississippiOregon
ConnecticutNew Mexico
NebraskaUtah
West VirginiaMontana
South DakotaNevada
North DakotaIdaho
AlaskaWyoming
New HampshireMaine
Rhode IslandVermont
HawaiiD.C.
Delaware
Outlays
Apportioned but not Spent
End Markets - American Recovery and Reinvestment ActMost of the remaining stimulus-related highway funding is in Vulcan-served states
As of March 31, 2011 Source: FHWA and ARTBA
$27.5 Billion Apportioned for Highways$27.5 Billion Apportioned for Highways•• Vulcan states apportioned 55% more than other statesVulcan states apportioned 55% more than other states•• $6 billion remains to be spent in Vulcan states$6 billion remains to be spent in Vulcan states
Note: Vulcan’s Top 10 Revenue States in 2010 noted with
Notes14
June 2011Source: McGraw-Hill and Company estimates.
End Markets - Highway Construction (Regular Programs)
-
5
10
15
20
25
30
35
40JA
N_20
09
FEB_
2009
MAR
_200
9
APR_
2009
MAY
_200
9
JUN_
2009
JUL_
2009
AUG
_200
9
SE
P_2
009
OCT
_200
9
NOV_
2009
DEC_
2009
JAN_
2010
FEB_
2010
MAR
_201
0
APR_
2010
MAY
_201
0
JUN_
2010
JUL_
2010
AUG
_201
0
SE
P_2
010
OCT
_201
0
NOV_
2010
DEC_
2010
JAN_
2011
FEB_
2011
MAR
_201
1
State Administered Awards, Excluding Stimulus Locally Administered Awards, Excluding StimulusLocally Administered Stimulus Awards State Administered Stimulus Awards
Vulcan-Served States Highway Construction(Billions of Contract Award $)
Regular Programs+20% versus PY
Growth in regular highway funding up 20% in Vulcan-served states
Notes
15June 2011
2009A 2010A 2011P 2012P 2013P
Obligation Limit 40.7$ 41.1$ 41.1$ 41.6$ 42.2$
Annual OutlaysRegular 37.4 32.0 35.6 41.9 44.2ARRA (Stimulus) 2.4 11.8 9.4 2.5 1.0
Total Cash Outlays 39.8$ 43.8$ 45.0$ 44.4$ 45.2$
Trust Fund Balance at Year-End $8.9 $20.7 $15.4 $4.2 $(8.8)
Fiscal Year Ending September 30,
Note: Above figures exclude Transit and the benefit of a new six-year highway bill. Reflects provisions of H.R.2847, The HIRE Act, Public Law 111Source: Congressional Budget Office Highway Trust Fund Projection, January 20, 2011
End Markets - Federal Highway Funding (CBO Projections)Latest highway projections by CBO show stable funding through FY12
Notes16
June 2011
$69
$93
$130$140
$175
1982A 1983A 1984A 1985A 1986A
Source: Company filings for respective fiscal year ends. Florida Rock fiscal year ends September 30 and Vulcan fiscal year ends December 31.Note: Vulcan 1982-1986 and 1991-1995 data is Earnings from Continuing Operations before Interest Expense and Taxes for the Construction Materials segment as reported. Vulcan 2002-2006 data is for Operating Earnings for the company, as reported. Florida Rock data is Operating Profit for the company, as reported. Growth rate calculation is calculated using trend line.
$47
$95
$128
$190
$221
1991A 1992A 1993A 1994A 1995A
$482 $490$580
$727
$1,015
2002A 2003A 2004A 2005A 2006A
CAGRCAGR+25%+25%
CAGRCAGR+46%+46%
CAGRCAGR+21%+21%
Financial Performance - Earnings Growth in Past RecoveriesSignificant Operating Income growth during recovery periods supports deleveraging
Notes
17June 2011
Financial Performance - Aggregates Gross Profit Bridge
Note: DDAA stands for Depreciation, Depletion and Amortization.Source: Company data.
