Martin Marietta Materials, Inc. · NYSE:MLM
Martin Marietta Materials — Q2 2006 Earnings Presentation
45 slides from Martin Marietta Materials's earnings presentation, Oct 17, 2006
Slide 1: Martin Marietta Materials
Martin Marietta Materials 1
Slide 2: Key Investment Considerations
Key Investment Considerations • Great locations serving high growth areas • Scarcity of aggregate supply • Step function change in value of mineral reserves • Accumulation of key strategic assets complete • Free cash flow returned to shareholders 2
Slide 3: Our Strategy – From Plan to Execution
Our Strategy – From Plan to Execution Loading barges at Three Rivers Quarry, Kentucky 3
Slide 4: Strategy
Strategy • Assemble leading set of assets in high growth Southeast and Southwest areas • Focus on long haul transportation to build competitive advantage • Focus on best practices and information systems to drive cost performance 4
Slide 5: Asset Accumulation - 1994
Asset Accumulation - 1994 Aggregates Production and Sales 5
Slide 6: Asset Accumulation - 1995
Asset Accumulation - 1995 $159 million capital invested in acquisitions Aggregates Production and Sales Dravo and Offshore Acquisition 6
Slide 7: Asset Accumulation - 1997
Asset Accumulation - 1997 $279 million capital invested in acquisitions Aggregates Production and Sales American Aggregates Acquisition 7
Slide 8: Asset Accumulation - 1998
Asset Accumulation - 1998 $348 million capital invested in acquisitions Aggregates Production and Sales Redland Acquisition 8
Slide 9: Asset Accumulation - 2001
Asset Accumulation - 2001 $222 million capital invested in acquisitions (1) Aggregates Production and Sales Meridian Acquisition (1) Excludes initial 19% Meridian investment made in 1998 9
Slide 10: Company Profile – 2005
Company Profile – 2005 70% of 2005 net sales from Southeast/Southwest Aggregates Production and Sales 10
Slide 11: Scarcity of Aggregate Supply
Scarcity of Aggregate Supply Limestone Hard Rock Information from the Department of Interior
Slide 12: Population Movement
Population Movement NC 18% Rank – #7 TX 18% GA 8% Rank - #4 Rank – #8 FL 5% Rank – #3 Percentage of 2005 net sales Rank of percent change – population 2000 to 2030 (source: Census Bureau) 12
Slide 13: Transportation Mode
Transportation Mode 7% 10% Rail Water 16% Rail 93% 74% Truck Truck 1994 2005 (71.2 million tons) (203.2 millions tons) 13
Slide 14: Transportation Economies of Scale
Transportation Economies of Scale Transportation Mode – Cost Per Ton Mile 20 tons per truck 12 - 18 Cents / Ton Mile 100 tons per rail car 4 - 8 Cents / Ton Mile 1,800 tons per barge 1 - 2 Cents / Ton Mile 45,000 tons per ship .4 - 1.2 Cents / Ton Mile 0 50 135 500 1,000 14
Slide 15: Maturing Distribution Network – Water Markets
Maturing Distribution Network – Water Markets Prince Edward Island Nova Scotia New York City Linden Philadelphia Wilmington, DE Kaskaskia Sparrows Pt. Cave-In-Rock Three Rivers Wilmington, NC Lake Charles Mobile Pensacola Charleston Savannah Producing Locations Beaumont Brunswick Houston Panama City
Slide 16: Local Market – Louisiana
Local Market – Louisiana Sources Barge Limestone Vicksburg Offshore Limestone Offshore Granite Local Gravel Natchez Beaumont 16
Slide 17: Scarcity = Increased Pricing
Scarcity = Increased Pricing 250 11.5%-13% 13.0% 12.0% 11.0% 225 (Millions of Tons) 10.0% 8.2% 207-211 9.0% 203 8.0% 200 192 189 192 190 7.0% 6.0% 175 5.0% 3.7% 3.2% 4.0% 2.4% 3.0% 150 1.3% 2.0% 1.0% 125 0.0% 2001 2002 2003 2004 2005 2006 Tons Based on latest guidance Percent increase in ASP (1) of
Slide 18: Demand Segments
Demand Segments 2005 2006 Residential Infrastructure 20% Commercial Residential Other Infrastructure Commercial 45% 26% Other 9% Estimated percentage of 2005 shipments 18
Slide 19: Cost Reduction Initiatives
Cost Reduction Initiatives Lemon Springs Quarry 19
Slide 20: Cost Reduction Initiatives
Cost Reduction Initiatives • Excellent Best Practices Program • Increased Plant Automation • Overhead Reduction • Better Information Systems • Effective Management of Benefits Cost 20
Slide 21: Headcount Reduction
Headcount Reduction 7200 8000 6900 6400 7000 5900 5800 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 Hourly Sales per employee up 45% over five years Salary 21
Slide 22: Capital Initiatives
Capital Initiatives Bahama Rock 22
Slide 23: Growth and Efficiency Improvement
Growth and Efficiency Improvement Long Haul Network Truck Quarries Nova Scotia Berkeley (SC) Bahamas Weeping Water (NE) Beckmann (TX) Burning Springs (WV) Three Rivers (KY) Lemon Springs (NC) N. Columbia (SC) Ruby (GA) North Troy (OK) 23
Slide 24: Aggregates Financials ($M) – Quarter
