3Q 2017 Supplemental Information for Earnings Conference Call

Transcription

1 3Q 2017 Supplemental Information for Earnings Conference Call November 2, 2017

2 I M P O R T A N T D I S C L O S U R E S F O R WA R D LO O K I N G STAT E M E N T S 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 forwardlooking 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 forwardlooking statements: those associated with general economic and business conditions; the timing and amount of federal, state and local funding for infrastructure; changes in Vulcan s effective tax rate; the increasing reliance on information technology infrastructure for Vulcan s ticketing, procurement, financial statements and other processes could adversely affect operations in the event that the infrastructure does not work as intended or experiences technical difficulties or is subjected to cyber attacks; the impact of the state of the global economy on Vulcan s businesses and financial condition and access to capital markets; changes in the level of spending for private residential and private nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions, including those relating to climate change, greenhouse gas emissions, or the definition of minerals or international trade; the outcome of pending legal proceedings; pricing of Vulcan's 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 interest rates; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental clean-up costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; modifications to the terms of the acquisition of Aggregates USA, LLC which may be required in order to satisfy approvals or conditions; business disruptions during the pendency of or following the acquisition of Aggregates USA, LLC, including diversion of management time; Vulcan's ability to manage and successfully integrate acquisitions; the potential of goodwill or long-lived asset impairment; 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. 2

3 T H I R D Q UA R T E R OV E R V I E W Aggregates shipments +1% August & September daily shipping pace up at least 7% absent Hurricane impact Aggregates pricing +3% ~100 bps negative impact from geographic and product mix Aggregates gross profit/ton* $5.20 Flat to PY despite disruptions to operations and higher diesel costs Non-aggregates gross profit Up $4 million to PY Recent acquisitions performing well SAG Down $3 million to PY In line with plan; continued area of focus * Shown on a same-store basis excluding 2017 acquisitions. 3

4 T H I R D Q UA RT E R DA I LY S H I P P I N G PACE IN L I N E W I T H E X P EC TAT I O N S E XC E P T F O R STO R M S Year-over-Year % Change in 3Q Aggregates Daily Shipments 7+% 2.5% 3.1% 3Q % July August & September August & September 'Storm Adjusted' Note: 3Q 2017 had one less shipping day than 3Q At least 1.5 million tons deferred due to hurricanes, continued impact into 4Q 4

5 AGGREG AT ES F U N DA M E N TA L S : P R I C I N G C L I M AT E R E M A I N S C O N S T R U C T I V E Aggregates Freight-Adjusted Price per Ton - TTM $13.03 $10.34 More than 60 consecutive months of sequential growth 3Q Q 2017 TTM = Trailing Twelve Months. 5

6 AGGREG AT ES F U N DA M E N TA L S : U N I T P RO F I TA B I L I T Y C O N T I N U ES TO I M P R OV E D ES P I T E LU L L I N S H I P M E N T G ROWTH $4.83 3Q Aggregates Unit Profitability $5.20 $6.45 3Q record cash gross profit per ton despite hurricanes $3.50 YoY change in: Shipments Cash gross profit per ton * 9% 12% 10% -4% 0% 3% 7% 14% 9% 1% Gross Profit per ton Cash Gross Profit per ton * Shown on a same-store basis excluding 2017 acquisitions. See Appendix for reconciliation of non-gaap measures. 6

7 M O M E N T U M H EA D E D I N TO , P R E L I M I N A RY P E RS P EC T I V E Aggregates demand* Aggregates pricing Up mid-single digits, private recovery continuing and public demand returning to growth (see next slide) Continued growth, climate remains constructive, variable by market but gains widespread Aggregates margins and flow-through Fundamentals in tact; certain 2017 cost headwinds not repeating Contributions from recent acquisitions, excluding Aggregates USA ~$35 million contribution to 2018 EBITDA Aggregates USA acquisition Expect to close 4Q 2017 * Note: Shipment growth may exceed demand growth due to, for example, fewer weather-impacted days 7

8 P R E L I M I N A RY V I E W TOWA R D S D E M A N D G ROWTH Vulcanserved markets Mid-single digit growth Private Public Continued residential recovery Nonresidential backlogs strong Growth widespread across portfolio, particular strength in CA and GA Overall public demand returning to growth after weakness in 2016 and 2017 State DOTs adjusting to new and higher levels of funding, pushing to get work out Other infrastructure to see some benefit from prior water infrastructure funding legislation VMC visibility improved Source: Company estimates. 8

9 AGGREG AT ES C YC L E A N D F U N DA M E N TA L S I N C O N T E X T Aggregates Volume Gross Profit per ton Footprint TTM million tons $4.78/ton ~350 aggregates facilities 15.5 billion tons of reserves ~4.5% compounding annual growth million tons $2.11/ton ~200 aggregates facilities 8.3 billion tons of reserves 9

10 A P P E N D I X R ECONCILIAT I O N O F N O N - G A A P M EA S U R ES Reconciliation of Non-GAAP Financial Measures Aggregates Segment Cash Gross Profit Aggregates segment cash gross profit adds back noncash charges for depreciation, depletion, accretion and amortization (DDA&A) to Aggregates segment gross profit. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. We present this metric as we believe it closely correlates to long-term shareholder value and we and the investment community use this metric to assess the operating performance of our business. Aggregates Segment Same Store Reported Q3 Q3 Q3 Q3 (in millions) Q Q Gross profit $260.5 $259.1 $261.8 $250.9 $188.0 $149.8 DDA&A Aggregates segment cash gross profit $ $ $ $ $ $ Units shipments - tons Aggregates segment cash gross profit per ton $ 6.45 $ 6.34 $ 6.40 $ 5.87 $ 5.15 $