1. Industry Leaders vs. Typical Members: Closing The Gap In A Recovering Market
Presented at the 46th Annual
NRMCA Business Administration Conference
October 18, 2004

2. Review Of Changes Since The Last Survey
The Industry Leaders have witnessed a dramatic change in the reason why they rank in the top quartile over the previous year, which is measured in Profit Per Yard.
This past year, the Industry Leaders rose to the top due almost exclusively to dramatic improvements in Net Sales Price.

3. Review Of Changes Since The Last Survey cont’d
Their performance in many other areas shrank both in comparison to the previous year and compared to the Typical Member.
This key finding speaks to the ability of the Typical Member to close the gap between themselves and the Industry Leaders during this last recessionary cycle.

4. Review Of Changes Since The Last Survey cont’d
This year’s areas of improvement narrowed to only a couple of categories, including value added and direct delivery costs.
The Typical Member closed the gap in several areas including materials costs, Variable Delivery Cost, Direct Fixed Plant Costs , and G& A expenses.

5. Areas of Performance This Year vs Last
Income Statement,
Dollars Per Cubic Yd.
2002
2003
Year over Year Change (%)
Typical Member
Industry Leaders
Sales Price
$67.21
$68.95
$68.04
$72.81
1.24%
5.60%
Material Costs
$36.81
$36.14
$36.98
$39.09
0.46%
8.18%
Plant Costs
$3.85
$4.15
$4.04
$4.33
5.01%
4.30%
Delivery Costs
$12.33
$11.82
$12.91
$12.82
4.71%
8.48%
Total Variable Costs
$52.99
$52.10
$53.93
$56.24
1.78%
7.94%
Marginal Contribution
$14.22
$16.84
$14.11
$16.57
-0.77%
-1.62%

6. Areas of Performance This Year vs Last cont’d
Income Statement,
Dollars Per Cubic Yd.
Continued
2002
2003
Year over Year Change (%)
Typical Member
Industry Leaders
Direct Costs – Plant
$3.02
$2.71
$3.05
$3.23
0.89%
19.27%
Direct Costs – Delivery
$3.99
$3.75
$3.79
$3.35
-2.46%
1.96%
Operating Profit
$7.21
$10.39
$7.27
$9.99
0.06%
0.87%
Selling Expenses
$1.36
$1.34
$1.30
$1.33
-4.14%
-0/50%
G & A Expenses
$4.08
$4.87
$3.73
$4.49
-8.61%
2.60%
Profit Before Taxes
$1.58
$4.63
$2.30
$4.44
45.35%
-4.06%

7. Industry Leaders 2004: Their Competitive Advantages Are Shrinking
Industry Leaders’ Advantages
Net Sales Price
Direct Delivery Costs
Where the Typical Members Have Closed The Gap
Materials Costs
Variable Delivery Cost
Direct Fixed Plant Costs
G& A expenses

8. Industry Leaders: Their 2004 Advantages
Net Sales Price
Direct Delivery Costs

9. Industry Leaders: Their 2004 Advantages con’t
Net Sales Price Per Yard
Industry leaders were able to increase the Net Sales Price by $3.86 compared to the previous year.
Key factors contributing to this increase include:
Value added increased by $4.59 for a 278% gain

10. Industry Leaders: 2004 Advantages con’t
Net Sales Price Per Yard
Miscellaneous yard sales increased $0.76 for a 102% gain
Fuel and environmental surcharges increased $.13 for a gain of 29.5%
Despite these gains, the price of concrete declined $1.23 (we believe the Industry Leaders are doing a better job of tracking these costs than in previous years).

