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Investor Presentation | April 2011 1
Our Strategy
Growth Profile
Industry Fundamentals
Current Construction Cycle
Earnings Leverage Opportunity
Presentation Outline
Investor Presentation | April 2011 2
Certain matters discussed in this presentation/document, 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; changes in interest rates; 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 for projects; changes in the level of spending for residential and private 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 for 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; the negative outlook on our debt rating and our increased cost of capital in the event that our debt rating is lowered under investment grade; 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 impact of the global economic recession on our business and financial condition and access to the capital markets; the potential impact of future legislation or regulations relating to climate change or green house gas emissions; 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 speak only as of the date hereof, and Vulcan assumes no obligation to publicly update such statements.
Important Disclosure Notes to Presentation
Safe Harbor Safe Harbor
Investor Presentation | April 2011 3
Aggregates FocusAttractive industry fundamentalsScale from being the largest playerQuality top-line growth converts to earnings
Leverage coast-to-coast footprintLarge, high-growth marketsStrategically located aggregates reservesDiversified regional exposure
Profitable growthTightly manage costsExecute strategic acquisitionsReinvest in high-return projects
Effective land management
Strategy
Strategic objectives lead to the ability to generate strong cashStrategic objectives lead to the ability to generate strong cash flows, even in a downturnflows, even in a downturn
2010 Net Sales by Product
67%
16%
15%
Cement
Asphalt
Concrete
Aggregates
Sales Tied to Aggregates
95%
Investor Presentation | April 2011 4
2000 Shipments Additions 2010
Vulcan’s Proven and Probable Reserves Billions of Tons
Notes: 2009 reserves include limestone reserves for cement. Source: Reports on Form 10-K and 10-Q for VMC and Company estimates
10.0(2.2)
+6.9
14.7
Supply to serve highSupply to serve high--growth markets has increased significantly in 10 yearsgrowth markets has increased significantly in 10 years
Aggregates Reserves
Investor Presentation | April 2011 5
Political Impact of Population Growth – 2000 to 2010
Population growth dramatically alters the composition of future Population growth dramatically alters the composition of future Congresses Congresses –– net gain of 6 in VMC statesnet gain of 6 in VMC states
+4+4
+2+2
+1+1+1+1
+1+1
+1+1+1+1
+1+1
(1)(1)(1)(1)
(2)(2)
(1)(1)(1)(1)
(1)(1)
(2)(2)
(1)(1)
(1)(1)
(1)(1)
Vulcan states shown in blue.
Net change in Congressional seats under reapportionment following the 2010 Census.
Investor Presentation | April 2011 6
Vulcan States 76%
Population Households Employment
Sources: Moody’s Economy.com
34%
35%36%
38%42%
36%
CA,FL,TXOther VMC-Served StatesOther States
Share of Growth
Population Growth – 2010 to 2020
78% of projected population growth in Vulcan78% of projected population growth in Vulcan--served states served states –– 42% in California, Florida and Texas42% in California, Florida and Texas
Investor Presentation | April 2011 7Price = PPI for Aggregates as reported by Bureau of Labor Statistics. 1982 = 100
U.S. Aggregates
Aggregates pricing consistently rises in all periods. No declinAggregates pricing consistently rises in all periods. No decline in any year since 1970e in any year since 1970
0%
2%
4%
6%
8%
10%
12%
14%
16%19
7019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
10
0
50
100
150
200
250
300YoY% Chg (Left axis) Price Index (Right axis)
Investor Presentation | April 2011 8Red arrows denote peak-to-trough decline in demand. Green arrows denote trough-to-peak growth in demand. Source: USGS and Company estimates.
U.S. Aggregates
Demand characterized by short, steep declines followed by sustaiDemand characterized by short, steep declines followed by sustained doublened double--digit growth perioddigit growth period
-
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)
Investor Presentation | April 2011 9December 2010. Source: McGraw-Hill and Company estimates.
U.S. Residential Construction
Residential construction activity appears to have stabilized aftResidential construction activity appears to have stabilized after a historic downturner a historic downturn
U.S. Housing StartsTrailing Twelve Months (000's of Single and Multi-Family Units)
-
500
1,000
1,500
2,000
2,500
2004 2005 2006 2007 2008 2009 2010
Peak-to-TroughDecline 73%
Investor Presentation | April 2011 10December 2010. Source: McGraw-Hill and Company estimates.
U.S. Nonresidential Construction
Private NR peaked approximately 18 months after residential. RaPrivate NR peaked approximately 18 months after residential. Rate of decline slowed in 2010te of decline slowed in 2010
U.S. NonresidentialTrailing Twelve Months (Millions of SF of Public and Private Contract Awards)
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2004 2005 2006 2007 2008 2009 2010
Peak-to-TroughDecline 75%in Private NR
PUBLIC
PRIVATE
Investor Presentation | April 2011 11December 2010. Source: McGraw-Hill and Company estimates.
U.S. Non-Highway Infrastructure Construction
Privately funded infrastructure more cyclical than publicly fundPrivately funded infrastructure more cyclical than publicly funded sewers, waterways and airportsed sewers, waterways and airports
Trailing Twelve Months of Contract Awards - Millions of $
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2004
2005
2006
2007
2008
2009
2010
Power / Utilities Sewers Runways / Waterways
Investor Presentation | April 2011 12Public Only. December 2010. Source: McGraw-Hill and Company estimates.
