Presentation by David Clarke, CEO Rinker Materials Melbourne 16 July 2002

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Transcription:

Presentation by Dav, CEO Rinker Materials Melbourne 16 July 2002 Dav July 2002 1

BUSINESS PROFILE Existing With Kiewit Concrete, concrete block, aggregates, asphalt, cement, concrete pipe, metal & polyethylene pipe, prestress & precast concrete products, wallboard and other building material distribution 305 operating sites in 28 states 56mt aggregate, 48 quarries and sand operations 8.4m cu yds pre- mix concrete, 89 plants 630kt asphalt, 5 plants 3.7m tons of cement from 2 manufacturing plants and 2 import terminals and other domestic purchases 130m concrete block, 23 plants 3.6mt concrete pipe, 54 plants 500kt prestress/precast products from 16 plants 450m sq.ft wallboard from 28 outlets Employees 8,667 in March 02 Sales Revenue YEM 02 $2,104m EBITDA YEM 02 $459m Concrete, concrete block, aggregates, asphalt, cement, concrete pipe, metal & polyethylene pipe, prestress & precast concrete products, wallboard and other building material distribution 381 operating sites in 31 states 84mt aggregate, 92 quarries, sand and aggregate operations 13m cu yds pre- mix concrete, 149 plants 4mt asphalt, 21 plants 3.7m tons of cement from 2 manufacturing plants and 2 import terminals and other domestic purchases 130m concrete block, 23 plants 3.6mt concrete pipe, 54 plants 500kt prestress/precast products from 16 plants 450m sq.ft wallboard from 28 outlets Employees 10,857 Sales Revenue YEM 02 $2,613m EBITDA YEM 02 $540m 2

CURRENT RINKER FACILITIES Orland Napa Fresno * OR Everett Seattle Fernley Reno Los Angeles Colton Las Vegas CA WA NV (Block/Bldg.Mat.) Las Vegas Pipe Pipe & Concrete Products ID Phoenix UT AZ Quarries & Sand Plants (out of Florida) Distribution (out of Florida) Ready-mix (out of Florida) PolyPipe * MT WY Albuquerque Bernalillo (Block) Denver CO NM El Paso * Kimball Roaring * Springs ND SD NE Grand Island Gainesville San Antonio KS Oklahoma City * TX Omaha Tulsa OK Dallas / Ft. Worth Houston Bay Concrete Baytown Sealy MN Paris IA Buffalo Washington Riverside Marshall Kansas City Alexandria LA WI AR IL MO MS * TN New Orleans Ft. Wayne Lafayette (Block) Indianapolis IN MI Cleveland Columbus Dayton OH KY Hartford Bardstown Henderson Bowling Green Tri-cities Nashville AL Knoxville * * Sandersville Augusta Atlanta VA Columbia SC PA NC Charleston Deerfield Macon Montgomery GA Union Sand Pittsburgh Ft Myers Thomasville Charlotte Jacksonville Orlando FL Frederick Miami MD Wilson Farmington Myrtle Beach Middeltown Florida Westfield 3 ME Leeds Raymond Wauregan Cement Plants - 2 Cement Terminals - 2 Quarries/Sand Plants - 13 Ready-mix Plants - 67 Block Plants - 22 Bldg.Mat.Dist. Centers - Pipe & Concrete Product Tennessee Quarries - 8 Readymix Plants - 7

FLORIDA QUARRIES & CEMENT OPERATIONS Baymeadows Cement Plant Cement Terminal Quarry Sand Mine Aggregate Terminal Railroad Center Hill Brooksville St. Catherines Pt. Canaveral Tulley City Point 474 Joshua Davenport Lake Wales Palmdale West Palm Beach Pt. Everglades Alico Road Miami FEC Rinker Lake SCL Krome 4

FLORIDA MATERIALS OPERATIONS Tallahassee Eastport Marietta Jacksonville Dierco Tallyrand Mfg. Orange Park Pensacola Pensacola Dierco Ft. Walton Panama City Gainesville Baymeadows Oldsmar Tampa/Dierco Lecanto Ocala Bushnell Lockhart L. Buena Vista Kennedy Hudson Odessa Tampa Riverview Palmetto DeLand Lady Lake Leesburg Sanford Contractors So. Orange Supply Kissimmee Lakeland Plant City W.Park Bunnell Ormond Beach Orlando/ Dierco East Orlando Daytona New Smyrna Titusville Cocoa Melbourne Palm Bay Vero Beach West Ft. Pierce East Ft. Pierce Stuart Readymix & Block Plant Readymix Block Plant Distribution Sarasota Cape Coral Ft.Myers Ft.Myers- Dierco Bonita Springs Naples Indiantown Jupiter Lake Park Riviera Mfg. Cen-Con West Palm Beach Lake Worth Belle Glade Delray W. Boca Boca Raton No.Laud. Pompano P.Pines Ft.Laud Sunrise S.Lauderdale Miramar Dierco Hollywood Pennsuco Medley North Miami Sweetwater LeJeune Krome CSRA International Downtown Miami Princeton South Miami Dav July 2002 5