Aggregates Financials ($M) Quarter Ended Percent June 30, Change 2006(1) 2005(1) Net Sales $ 482 $ 447 8% Operating Earnings $ 113 $ 98 15% Operating Margin 23.4% 22.0% (1) All amounts presented are from continuing operations. Prior period amounts have been recast for current year discontinued opera
Slide 25: Aggregates Financials ($M) – Six Months
Aggregates Financials ($M) Six Months Ended Percent June 30, Change 2006(1) 2005(1) Net Sales $ 865 $ 754 15% Operating Earnings $ 157 $ 115 36% Operating Margin 18.1% 15.3% (1) All amounts presented are from continuing operations. Prior period amounts have been recast for current year discontinued
Slide 26: Aggregates Financials ($M) – Year
Aggregates Financials ($M) Year Ended Percent December 31, Change 2005(1) 2004(1) Net Sales $1,625 $1,411 15% Operating Earnings $ 299 $ 224 34% Operating Margin 18.4% 15.8% (1) All amounts presented are from continuing operations as presented in 2005 Annual Report. 26
Slide 27: Market Overview – Industrial
Market Overview – Industrial 27
Slide 28: Market Overview - Environmental: Thioguard
Market Overview - Environmental Thioguard® 28
Slide 29: Market Overview – Rubber & Plastics
Market Overview – Rubber & Plastics 29
Slide 30: Market Overview - Other
Market Overview - Other Der ae Lf aN: A gil 1 Sy 4 om ee Be |
Slide 31: Magnesia Specialties Financials ($M) – Quarter
Magnesia Specialties Financials ($M) Quarter Ended Percent June 30, Change 2006 2005 Net Sales $ 36 $ 30 21% Operating Earnings $ 10 $ 6 56% Operating Margin 27.6% 21.4% 31
Slide 32: Magnesia Specialties Financials ($M) – Six Months
Magnesia Specialties Financials ($M) Six Months Ended Percent June 30, Change 2006 2005 Net Sales $ 73 $ 60 23% Operating Earnings $ 18 $ 11 59% Operating Margin 24.9% 19.2% 32
Slide 33: Magnesia Specialties Financials ($M) – Year
Magnesia Specialties Financials ($M) Year Ended December 31, 2005 2004 2003 Net Sales $ 123 $ 106 $ 86 Operating Earnings $ 24 $ 18 $ 6 Operating Margin 19.4% 16.6% 7.0% 33
Slide 34: Restructured Magnesia Specialties
Restructured Magnesia Specialties 2000 2005 Lime 21% Chemicals Refractories 65% 44% Chemicals 35% Lime 35% 34
Slide 35: Composites – Change in Focus
Composites – Change in Focus From To Commercial Military Truck Trailers Panel Products 35
Slide 36: Composites – Change in Focus
Composites – Change in Focus 36
Slide 37: Financial Information
Financial Information Pensacola Yard 37
Slide 38: Selected Balance Sheet Data
Selected Balance Sheet Data $1,000 90% $802 $800 $745 $718 $719 $715 $710 60% ($ Millions) $600 44% 41% 37% 34% 34% $400 32% 30% $200 152 114 69 5 $0 0% 2001 2002 2003 2004 2005 At 6/30/06 Debt Net Cash in Banks Net Debt to Capitalization (1) (1) The calculation of net debt to capitalization is avai
Slide 39: Materials Financials ($M) – Quarter
Materials Financials ($M) Quarter Ended Percent June 30, Change 2006 2005 Net Sales(1) $ 518 $ 477 8.6% Operating Earnings(1) $ 120 $ 100 19.8% Net Earnings $ 76 $ 61 23.3% Earnings per Diluted Share $ 1.63 $ 1.30 25.4% (1) Net sales and operating earnings are from continuing operations. Prior perio
Slide 40: Materials Financials ($M) – Six Months
Materials Financials ($M) Six Months Ended Percent June 30, Change 2006 2005 Net Sales(1) $ 943 $ 815 15.6% Operating Earnings(1) $ 171 $ 119 43.2% Net Earnings $ 107 $ 69 55.8% Earnings per Diluted Share $ 2.29 $ 1.44 59.0% (1) Net sales and operating earnings are from continuing operations. Prior
Slide 41: Materials Financials ($M) – Year
Materials Financials ($M) Year Ended Percent December 31, Change 2005 2004 Net Sales(1) $1,755 $1,521 15.4% Operating Earnings(1) $ 309 $ 230 34.0% Net Earnings $ 193 $ 129 49.2% Earnings per Diluted Share $ 4.08(2) $ 2.66 53.4% (1) Net sales and operating earnings are from continuing operations as
Slide 42: Cash Flow from Operations ($M)
Cash Flow from Operations ($M) Six Months Ended June 30, 2006 2005 Capital investment $ 158 $ 101 Share repurchase $ 83 $ 81 Dividends $ 21 $ 19 No plan to delever 42
Slide 43: Uses of Cash ($M)
Uses of Cash ($M) 2005 2004 Change • Pension Investment $ 15 $ 51 ($ 36) • Capital Investment $221 $163 $ 58 • Share Repurchase $176 $ 75 $101 • Dividend (15% per share increase in 9/05) $ 40 $ 37 $ 3 • Cash on Hand $ 77 $162 ($ 85) 43
Slide 44: Cash Returned to Shareholders
Cash Returned to Shareholders $216 225 200 175 In millions 150 125 $111 100 75 $49 50 $28 $20 25 Dividends 0 Share 2001 2002 2003 2004 2005 Repurchases 44
Slide 45: Disclaimer and Investor Relations Contact
The document attached represents one part of a presentation which has been or will be 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 our Form 10-K
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