U.S. Highway Construction
Continued growth in contract awards driven by ARRA fundsContinued growth in contract awards driven by ARRA funds
U.S. HighwaysTrailing Twelve Months Contract Awards (Millions of $)
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2004 2005 2006 2007 2008 2009 2010
Local
State / Federal
Investor Presentation | April 2011 13
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
TennesseeWashington
WisconsinMinnesota
ArizonaAlabama
OklahomaSouth Carolina
KentuckyMassachusetts
LouisianaMarylandColoradoArkansas
IowaMississippi
KansasOregon
ConnecticutNew Mexico
NebraskaUtah
West VirginiaMontanaNevada
South DakotaIdaho
AlaskaNorth Dakota
WyomingMaine
Rhode IslandNew Hampshire
VermontHawaii
District ofDelaware
Outlays Apportioned but not Spent
As of December 31, 2010Source: 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•• 62% of funds have been spent (57% in Vulcan states)62% of funds have been spent (57% in Vulcan states)
Key Vulcan states will benefit the most from stimulusKey Vulcan states will benefit the most from stimulus--related highway projectsrelated highway projects
U.S. Highway Construction - American Recovery and Reinvestment Act (ARRA)
Investor Presentation | April 2011 14
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
Trailing Twelve Months of U.S. Contract Awards (Millions $)
December 2010. Sources: McGraw-Hill and Company estimates.
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
U.S. Highway Construction – Federal Highway Funding
End market will benefit from stimulusEnd market will benefit from stimulus--related projects and a new federal highway billrelated projects and a new federal highway bill
Investor Presentation | April 2011 15
HighwaysHighways
$-
$100
$200
$300
$400
$500
$600
TEA-21 SAFETEA-LU Next Bill?
Highways Transit/Safety Rail NIB(Billions of $)
$551 BillionPresident’s FY’12 budget proposal Feb. 14, 2011 $218 Billion $286 Billion
U.S. Highway Construction – Federal Highway Funding
PresidentPresident’’s reauthorization proposal calls for 93% increases reauthorization proposal calls for 93% increase
Note: Next Bill total for six-year period from FY 2012 to FY 2017
Investor Presentation | April 2011 16
Note: Above figures exclude Transit and the benefit of a new six-year highway bill. Totals may not foot due to rounding.
U.S. Highway Construction – Federal Highway Funding
Latest highway funding projections by Congressional Budget OfficLatest highway funding projections by Congressional Budget Office show surplus balance through FYe show surplus balance through FY’’1212
(Billions of $)Highway Trust Fund - Highway Account
2009A 2010A 2011P 2012P 2013P
Obligation Limitation - FHWA 40.7$ 41.1$ 41.1$ 41.6$ 42.2$
Cash FlowBeginning of Year Balance 10.0 8.9 20.7 15.4 4.2 Flexing - Transfer of Cash (0.9) (1.0) (1.0) (1.0) (1.0) Revenues & Interest 30.2 30.2 31.3 31.7 32.1 General Fund Transfer 7.0 14.7 - - - Outlays (37.4) (32.0) (35.6) (41.9) (44.2) End of Year Balance 8.9$ 20.7$ 15.4$ 4.2$ (8.8)$
ARRA Stimulus Spending for Highways 2.4$ 11.8$ 9.4$ 2.5$ 1.0$
Estimated Total Highway Spending 39.8$ 43.8$ 45.0$ 44.4$ 45.2$
Reflects provisions of H.R.2847, The HIRE Act, Public Law 111-147
Source: CBO Highway Trust Fund Projection, January 20, 2011
Fiscal Year Ending September 30
Investor Presentation | April 2011 17Nearly-Same Store = Sources of shipments in current period and prior year period are comparable
Aggregates Shipments - Last 5 Construction Cycles
The current cycle appears to be tracking historical recovery patThe current cycle appears to be tracking historical recovery patternsterns
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
Investor Presentation | April 2011 18
$3.30
$4.03
$4.66 $4.74 $4.68
$4.15
147,600
259,500
2005 2006 2007 2008 2009 2010
Aggregates Cash Earnings / Ton(Red Line = Volume in Thousands, Blue Bars = Cash Earnings / Ton)
Cash Earnings = Aggregates Segment Gross Profit + DDAA as reported on Form 10-K
Management Actions in the Downturn
Cash earnings per ton has improved despite weak demand Cash earnings per ton has improved despite weak demand –– 26% higher than at peak of demand26% higher than at peak of demand
Investor Presentation | April 2011 19
$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%
Comparison of Earnings Growth During the Last Three Recoveries
Rapid growth in Operating IncomeRapid growth in Operating Income
Investor Presentation | April 2011 20
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
Pric
e
60.1%
47.7%
70%
100%
130%
160%
190%
220%
250%
2002 2003 2004 2005 2006
Inde
xed
Price
139.7%
61.2%
Superior stock price performance coming out of past downturnsSuperior stock price performance coming out of past downturns
Comparison of Stock Performance During the Last Three Recoveries
Investor Presentation | April 2011 21
U.S. Infrastructure Needs willU.S. Infrastructure Needs willDrive Core BusinessDrive Core Business
Geography is Aligned Geography is Aligned for Growth for Growth
AggregatesAggregates--FocusFocus
Strong Operating Leverage as Strong Operating Leverage as Demand Recovers Demand Recovers
Key drivers of value creationKey drivers of value creation
Summary