The Industry Leaders: Outperforming The Rest In A Down Market Presented at the 45 th Annual NRMCA Business Administration Conference October 20, 2003

Review Of Changes Since The Last Survey  After several years of improved performance, 2002 saw a downturn in financial results industry-wide  However, the Industry Leaders continue to outperform their peers because they find new areas in which to sharpen their margins

Review Of Changes Since The Last Survey cont’d  While the Typical Member saw net profit fall 51% ($3.23 to $1.58 per yard), the Industry Leaders dropped only 25% ($6.20 to $4.63 per yard).  The Industry Leaders have lost their advantages in selling price, sales expenses and a variety of other areas.

Review Of Changes Since The Last Survey cont’d  As exceptional operators, they have found new areas in which to reduce costs in the face of the industry’s first downturn in a decade.  These new areas of improvement include material cost, overall delivery, and selling, general and administrative expenses to offset a more precipitous drop in selling price as compared to the Typical Member.

Areas of Performance This Year vs Last Income Statement, Dollars Per Cubic Yd Year over Year Change (%) Typical Member Industry Leaders Typical Member Industry Leaders Typical Member Industry Leaders Sales Price $66.24$70.14$67.21$ %-1.70% Material Costs $36.01$36.33$36.81$ %-0.54% Plant Costs $3.70$4.07$3.85$ %1.97% Delivery Costs $12.07$12.60$12.33$ %-6.19% Total Variable Costs $51.78$53.00$52.99$ %-1.70% Marginal Contribution $14.46$17.14$14.22$ %-3.27%

Areas of Performance This Year vs Last cont’d Income Statement, Dollars Per Cubic Yd. Continued Year over Year Change (%) Typical Member Industry Leaders Typical Member Industry Leaders Typical Member Industry Leaders Direct Costs – Plant $2.56$2.26$3.02$ %19.91% Direct Costs – Delivery $3.74$3.76$3.99$ %0.27% Operating Profit $8.16$11.13$7.21$ %-6.65% Selling Expenses $1.27$1.21$1.36$ %10.74% G & A Expenses * $4.43$4.77$4.91$ %2.10% Profit Before Taxes $3.23$6.20$1.58$ %-25.32%

Industry Leaders: 2003 Competitive Advantages Declining Statistics  Sales Price  Direct Plant Costs  Selling Expenses Improving Statistics  Plant Costs  General & Administrative Expenses New Competitive Advantages  Material Costs  Delivery Costs  Direct Delivery Costs

Industry Leaders: 2003 Declining Statistics  Sales Price  Direct Plant Costs  Selling Expenses

Declining Statistics  Sales Price  Net sales price down 1.7% for the industry leaders, but up 1.46% for the typical member.  Industry Leaders still have a pricing advantage in almost every category, albeit smaller than in  However, significant pricing advantage lost in the average sales price of ready mixed concrete, added value and misc. yard sales concrete categories. Sales Mix Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Ready Mixed Concrete $75.18$65.96$65.05$62.14$62.89$64.94 Fibers, Supers, Colors, etc. $1.84$2.04$1.78$2.58$2.32$1.65 Misc. Yard Sales $2.75$1.38$1.75$0.97$1.04$1.73

Declining Statistics, cont’d  Direct Plant Costs  Industry leaders still hold advantage in total direct plant costs.  However, Direct Plant Cost rose 19.91% in 2003 for the Industry Leaders compared to only 17.73% for the Typical Member.  The Leaders lost an advantage of $0.24 per yard in 2003 from an increase in plant and equipment leases. Direct Plant Costs Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Plant & Support Equipment Leases $0.20$0.37$0.32$0.24$0.26$0.41

Declining Statistics, cont’d  Selling Expenses  Industry leaders still hold advantage in total selling expenses.  However, Selling Expenses rose $0.13 per yard in 2002 for the Industry Leaders compared to only $0.09 per yard for the Typical Member.  Significant pricing advantage lost in Fringes, Marketing and T&E expenses. Selling Expenses Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Fringes$0.20$0.20$0.18$0.17$0.17$0.21 Auto Expenses, Travel & Entertainment $0.26$0.21$0.23$0.19$0.19$0.22 Advertising & Marketing Expenses $0.31$0.18$0.19$0.09$0.11$0.13

Industry Leaders: 2003 Improving Competitive Advantages  Variable Plant Costs  General & Administrative Expenses

Improving Statistics  Variable Plant Costs  Total Plant Costs for the Industry Leaders have increased from $4.07 to $4.15 over Over the same period, total plant costs for the Typical Member has increased from $3.70 to $3.85.  While the Typical Member retains the overall advantage in this category, Industry Leaders have reduced the gap $0.07 per yard in Plant Costs Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Power$0.53$0.54$0.46$0.43$0.44$0.37 Repairs & Maintenance $1.08$1.10$1.05$0.96$0.98$0.85

Improving Statistics, cont’d  General & Administration Expenses  Total G&A Expenses for the Industry Leaders has increased $0.30 per yard over For the same period, G&A Expenses for the Typical Member has increased $0.37 per yard.  While the Typical Member retains the overall advantage in this category, Industry Leaders have reduced the gap $0.07 per yard in Direct Plant Costs Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Office Salaries & Wages $1.76$0.84$1.22$0.80$0.86$0.75 Legal & Prof. Expenses $0.51$0.25$0.35$0.16$0.19$0.16 Bad Debts $0.31$0.20$0.19$0.13$0.15$0.13

Industry Leaders: 2003 New Competitive Advantages  Material Costs  Delivery Costs  Direct Delivery Costs

New Advantages  Material Costs  Total material costs are down 0.52% ($0.19 per yard) for the industry leaders, but up 2.22% ($0.80 per yard) for the typical member.  Industry Leaders have developed a $0.67 per yard cost advantage in material costs over Typical Members. Material Costs Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Cement$20.86$18.69$18.03$17.24$17.47$16.83 Slag$0.52$0.76$0.59$0.86$0.81$0.67 Miscellaneous Material Costs $1.10$0.59$0.50$0.94$0.87$0.56

New Advantages cont’d  Variable Delivery Costs  In 2002, Variable delivery costs are down 6.7% ($0.78 per yard) for the industry leaders, but are up 2.15% ($0.26 per yard) for the typical member.  Industry Leaders have developed a $0.51 per yard cost advantage within the delivery cost category. Variable Delivery Costs Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Driver Wages $7.18$6.38$6.34$6.04$6.13$5.78 Repairs & Maintenance $2.69$2.33$2.24$2.10$2.15$2.01 Other Delivery Costs $0.27$1.18$0.23$0.26$0.33$0.20

New Advantages cont’d  Direct Delivery Costs  During 2002, Direct delivery costs are down 0.27% ($0.01 per yard) for the industry leaders, but are up 6.68% ($0.25 per yard) for the typical member.  Industry Leaders have gained a $0.24 per yard cost advantage over Typical Members in Sales Mix Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Depreciation$2.46$2.19$1.81$1.34$1.46$1.22 Other Direct Delivery Costs $0.21$0.34$0.38$0.29$0.30$0.18

Profit Model Ratios  Pre-Tax Profit Margin %  Asset Turnover  Return on Assets (ROA) %  Return on Equity (ROE) % Profit Model Ratios Under 100,000 Yards 100,000 to 299,999 yards 300,000 to 500,000 yards Over 500,000 Yards Typical NRMCA Member Industry Leaders Pre-Tax Profit Margin % 3.5%1.1%3.7%2.8%2.4%6.7% Asset Turnover 1.3x1.6x1.5x1.7x1.7x1.9x ROA % 4.6%1.8%5.4%4.8%4.0%12.7% ROE % 10.4%6.2%11.0%8.9%7.8%21.5%

Profit as a Percentage of Sales by Company Size

Profit as a Percentage of Sales by Regions

Asset Turnover by Company Size

Asset Turnover by Regions

Return on Assets (ROA) % by Company Size

Return on Assets (ROA) % by Regions

Return on Equity (ROE) % by Company Size

Return on Equity (ROE) % by Regions

Benchmarks to Productivity  Cubic Yards Per Hour  Average Load Size