Sources of Changes in Gross Profit(US$ in millions)
$652
$320
$428 ($485)
($209)
($66)
$0
$200
$400
$600
$800
$1,000
$1,200
2005 GrossProfit
Price Volume Cash Costs DDAA 2010 GrossProfit
Notes18
June 2011
Financial Performance - Vulcan’s Aggregates PricingVulcan has improved pricing during the downturn
Trailing Twelve Months Index (1Q’06 = 100)
50%
100%
136%
Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Volume Price
Source: Company data.
Notes
19June 2011
Aggregates Cash Earnings / Ton(Red Line = Volume (000’s), Blue Bars = Cash Earnings / Ton)
Cash Earnings = Aggregates Segment Gross Profit + DDAA as reported on Form 10-K
Financial Performance - Aggregates ProfitabilityCash earnings have improved despite weak demand – 25% higher than at peak of demand
Notes20
June 2011
Financial Performance – Capital Structure
Pro Forma Debt Maturity Profile through 2015(as of 3/31/2011)
Note: Pro Forma maturity schedule illustratively assumes that 50% of both 2012 and 2013 Notes are tendered and purchased
(1) Dashed box represents $1.5 billion unsecured credit facility maturing November 2012.
US$ in millions
Sources and Uses of Funds and Pro Forma Capital Structure
1
$5 $150$135 $150
$1,650
2011 2012 2013 2014 2015
Revolver Draw Senior Notes Undrawn Revolver
Senior Unsecured Notes $ 1,100 Pay Down Revolver $ 325Refinance and terminate 2015 Term Loan 450Partial tender of 2012 / 2013 Notes 275Estimated Fees & Expenses 38Other / Misc 12
Total Sources of Funds $ 1,100 Total Uses of Funds $ 1,100
Uses of FundsSources of Funds
Notes20
Notes
21June 2011
Summary - Investment Highlights
#1 U.S. aggregates company by production, reserves and revenue Approximately 14.7 billion tons of reserves, or 50 years at peak volumes, in strategic locationsShipped an average of 211 million tons of aggregates (Pro Forma for Florida Rock) annually over the last five years
Broad and diversified geographic footprintStrong presence in states with greatest growth profiles
78% of U.S. population growth by 2020 expected in Vulcan-served statesStrong base of demand from public sector construction
U.S. infrastructure needs will continue to drive core businessSustained level of demand from less cyclical public highway spending
Operating leverage in the economic cycleWell positioned for cyclical recovery with opportunity to grow earnings significantlyIncremental aggregates margin estimated at 60% of incremental revenueCurrent cash earnings per ton 25%+ higher than peak of demand in 2005Average EBITDA (Pro Forma for Florida Rock) in 2006 and 2007 of $1.3 billion vs. 2010 EBITDA of $370 million
Leverage-neutral financing priced June 3, 2011Addresses near-term refinancing needs and increases financial flexibilityTerms out maturities
Investor Handout | September 29, 2010
Supplemental Information Follows
22
Notes23
June 2011
$812
$886
$548
$371
($46)
($25)
($21)
($43)
+$28
($70)
( $334)
($74)
+$70
2008
Gain on Divestitures
2008 w/o Gain
Aggr Volume
All Other Operating
2009
IDOT Legal Settlement
Aggr Volume
Aggr Price
Aggr Cost / Other
Concrete / Asphalt
All Other Operating
2010
Other 2010 Notes:On a comparable basis,full year SAG was $4 million lower
Diesel fuel and liquid asphalt lowered earnings $51 million
Appendix - Company Financial Results - 2010
Notes
24June 2011
Dec 2002 – Dec 2006
Note: Scales for charts are for different ranges. 1982, 1991 and 2002 represent trough years of industry volumes. Source: Bloomberg
Dec 1991 – Dec 1995Dec 1982 – Dec 1986
80%
100%
120%
140%
160%
180%
200%
220%
240%
1982 1983 1984 1985 1986
Inde
xed Pr
ice
130.6%
72.2%
Vulcan Materials S&P 500 Index
90%
100%
110%
120%
130%
140%
150%
160%
170%
1991 1992 1993 1994 1995
Inde
xed
Price
60.1%
47.7%
70%
100%
130%
160%
190%
220%
250%
2002 2003 2004 2005 2006
Inde
xed
Price
139.7%
61.2%
Appendix - Stock Performance During Last Three Recoveries
Notes25
June 2011
Note: Capital Spending excludes acquisitionsSource: Company data
$0
$100
$200
$300
$400
$500
$600
2011E20102009200820072006200520042003200220012000
EnvironmentalProfit AddingReplacement
35% of the capital invested in high growth strategic projects in CA, TX, FL, GA, VA and the Gulf Coast.
