FOUNDATION TRANSFORMATION VALUE Analyst & Investor Day On Location. May 10, 2016 Dallas, Texas

Transcription

1 FOUNDATION TRANSFORMATION VALUE Analyst & Investor Day On Location May 10, 2016 Dallas, Texas

2 Disclaimer Statement Regarding Safe Harbor for Forward-Looking Statements This presentation may contain forward-looking statements that is, information related to future, not past, events. Like other businesses, Martin Marietta is subject to risks and uncertainties which could cause its actual results to differ materially from its projections or that could cause forward-looking statements to prove incorrect, including the risks and uncertainties discussed in Martin Marietta s most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, which have been filed with the Securities and Exchange Commission and are readily available on the Internet at Except as legally required, Martin Marietta undertakes no obligation to publicly update or revise any forward-looking statements, whether resulting from new information, future developments or otherwise. Non-GAAP Financial Terms These slides contain certain non-gaap financial terms which are defined in the Appendix. Reconciliations of non-gaap terms to the closest GAAP term are also provided in the Appendix.

3 AGENDA Safety Update Foundation. Transformation. Value. Cement Division Foundation Cement Transformation Process Rock to Cement Conclusion Driving Value

4 Safety Statistics Cement Division YTD (TXI) TIIR LTIR Lost Time Incidents Reportable Incidents As of April 30, 2016

5 MARTIN MARIETTA The right people with the right assets; driving operational excellence against the right strategic plan; with a relentless focus on driving shareholder value.

6 AGENDA Safety Update Foundation. Transformation. Value. Cement Division Foundation Cement Transformation Process Rock to Cement Conclusion Driving Value

7 Cement Division Foundation People Reserves Drive Sustainable Shareholder Value Plants Permits Location

8 Cement Division Foundation Midlothian Cement Plant Select Midlothian Metrics Current Rated Clinker Permitted Clinker Capacity Owned Reserve Life Plant Headcount >2.1 mm tons >2.5 mm tons >50 years 179 people Midlothian Cement Shipments

9 Cement Division Foundation Location Texas significantly outperforming in cement consumption 1993 California 10% All Other 65% Texas 10% Florida 7% Illinois 4% Ohio 4% All Other 61% California 12% Texas 12% Florida 8% Illinois 4% Ohio 3% All Others 60% Texas 17% California 10% Florida 6% Ohio 4% Illinois 3% 76.6 million metric tons million metric tons 86.5 million metric tons Source: 2014 PCA Yearbook; annual shipments as a % of domestic Portland cement consumed.

10 AGENDA Safety Update Foundation. Transformation. Value. Cement Division Foundation Cement Transformation Process Rock to Cement Conclusion Driving Value

11 Transformational Cement Chemistry Compounds Compound Components Industry Shorthand Tricalcium silicate (CaO) 3 + SiO 2 C3S Dicalcium silicate (CaO) 2 + SiO 2 C2S Tricalcium aluminate (CaO) 3 + Al 2 O 3 C3A Tetracalcium aluminoferrite (CaO) 4 + Al 2 O 3 + Fe 2 O 3 C4AF Compound Mass % Industry Shorthand Calcium oxide, CaO 61-67% C Silicon dioxide, SiO % S Aluminum oxide, Al2O % A Ferric oxide, Fe2O3 0-6% F Sulfur Trioxide, SO % S

12 Transformational Cement Chemistry 101 Cement chemists use the oxide of an element when reporting a chemical analysis Element Calcium Oxide CaO Silica SiO 2 Aluminum Al 2 O 3 Iron Fe 2 O 3

13 Transformational Cement Production Process Cement 1 Limestone and other raw materials are quarried 4 Heat transforms the materials into pellets of clinker 2 Raw materials are ground and blended 5 Clinker is ground with gypsum into a fine gray powder to make cement 3 Raw materials are heated to 2,850 F in a kiln 6 Cement is stored and shipped via truck, rail, or water

14 Transformational Raw Vertical Roller Mill SEPARATOR DRIVE SHAFT MILL OUTLET RAR TM SEPARATOR SEPARATOR GUIDE VANES SEPARATOR ROTOR FEED CHUTE REJECTS CONE MILL BODY TIRE GRINDING ROLLER ROCKER ARM LEVER ROCKER ARM FORT GRINDING TABLE MAIN DRIVE REDUCER REJECTS SCRAPER ROLLER LOADING SYSTEM

15 Transformational Preheater Tower Pre-blended, powder-sized raw material is conveyed to the top of a 400-foot preheater tower. Preheater n As the material falls through the tower, it increases in temperature from 70 F to 1650 F. From 1100 F to 1650 F, the limestone in the blend of raw materials is subjected to calcination. Calcination CaCO 3 + heat CaO + CO 2 Limestone Calcium Oxide Carbon Dioxide Calcium Oxide (CaO) enters the kiln and Carbon Dioxide (CO2) exits the plant as stack gas.

16 Transformational Kiln Outside a kiln Inside a Kiln

17 Transformational Typical Clinker Cooler Main Functions Heat recuperation Clinker transport Clinker cooling Clinker crushing

18 Transformational Clinker Cooler Fuller Hybrid CIS/CFG Clinker Cooler 14 grates wide by 82 rows long

19 Transformational Finish Mill The last step in the production process is to grind the clinker, gypsum, limestone and other materials to produce cement Clinker (90%) Gypsum and Limestone (10%) Finish Mill Balls Cement

20 Transformational Storage and Distribution 85,000 Ton Cement Silos at Midlothian

21 Transformational Pollution Control Devices Main baghouse Alkali baghouse Sulphur scrubber RTOs (Regenerative Thermal Oxidizers) Additional dust collectors Water sprays for fugitive dust

22 Transformational Control Room at Midlothian Cement Plant

23 Transformational Cement Production Cost Profile Typical Cost Structure of Producing Cement Alternative Fuel Types Other Fixed 7% Depreciation 19% Raw Materials 9% Fuel 16% Tires Labor 14% Power 9% Part, Supplies & Service 26% Note: Actual average production costs for Midlothian and Hunter plants in Rail Ties Plant Fuels Used Wood Chips Midlothian Hunter Natural gas Coal Natural gas Coal Liquid waste Tires Wood chips Liquid waste Process Engineered Fuels (Non-recycled waste)

24 Transformational Alternative Fuels Example Whole Tires Burning on a Skewer at Midlothian

25 AGENDA Safety Update Foundation. Transformation. Value. Cement Division Foundation Cement Transformation Process Rock to Cement Conclusion Driving Value

26 Cement Division Financial Overview 2015 Cement Contribution to MLM Cement Net Sales 11% Non-Cement MLM Net Sales 89% ($ millions) 2015 Results* Volume (000s) 3,793 Net Sales $367.4 Gross Profit $107.4 Gross Margin 29.2% *2015: Results are based on external sales only and include the CA operation for 9 months of the year

27 Questions

28 FOUNDATION TRANSFORMATION VALUE Analyst & Investor Day On Location May 10, 2016 Dallas, Texas