Martin Marietta Materials, Inc.

Transcription

1 Doswell Quarry, VA Martin Marietta Materials, Inc. Investor Presentation January 14, 2010

2 The Martin Marietta Materials Story 2 Our company Our The strengths The performance Our performance & outlook Future Our growth

3 At a Glance 3 Leading producer of construction aggregates 289 quarries & distribution yards Operate in 27 states, Bahamas and Nova Scotia Producer of magnesia-based chemicals and dolomitic lime Market cap: $4.3 billion 2008 net sales: $1.9 billion NYSE: MLM Recognitions Ranked #1 World s Most Admired Company for Building Materials Industry by Fortune Magazine Only company in industry selected to the Information Week 500 for 8th year in a row

4 4 Aggregates The Foundation of America Aggregates Stone Sand Gravel Applications Roadbase Concrete Asphalt End Uses Highways/Roads & Bridges Buildings Rail Agriculture

5 Strength in Numbers 5 Reserves (tons) Intrinsic value of reserves Years of production available Number of acquisitions in last 15 years 3.. Aggregates facilities B $9.7 B MLM Form 10-K for Year Ended December 31, Assumptions for Intrinsic Value: Owned reserves 57% / Leased reserves 43% as disclosed in MLM Form 10K for Year Ended December 31, Value of $1/ton for owned reserves and $0.40/ton for leased reserves. Value is highly dependent on specific quarry location. 3 MLM historical SEC filings through Form 10Q for Quarter Ended September MLM Form 10Q for Quarter Ended September 30, 2009

6 Well-Positioned in the Industry 6 Net Sales by Product Line Specialty Products % of Aggregates Product Line Shipments 9% Residential 9% Other 10% Aggregates 86% Commercial 31% Infrastructure 50% Asphalt Ready Mixed Concrete Road Paving Source: MLM Form 10K for year ended December 31, 2008

7 The Martin Marietta Materials Story 7 Our company Our The strengths The performance Our performance & outlook Future Our growth

8 Building On Our Strengths 8 1. Attractive Industry Fundamentals 2. Superior Locations 3. Pure Play Aggregates 4. Leading Distribution Network 5. Financial Strength

9 1. Attractive Industry Fundamentals 9 Significant barriers to entry Quantity and quality of resources Location Strict regulatory requirements Limit new quarry openings No cost-effective substitute for aggregates High importance product, but low % of total costs Industry consolidation/scarcity Improved pricing discipline

10 10 2. Superior Locations 73% of Net Sales in High-Growth States Biggest decrease: -98, to 2009 Migration Pattern Net Loss Net Gain -250,000-50, , ,000 Net change in number of people migrating Biggest increase: +143,423 Source: Wall Street Journal dated December 24, 2009

11 11 3. Pure Play Aggregates Uniquely Positioned vs. Peers Pure Aggregates Product Focus Privately-Owned Competitors VMC Integrated Competitors 1 Vertically Integrated Local U.S. Footprint National Nearest competitor (VMC) has 65% aggregates product mix 1 Integrated competitors include: CEMEX, CRH, Heidelberg, Holcim & LaFarge

12 4. Leading Distribution Network - Rail 12 Guernsey Granite Canyon Fort Dodge Sioux City Denver Oklahoma City Snyder Lubbock Dallas North Troy/ Mill Creek Hatton Hugo Broken Bow Black Rock Jones Mill Memphis Shreveport Canton Fredonia Lemon Springs Doswell Hampton Maylene/ Atlanta Columbia Wilmington Alabaster/ Camak Warrenton O Neal Junction Augusta City Ruby Savannah Shorter New Braunfels Beckmann Garwood Houston Gautier/Mobile/ Pensacola Dothan Jacksonville Orlando Laredo Corpus Christi Tampa MLM quarries shipping by rail

13 4. Leading Distribution Network - Water 13 Nova Scotia Kaskaskia Three Rivers Baltimore Beaumont Lake Charles Mobile/ Pensacola Tampa/ Pt. Manatee MLM quarries shipping by water Savannah Charleston Jacksonville Cape Canaveral Bahamas Morehead City Bermuda Major Foreign Shipments To From Aruba Bahamas Canadian Maritimes Nova Scotia Caribbean Bahamas Trinidad Bahamas & Nova Scotia

14 14 4. Leading Distribution Network Superior to Peers Martin Marietta Materials Vulcan Materials Company Rail 19% Water 11% Rail & Water 16% Truck 70% Truck 84% 30% of tonnage moved by low-cost transportation modes 16% of tonnage moved by low-cost transportation modes Source: MLM and Vulcan Forms 10K for year ended December 31, 2008

15 15 5. Financial Strength Strong Balance Sheet & Free Cash Flow Strong Balance Sheet 1 (September 30, 2009) Excellent liquidity $194 M cash $423 M available borrowings Maintain investment grade credit rating $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Free Cash Flow 2 * Cash Flow CAPEX Free Cash Flow Sources: 1 MLM Form 10Q for Quarter Ended September 30, MLM historical SEC filings * Free cash flow is defined as cash flow provided by operating activities plus proceeds from divestitures, less capital expenditures.