11. Industry Leaders: 2004 Advantages con’t
Net Sales Price
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
$61.01
$63.80
$64.94
$61.56
$63.23
$63.71
Fibers, super plasticizers, colors
$1.41
$2.25
$1.40
$3.14
$2.94
$6.24
Sand, gravel, misc. yard sales.
$1.38
$0.92
$1.39
$0.99
$1.50
Waiting time, min. load charges
$3.36
$2.18
$0.69
$0.80
$0.91
Fuel surcharge, environmental
$0.97
$0.55
$0.68
$0.38
$0.44
$0.57
Discounts & allowances
($1.02)
($0.67)
($0.53)
($0.44)
($0.47)
($0.61)
Total Net
Sales
$67.11
$69.03
$68.57
$66.36
$68.04
$72.81

12. Industry Leaders: 2004 Advantages con’t
Direct Fixed Delivery Costs Per Yard
Industry leaders decreased their total direct fixed delivery costs over the previous year by $0.40
Key factors contributing to the reduction:
Truck equipment leases declined by $0.39
Fleet insurance declined by $0.15

13. Industry Leaders: 2004 Advantages con’t
Direct Fixed 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
Depreciation
$1.76
$1.99
$1.80
$1.38
$1.51
$1.33
Truck Equipment Leases
$0.68
$0.73
$0.42
$0.46
$0.31
Dispatch Salaries
$0.91
$0.87
$0.88
$0.61
$0.75
Fleet Insurance
$0.70
$0.72
$0.47
$0.41
$0.45
$0.36
Vehicle Registration
$0.43
$0.40
$0.28
$0.30
Info Tech
$0.05
$0.07
$0.09
$0.06
Other Direct Delivery Expenses
$0.39
$0.25
$0.33
$0.27
Total Direct Fixed Costs – Delivery
$4.85
$5.20
$4.31
$3.46
$3.79
$3.35

14. Where the Typical Members Have Closed The Gap
Materials Costs
Variable Delivery Cost
Direct Fixed Plant Costs
G& A expenses

15. Where the Typical Members Have Closed The Gap con’t
Materials Costs Per Yard
While the Typical Member has seen an increase of $0.17 over the previous year, this compares to an increase of $2.95 for the Industry Leaders.
Key factors contributing to comparison include:
Cement decreased by $0.19 compared to an increase of $1.10 for the Industry Leaders
Fly ash increased only $0.07 compared to an increase of $0.63 for the Industry Leaders

16. Where the Typical Members Have Closed The Gap con’t
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
$16.39
$17.15
$16.86
$16.97
$17.28
$17.93
Fly Ash
$1.02
$0.79
$0.78
$1.22
$1.17
$1.77
Slag
$0.35
$0.73
$0.74
$0.75
$0.77
$0.68
Chemical Admixtures
$1.31
$1.34
$0.96
$1.06
$1.13
Mechanical Admixtures
$0.18
$0.31
$0.17
$0.22
$0.13
Coloring
$0.05
$0.12
$0.07
Fine Aggregates
$6.10
$5.98
$5.80
$5.94
$6.92
Coarse Aggregates
$7.83
$7.75
$8.57
$9.74
$9.62
$10.49
Water
$0.09
$0.08
$0.03
$0.04
Misc. Mat. Costs
$0.59
$0.54
$0.84
$0.81
$0.51
Total Direct Fixed Costs – Delivery
$33.47
$34.92
$35.11
$36.60
$36.98
$39.09

17. Where the Typical Members Have Closed The Gap con’t
Variable Delivery Costs Per Yard
While the Typical Member has seen an increase of $0.58 over the previous year, this compares to an increase of $1.00 for the Industry Leaders.
Key factors contributing to difference include:
Driver Wages increased by $0.23 compared to an increase of $0.63 for the Industry Leaders
Fringes increased by $0.18 compared to an increase of $0.24 for the Industry Leaders

18. Where the Typical Members Have Closed The Gap con’t
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
$5.78
$6.34
$6.31
$6.23
$6.36
$6.41
Fringes
$2.10
$2.22
$2.38
$2.51
$2.45
$2.70
Repairs & Maintenance
$2.42
$2.25
$2.39
$1.99
$2.09
$1.92
Power
$1.69
$1.59
$1.57
$1.25
$1.34
$1.24
Waste Concrete Cleanup
$0.34
$0.36
$0.24
$0.25
$0.26
All other plant expenses
$0.42
$0.44
$0.33
$0.40
$0.41
$0.31
Total Variable Costs – Delivery
$12.75
$13.20
$13.23
$12.63
$12.91
$12.82