Investment objectives:• add reserves• increase production capacity• lower costs
Appendix – Annual Capital Spending ($ Millions)Driven by level of demand and strategic project opportunities
Notes
26June 2011
As of December 2010. Nearly-Same Store = Sources of shipments in current period and prior year period are comparable.
Appendix - Aggregates Shipments Last 5 Construction Cycles
Vulcan Nearly-Same Store Aggregates Shipments(Year-over-Year % Change in Trailing 4 Quarters)
-30%
-20%
-10%
0%
10%
20%
30%
-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
'72-'78 '78-'84 '88-'94 '00-'06 '06-'10
Troughs
Quarters to Trough Quarters from Trough
Notes27
June 2011
Source: Company estimates.
Highways
Examples: Highways, streets and bridgesDemand Drivers: Federal and State FundingAggregates Intensity: High(per dollar of construction spending)
Non-Highway Infrastructure
Examples: Sewer, Water Supply and UtilitiesDemand Drivers: State and local funding, populationAggregates Intensity: Medium(per dollar of construction spending)
Residential
Examples: Single-family homesDemand Drivers: Employment, interest rates, populationAggregates Intensity: Low(per dollar of construction spending)
Non-Residential Buildings
Examples: Stores, Office, Warehouse, Institutional, GovernmentDemand Drivers: Employment, income, interest rates, vacancy ratesAggregates Intensity: Medium/Low(per dollar of construction spending)
Appendix – Characteristics of the Major End Uses
Notes
28June 2011
Appendix – Sources of State Funding for HighwaysMost Vulcan-served states have dedicated sources of funding for highway construction
Notes29
June 2011
Trailing Twelve Months of U.S. Contract Awards (Millions $)
Public Only. March 2011. Sources: McGraw-Hill and Company estimates.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
September 1997ISTEA Expires
August 2005SAFETEA-LU becomes law$286bn for highways and transit
June 1998TEA-21 becomes law$218bn for highways and transit
September 2003TEA-21 Expires
Feb 2009 American Recovery and Reinvestment Act
September 2009SAFETEA-LU Expires
December 1991ISTEA becomes law
Appendix – Federal Highway Funding
Notes
30June 2011
FHWA Highway Statistics 2007 and 2008. State Sources of Funding Table SF-1, Local Sources of Funding Table LGF-21
Note: Sources of Revenue includes all receipt categories used for highway related disbursements, including capital outlay, administration, debt service and others. Excludes Federal Funds provided to states for Federal-Aid projects.
Sources of Highway Capital Spending
FHWA Highway Statistics 2007, Table HF-10
Sources of Revenue Used for Highways
General Funds and Other Taxes,
27%
Highway User Fees42%
Prop. Taxes 6%
Other 12%
Bonds 13%
State & LocalState38%
Federal37%
Local25%
Appendix - Sources of Funding for HighwaysHighway-based user fees play an important role in funding non-federally qualified projects
Notes31
June 2011
Note: Growth Rate calculated as growth rate of trend line. Nominal prices deflated by PPI for Industrial Commodities. Sources: Company estimates and *PPI for Aggregates as reported by Bureau of Labor Statistics.