16 The Martin Marietta Materials Story 16 Our company Our The strengths The performance Our performance & outlook Future Our growth

17 17 Performance Remains Resilient Despite Economic Headwinds Despite declining net sales MLM remains solidly profitable $1.96 Net Sales ($B) $6.06 $1.86 $1.17 Diluted EPS ($) $4.20 $ YTD 9/30/ YTD 9/30/09 Source: MLM Form 10Q for Quarter Ended September 30, 2009 and MLM Form 10K for Year Ended December 31, 2008

18 Disciplined Cost Control 18 Headcount Reduction 6,400 5,600 4, YTD 9/30/09 Hourly Salary Note: Headcount equal to average number of employees For 9 months ended 9/30/09: COS reduced in every significant cost category OT hours down significantly SG&A Decreased $10.6 M compared with prior-year period Includes absorbing $4.8 M increase in pension expense For 5-year period ended 12/31/08: Earnings from operations per average number of employees up 105%

19 A Profitable Specialty Products Business 19 9% of 2008 consolidated sales and operating profits 2008 Net Sales by Product Line Stone 2% 1% Other Operating Margin excluding freight and delivery revenues 23% 17% Lime 28% Chemical Products 69% Sources: 2008: MLM Form 10K for Year Ended December 31, E: Management s estimate E

20 The Martin Marietta Materials Story 20 Our company Our The strengths The performance Our performance & outlook Future Our growth

21 Key Growth Drivers Infrastructure spending 2. Economic recovery 3. Pricing momentum 4. Operating leverage

22 1. Infrastructure Spending Stimulus Short Term Impact 22 American Recovery & Reinvestment Act (ARRA) Energy Other Health Care Protecting the Vulnerable Education & Training $787 B Tax Relief $27.5 B for highways & bridges $9.3 B for rail transportation $8.4 B for public transit $4.6 B to Army Corps of Engineers Infrastructure & Science State & Local Relief MLM s top 5 states account for 21% of total apportioned ARRA highway funds

23 23 1. Infrastructure Spending Upgrade of Nation s Infrastructure a Key Driver for Long-Term U.S. infrastructure = Grade D 5 year investment need of $2.2 trillion to bring U.S. infrastructure to a good condition 33% of major roads are in poor or mediocre condition Over 26% of bridges are structurally deficient or functionally obsolete Source: American Society of Civil Engineers 2009 Report Card for America s Infrastructure

24 $ Billions Economic Recovery Construction Spending Set to Recover $450 $400 U.S. Construction Spend Infrastructure Commercial Residential $350 $300 $250 $200 $150 $100 $50 $0 + 8% + 30% - 5% E 2010F Source: Dodge

25 25 3. Pricing Momentum Impressive Pricing Momentum Clearly Demonstrated During Periods of Declining Volumes Despite a decline in volume of 39% Tons (in millions) Pricing continues to increase Price Increases % 13.5% 10.4% 8.1% 6.9% 2% - 3% E Sources: : MLM historical SEC filings 2009E: Management s estimate E Selling price is established locally at the point of sale and is subject to competitive and other factors at each locality. ASP increases reflect the average of the Corporation s selling price across all markets, some of which may have already been implemented. Local prices can vary significantly from this average.

26 4. Operating Leverage Powerful Upside Leverage to Volume Increases 26 Every $1 in additional net sales Adds $0.60 to gross profit* If volume recovers by only 50% Should deliver RECORD profitability * Represents management s estimate of incremental gross profit to be achieved over the course of the business cycle and is dependent upon other factors, that may or may not materialize.

27 27 Looking Ahead Operating Margin Set to Expand Goal: 1,000 bps improvement vs % 32% Key Drivers: Lean cost structure 12% Volume recovery Pricing Base 2013 Goal* * Represents management s estimate of operating margin to be achieved over the course of the business cycle and is dependent upon other factors, that may or may not materialize.

28 28 Committed to Delivery Industry-Leading Returns to Shareholders 150% MLM VMC S&P 500 S&P 500 Materials 150% 125% 100% 75% 77% 50% 25% 0% -25% -50% -6% -10% 1 Year 3 Year 5 Year 10 Year Total return inclusive of dividends as of December 31, 2009

29 Why Invest in Martin Marietta Materials 29 Uniquely positioned in an attractive industry Pure play Best locations and distribution network Pricing momentum Consistent and disciplined performance record Cost management Financial strength Highly leveraged for volume recovery Stimulus Infrastructure spend Economic recovery

30 Forward Looking Statements 30 The document attached represents one part of a presentation being made. It is not a complete record of the presentation because it does not reflect the lengthy oral comments which will be part of the presentation. This document is not intended to be a substitute for the Corporation s Form 10-K or other SEC filings. Further, while management may make presentations from time to time, please understand that the corporation does not undertake any obligation to update any information contained in these materials. Finally, some of the statements in this presentation are forward-looking in nature. Any forward-looking statements are, by their nature, uncertain and dependent upon numerous contingencies, including the accuracy of the assumptions underlying the statements, which could cause actual results and events to differ materially from those indicated in such forward-looking statements. See the risk factors listed in the Corporation s current annual report and Forms 10-K, 10-Q and 8-K reports filed with the Securities and Exchange Commission. Other factors besides those may also adversely affect the Corporation and may be material to the Corporation. If you have any questions or comments, please contact us directly at Thank you.

31 Contact Information Corporate Headquarters: Martin Marietta Materials, Inc Wycliff Road Raleigh, NC Investor Relations: Website: