2012 Earnings Highlights. Earnings Conference Call, February 14, 2013

Transcription

1 2012 Earnings Highlights Earnings 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 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; 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 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; weather and other natural phenomena; energy costs; costs of hydrocarbonbased 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 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; 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 forwardlooking statement in this document except as required by law. 2

3 2012 Summary Continued 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. 3

4 Full Year 2012 Financial Results Margin Expansion and Earnings Improvement on Flat Revenues Full Year 2012 F(U) Amounts in Millions, except EPS vs 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 EBITDA 1 $ 411 $ 352 $ 59 % Margin 17.1% 14.6% 2.5 pts EPS from Cont. Ops, diluted $ (0.42) $ (0.58) $ 0.16 Adjusted EPS 1 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. 4

5 Full Year Results for Profitability Increase in Profitability Driven by Higher Pricing and Effective Cost Control Gross Profit Margin 13.9% Adjusted EBITDA Margin 17.1% 11.8% 14.6% Aggregates Gross Profit Margin 20.4% Aggregates Cash Gross Profit per Ton $ % $ Note: Please see Non-GAAP reconciliations at the end of this presentation. Aggregates Gross Profit Margin calculated using Segment Total Revenues. 5

6 Aggregates Performance Higher Pricing and Lower Costs Are Driving Earnings Growth Full Year 2012 Change Due To: +$9 $593 $573 ($12) +$27 ($4) Note: Please see Non-GAAP reconciliations at the end of this presentation. 6

7 Aggregates Performance Unit 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. 7

8 Non-Aggregates Performance Concrete 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. 8

9 Fourth Quarter 2012 Financial Results Margin Expansion and Earnings Improvement on Flat Revenues Fourth Quarter 2012 F(U) Amounts in Millions, except EPS vs 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 EBITDA 1 $ 90 $ 95 $ (5) % Margin 15.7% 16.4% -0.7 pts EPS from Cont. Ops, diluted $ 0.03 $ (0.20) $ 0.23 Adjusted EPS 1 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. 9

10 Balance Sheet Strengthening the Balance Sheet Through Debt Reduction As of December 31 Amounts in Millions, except ratios Total Debt $ 2,677.0 $ 2,815.4 $ 2,718.3 Cash and Cash Equivalents Net Debt $ 2,401.5 $ 2,659.6 $ 2,670.8 Net Debt / Adjusted EBITDA

11 End Markets Passage of Federal Highway Bill Should Provide Stability and Predictability to Funding 11

12 End Markets Obligation 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 12

13 End Markets TIFIA 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. 13

14 End Markets Other Public Infrastructure Supported by Large Projects Through the Downturn 14

15 End Markets Private Construction Growth Bodes Well for Continued Recovery in Our Markets 15

16 End Markets Private Construction Growth Bodes Well for Continued Recovery in Our Markets 16

17 End Markets Key Vulcan-Served States Continue to Realize Significant Growth in Housing Starts Source: McGraw-Hill and Company Estimates 17

18 Full Year 2013 Outlook Commentary Earnings 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. 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 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: 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 YTD 12/31/12 YTD 12/31/11 YTD 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 Discontinued operations, net of tax (1.3) (4.5) (6.0) EBIT 58.0 (3.1) (11.5) Plus: Depr., depl., accretion and amort EBITDA Legal settlement (46.4) 40.0 Restructuring charges Exchange offer costs Gain on sale of real estate and businesses (46.8) (2.5) (65.1) (42.1) (39.5) Adjusted EBITDA YTD 12/31/12 YTD 12/31/11 EPS and Adjusted EPS As reported 0.03 (0.20) (0.42) (0.58) Legal settlement (0.22) Restructuring charges Exchange offer costs 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) Trailing 12 Months 2012 Q Q Q Aggregates Segment Cash Gross Profit Aggregates segment gross profit Agg. Depr., depl., accretion and amort Aggregates segment cash gross profit ,021.1 Aggregate tons Aggregates segment cash gross profit per ton Q Q Q Q Q Q Q Q Q Q Q Q Q Q Aggregates segment gross profit Agg. Depr., depl., accretion and amort Aggregates segment cash gross profit 1, , , , , , , Aggregates tons Aggregates segment cash gross profit per ton Q Q Q Q Q Q Q Q Q Q Source: Company filings 20