Appendix - Aggregates Pricing
Aggregates Pricing - CAGR
5.5% 1.4% 3.8% 1.2%6.6% 2.5% 4.5% 1.9%
Nominal Real Nominal Real
Industry * VMC
2000 to 2010 1990 to 2010
Notes
32June 2011
Note: Growth Rate calculated as growth rate of trend line. Nominal prices deflated by PPI for Industrial Commodities. Sources: Company estimates and *PPI for Asphalt as reported by Bureau of Labor Statistics.
Appendix - Asphalt Pricing
Asphalt Mix Pricing - CAGR
9.0% 4.7% 5.4% 3.5%10.2% 5.9% 5.9% 3.3%
Nominal Real Nominal Real
Industry * VMC
2000 to 2010 1990 to 2010
Notes33
June 2011
Note: Growth Rate calculated as growth rate of trend line. Nominal prices deflated by PPI for Industrial Commodities. Sources: Company estimates and *PPI for Ready-Mixed Concrete as reported by Bureau of Labor Statistics.
Appendix - Ready-Mixed Concrete Pricing
2000 to 2010 1990 to 2010
Ready-Mixed Concrete Pricing - CAGR
4.9% 0.8% 3.5% 1.1%5.2% 2.5% 5.5% 2.9%
Nominal Real Nominal Real
Industry * VMC
Notes
34June 2011
USGS and Company Estimates. VMC Top 10 Revenue States in 2009
Appendix - Historical Recoveries After Construction Downturn
Comparison of Historical Trend in Aggregates Demand
0
50
100
150
200
250
1970 1978 1986 1994 2002 2010
U.S. Market VMC Top 10 States
USGS and Company Estimates.VMC Top 10 States in Sales for 2010
Key Vulcan-served states have historically exhibited stronger growth in demand
Notes35
June 2011
Demographic Data Sources: Woods & Poole Economics CEDDS 2010 and Moody’s Economy.com
Appendix - Demographic Growth
U.S. Demographic Growth, 2010 to 2020 by State
Rank StateShare of Growth State
Share of Growth State
Share of Growth
1 Texas 15% Florida 13% Texas 14%2 California 14% Texas 13% Florida 11%3 Florida 13% California 12% California 9%4 Georgia 7% Arizona 6% New York 5%5 Arizona 6% Georgia 6% Georgia 5%6 North Carolina 6% North Carolina 5% North Carolina 4%7 Nevada 3% Washington 3% Arizona 4%8 Virginia 3% Virginia 3% Virginia 3%9 Washington 2% Colorado 2% Pennsylvania 3%
10 Colorado 2% Nevada 2% Washington 3%Top 10 Subtotal 71% 65% 61%
Vulcan-served States 78% 75% 69%Source: Moody's Economy.comNote: Vulcan-served states shown in bolded, blue text.
Population EmploymentHouseholds
Solid presence in states with most favorable growth profile
Notes
36June 2011
9.5
9,900 9,900 10,200
??
Appendix - Context for Future Aggregates DemandOnly 3% growth in number of quarries during the 26 years leading up to most recent demand peak
Notes37
June 2011Note: Includes Aggregates, Asphalt, Concrete and Cement Operations
Appendix - Growth Through Acquisitions
End of 1990CalMat - 1999Tarmac - 2000ICA Joint Venture - 2001New West Materials - 2005Florida Rock Industries - 2007Other Acquisitions & Greenfields
Acquisitions contribute to growth and regional diversification
Notes
38June 2011
Geologic Fall Line
Note: Blue shaded area denotes little or no aggregates suitable for mining. Some remote distribution movements not shown with an arrow for clarity
Appendix - Remote-Served Aggregates MarketsComprehensive distribution network to serve markets with limited minable aggregates
Notes39
June 2011
Over 6,000 acres of land owned
In early 2006, more than $60 million was approved to increase our production capacity from 9 million tons to 12 million tons annually and increase our shipping capacity by 3 million tons. The project was completed mid-2007.