KIEWIT FACILITIES WA WY NE CA UT AZ NM Quarries Integrated aggregates, concrete & asphalt operations 6

KIEWIT ARIZONA FACILITIES UNITED METRO MATERIALS 7

BUSINESS REVENUE EXISTING WITH KIEWIT Other 15% Arizona 15% Tennesse 3% Texas 5% Nevada 5% Northwest 4% Midwest 10% Georgia 3% Florida 55% Other 14% Tennesse 2% Texas 4% Nevada 4% Northwest 5% Midwest 8% Georgia 2% Florida 45% 8

OUR MARKETS Rinker Residential Non-Building 29% 40% 31% Non-Residential We don t expect any change with the successful acquisition of Kiewit 9

THE ELEMENTS OF RINKER S STRATEGY Supply materials for the building and construction industry in North America, with a particular focus on heavy building materials. Strategic drivers: < Number 1 or 2 in all markets < Overall cost leadership < Growth predominantly through acquisition < Talented people < High performance ethic < A safe workplace 10

APPROACH TO GROWTH Acquisitions must deliver #1 or #2 market position (or be the first step in a clearly deliverable plan to achieve), where market structure is attractive, or can be made attractive, and/or where population growth exceeds national averages Quarries first approach to new regions Integrated construction material systems acceptable on a region-by-region approach, but against a short cement capacity strategy Ready-mix only if integrated with Quarries and/or Cement, or if part of a backward integration strategy Asphalt in niche markets only and must be integrated with quarries. Preferably FOB or delivered sales only paving only where not the dominant activity of the business Concrete Pipe and Precast (cautious growth until recent acquisitions fully integrated and business performing satisfactorily) Gypsum supply (Wallboard Distribution) in Florida and elsewhere where we leverage off our existing business model and take advantage of our buying power 11

KIEWIT FIT TO RINKER S GROWTH STRATEGY The integrated businesses in Arizona, Portland Oregon and Northern California align very closely with Rinker s growth strategy. Elements of Rinker s Growth Strategy Grow preferably where population exceeds national averages Quarry products, the focus of growth in new regions. Integrated construction material systems comprising quarries, concrete and perhaps cement & block on a region by region basis Aggregate operations in Arizona, Portland & Northern California are sand & gravel. Lower barriers to entry enhanced by integrated nature of business. Eight hardrock quarries in five states. Kiewit Fit These states are all projecting to continue with higher than average population growth. They were among the 10 regional zones outside of Florida identified as good growth prospects for Rinker in the 1998 Strategy Review. TEA 21 allocations for 1998-2003 for California were in the top half of states. Arizona s initial increase was 60% compared with average US increase of 40%. In Arizona, Kiewit s business model is that of a strong, comprehensive and customer focused concrete & asphalt supply system where their plants are generally located on their own aggregate sites. Key components include having the best overall market coverage, strong long term customer relations, strong & stable local management who stay ahead of the competition, a sound understanding of the market & their competitors, a high level of customer service and effective support systems. Virtually all aggregate requirements sourced internally, which accounts for 50% of Kiewit s aggregate production in Arizona; 36% overall. Asphalt in niche markets, must be integrated with quarries. Construction not to be dominant. Number 1 or number 2 in each market Asphalt is an integral part of business; no paving other than a very small business in Yuma AZ Majority of aggregate requirements are sourced internally Kiewit generally fits this criteria extremely well, with strong positions in most markets Cost leadership, or opportunity to achieve leadership Well run business, but opportunity for operational cost savings. 12

ECONOMIC STATISTICS FOR KIEWIT S MARKETS (2000) Population (1999) State GDP* Real GDP Growth CAGR (1990-2000)* Forecast Population CAGR (00-05) TEA21 Allocation Increase* Aggregate Cement Consumption Consumption Per Capita* Per Capita* Key Economic Strengths Arizona 5.13M $140.1bn 6.6% 2.6% 60% 12.6 0.64 Well diversified economy that is a major center for low cost, hightech manufacturing and backoffice operations. Phoenix 3.07M $140.1bn 6.9% 2.7% 60% 12.6 0.64 Well diversified economy that is a major center for low cost, high-tech manufacturing and back-office operations. Portland 1.83M $110.0bn 6.6% 1.7% 50% 12.0 0.29 A large computer related manufacturing industry. Vallejo.54M $1,186bn 3.4% 2.1% 46% 6.4 0.37 Expanding high-tech industries as well as relatively affordable housing for the SF Bay area. Sacramento 1.22M $1,186bn 3.4% 1.9% 46% 6.4 0.37 Low cost housing and office space for Northern California. Omaha US Average.72M 281,421K $52.3bn 8.875tn 3.3% 3.2% 0.7% 0.9% 43% 12.0 9.8 0.70 0.40 Affordable living and business lots as well as a sophisticated telecommunications backbone. *Data in these columns is for the entire State. 13

KIEWIT HISTORICAL PERFORMANCE US $ Millions Fiscal Year Ending December 31 1998 1999 2000 2001 Revenues 333.1 437.1 488.1 505.2 Revenue Growth Rate 31.2% 11.7% 3.5% EBITDA* 38.0 60.1 68.8 80.8** EBITDA Margin 11.4% 13.8% 14.1% 16.0% Note: Kiewit 2000 & 2001 normalized for equity earnings of $5.6M and $0.3M in 1998 & 1999 respectively. *Includes investment income of $3.6M; $4.6M; $4.8M; $4.5M, for 98, 99, 00 and 01 **Kiewit acquisition multiple of 7.1 times excluded investment income 14

RIGOROUS INTEGRATION PLAN & PROCESS TO MINIMIZE ACQUISTION RISK Detailed plans will be completed prior to close. < To ensure delivery of synergies including: o Back office consolidation o Purchasing o Overhead rationalization and customer synergies in Las Vegas & Pacific NW o Operational costs o Working capital improvements o Pricing o High performance ethic < To give Kiewit management an expectation blue print < Detailed action plans and monthly run charts drive process. 15

CONSTRUCTION EXPENDITURE FORECASTS REMAIN RELATIVELY ROBUST USA FLORIDA ARIZONA % Change on prior year * 2002 Forecast 2002 Forecast 2002 Forecast Residential -Dodge -3.2% -1.7% -1.9% Non-Residential -Dodge -8.2% -7.1-10.8% Non-Building -Dodge 8.8% 21.4% 6.7% Total put in place -Dodge -2.6% -0.2% -3.1% * Calendar Years Source: Dodge 1 Q 2002 PIP Forecast (constant 1992 $) Dav 16

AN ANALYSIS OF YEM 02 PERFORMANCE A record year Florida very strong Sales > $2 Billion EBIT > $300 Million Florida Construction Materials Sales +10%; EBIT +18% Balance of Business Sales +4% EBIT 5% Pipe Sales +17% EBIT +11% Good performance in Nevada and Georgia Weak economy in South Central Division Washington state weak o Problem Areas: Polypipe/Rehabilitation Sales down 28% Prestress Sales down 11% Gypsum Sales down 17% Excluding Problem Areas Rinker Sales +14% (reported +7%) EBIT +18% (reported +8%) Dav 17

RINKER S COMPARITIVE PERFORMANCE IN YEM 02 Profit declines in Gypsum, Polypipe and Prestress and lower acquisition activity resulted in an average year compared to our competitors in YEM 02 Rinker Vulcan Martin Marietta Florida Rock Sales Growth +7% +10% +21% +7% EBITDA Growth +10% +15% +8% +11% EBITDA Margin Change +0.6PP +1.3PP -2.8PP +0.9PP RMC* Hanson* Sales Growth -1% +23% EBITA Growth -16% +13% EBITA Margin Change -1.2PP -1.5PP * Calendar 2001 for RMC and Hanson; Numbers represent US Business only 18

A BETTER LIKE FOR LIKE COMPARISON Excluding Gypsum, Polypipe & Prestress. Rinker Vulcan Martin Marietta Florida Rock Sales Growth +14% +10% +21% +7% EBITDA Growth +17% +15% +8% +11% EBITDA Margin Change +0.5PP +1.3PP -2.8PP +0.9PP RMC* Hanson* Sales Growth -1% +23% EBITA Growth -16% +13% EBITA Margin Change -1.2PP -1.5PP * Calendar 2001 for RMC and Hanson; Numbers represent US business only 19

STRENGTHS OF THE EXPANDED RINKER Businesses generally are in regions with historical and projected population growth rates above the national average. Most businesses are either number 1 or 2 in their market. If not, there is either a plan to get there or divest. Position in Florida and Arizona is strong as a large integrated player. Pipe and Concrete Products in 26 states; very strong in Texas and the mid-west. Benchmarking and OIP culturally well entrenched. Organization structure designed around profit centre cells. Variable remuneration linked to SVA for both the short and long terms. SAP systems provide strong platform for business management and growth. 20

CURRENT TRADING CONDITIONS Florida construction activity somewhat stronger than total US 3 MMA Contract Value* (March May) 2002 vs 2001 Residential Non Residential Streets & Highways US + 4.1% - 14.6% - 1.2% FL + 11.5% - 18.0% + 4.3% Extremely wet weather in Florida in June and early July as well as Texas in July * Sources: Dodge 21