Appendix - Remote-Served Aggregates MarketsCapacity to serve the U.S. Gulf Coast which has limited minable aggregates suitable for construction
Notes
40June 2011
ESTIMATED DEMANDThese 12 markets account
for 80% of Florida’s consumption of aggregates
Share of Domestic Hard Rock Production
Note: Estimated aggregates demand as of December 2010. Includes Stone, Sand and Lime-rock materials
Appendix - Florida Aggregates MarketFlorida-based aggregates is characterized by a shortage of hard rock reserves
Notes41
June 2011
Appendix - Land ManagementAfter minable reserves are depleted, residual land can be a valuable asset
Notes
42June 2011
Appendix - Reconciliation of Non-GAAP Measures
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. We adjusted EBITDA in 2008 to exclude the noncash charge for goodwill impairment. Cash earnings adjusts segment Gross Profit for depreciation, depletion, accretion and amortization. These financial metrics are often used by the investing community as an indicator of a company’s ability to incur and service debt. Generally Accepted Accounting Principles (GAAP) does not define “EBITDA” and “cash earnings”. Thus, they should not be considered as an alternative to operating earnings or any other liquidity or performance 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. We use EBITDA and cash earnings 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.Note: DDAA stands for Depreciation, Depletion and Amortization.
in thousands
2010 2009 2008 2007 2006 2005Gross Profit 320,200$ 393,300$ 657,600$ 828,700$ 819,000$ 650,000$ DDAA 293,000 312,200 310,800 246,900 210,300 206,400 Cash Earnings 613,200$ 705,500$ 968,400$ 1,075,600$ 1,029,300$ 856,400$
Tons 147,593 150,900 204,300 231,000 255,400 259,500
in thousands
2010 2009 2008 2007 2006Net cash provided by operating activities 202,706$ 453,036$ 435,184$ 708,144$ 579,349$ Changes in operating assets and liabilities (19,938) (90,276) (167,495) (29,649) 82,414 Other net operating items (providing) using cash 102,835 62,166 122,289 43,890 34,803 (Earnings) loss on discontinued operations, net of tax (6,053) (11,666) 2,449 12,177 9,964 (Benefit from) provision for income taxes (89,663) (37,869) 71,692 204,415 223,313 Interest expense, net 180,740 172,980 169,687 41,593 20,139 EBITDA 370,627$ 548,371$ 633,806$ 980,570$ 949,982$ Goodwill impairment - - 252,664 - - Adjusted EBITDA 370,627$ 548,371$ 886,470$ 980,570$ 949,982$
in thousands
2010 2009 2008 2007 2006Net earnings (loss) (96,490)$ 30,314$ 918$ 450,910$ 470,214$ (Benefit from) provision for income taxes (89,663) (37,869) 71,692 204,415 223,313 Interest expense, net 180,740 172,980 169,687 41,593 20,139 (Earnings) loss on discontinued operations, net of tax (6,053) (11,666) 2,449 12,177 9,964 Depreciation, depletion, accretion and amortization 382,093 394,612 389,060 271,475 226,352 EBITDA 370,627$ 548,371$ 633,806$ 980,570$ 949,982$ Goodwill impairment - - 252,664 - - Adjusted EBITDA 370,627$ 548,371$ 886,470$ 980,570$ 949,982$
Reconciliation of Earnings to Cash Earnings per Ton of Aggregates
Reconciliation of Net Cash Provided by Operating Activities to EBITDA
Reconciliation of Net Earnings (Loss) to EBITDA
Notes43
June 2011
Important Disclosure Notes to Presentation
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: 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 highway projects without a reliable method of federal funding; the impact of the global 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 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; 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.
Corporate Headquarters:Vulcan Materials Company1200 Urban Center DriveBirmingham, AL 35242
Telephone: (205) 298-3000
Investor Relations:Mark D. Warren
Telephone: (205) 298-3191Email: [email protected]
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)
E-mail: [email protected]: bnymellon.com/shareowner/isd
Independent Auditors:Deloitte & Touche, LLPBirmingham, Alabama
Registrar and Transfer Listing:The Bank of New York Mellon Corporation
Pittsburgh, Pennsylvania
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