19. Where the Typical Members Have Closed The Gap con’t
Direct Fixed Plant Costs Per Yard
While the Typical Member has seen an increase of only $0.03 over the previous year, this compares to an increase of $0.52 for the Industry Leaders.
Key factors contributing to difference include:
Depreciation increased by $0.05 compared to an increase of $0.19 for the Industry Leaders
All other direct plant expense increased by $0.07 compared to an increase of $0.36 for the Industry Leaders

20. Where the Typical Members Have Closed The Gap con’t
Direct Fixed 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
Depreciation
$0.80
$0.95
$1.01
$1.05
$0.94
Plant & Support Equipment Leases
$0.32
$0.36
$0.28
$0.18
$0.21
Insurance
$0.15
$0.16
$0.17
$0.14
$0.19
Real Estate Taxes
$0.20
Quality Control
$0.52
$0.46
$0.40
$0.43
$0.47
Environmental Expense
$0.08
$0.07
$0.09
Info Tech
$0.05
$0.06
$0.02
$0.03
$0.04
Other Direct Delivery Expenses
$0.79
$0.69
$0.87
$0.90
$1.08
Total Direct Fixed Costs – Delivery
$2.50
$3.29
$2.93
$2.95
$3.05
$3.23

21. Where the Typical Members Have Closed The Gap con’t
G & A Expenses Per Yard
While the Typical Member has seen an decrease of $0.35 over the previous year, this compares to an increase of $0.11 for the Industry Leaders.
Key factors contributing to difference include:
Executive Salaries decreased by $0.05 compared to an increase of $0.11 for the Industry Leaders
Office Salaries & Wages decreased by $0.14 compared to an decrease of $0.01 for the Industry Leaders
Fringes decreased by $0.02 compared to an increase of $0.07 for the Industry Leaders

22. Where the Typical Members Have Closed The Gap con’t
G&A 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
Executive Salaries
$0.74
$1.00
$0.84
$0.46
$0.55
$0.76
Executive Bonuses
$0.08
$0.27
$0.15
$0.10
$0.16
Office Salaries & Wages
$1.15
$0.94
$0.86
$0.65
$0.72
Fringes
$0.36
$0.60
$0.49
$0.31
$0.35
Comm. Expenses
$0.22
$0.23
$0.11
$0.13
$0.14
Office Supplies
$0.38
$0.17
Other Insurance
$0.28
$0.26
Other D&A
$0.19
$0.24
$0.34
Info Tech
$0.12
Legal & Professional
$0.37
$0.18
Bad debts
$0.32
$0.29
All other G&A Expenses
$0.66
$0.87
$1.01
Total G&A Expenses
$4.50
$5.38
$4.63
$3.36
$3.73
$4.49

23. Pre-Tax Profit Margin %
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 %
5.3%
1.6%
3.6%
3.4%
6.2%
Asset Turnover
2.0x
1.5x
1.7x
ROA %
9.9%
2.6%
6.3%
6.0%
5.8%
10.3%
ROE %
37.8%
12.2%
8.8%
9.0%
14.0%

24. Profit as a Percentage of Sales by Company Size

25. Profit as a Percentage of Sales by Regions

26. Asset Turnover by Company Size

27. Asset Turnover by Regions

28. Return on Assets (ROA) % by Company Size

29. Return on Assets (ROA) % by Regions

30. Return on Equity (ROE) % by Company Size

31. Return on Equity (ROE) % by Regions

32. Summary Slide
The Industry as a whole does not seem to have recovered as well as the rest of the economy.
Both the Industry Leaders and the Typical Members have been unable to increase prices to reflect increased costs.

33. Summary Slide con’t
While the gap has narrowed between the Industry Leaders and the Typical Member, industry-wide profitability is trailing the highs of the late 90’s by $2.97 per yard, or a decline of 56.3% since 1999 ($5.27 in 1999 vs $2.30 in 2003).
The industry must increase prices to match the realities of increased costs to return to its historical levels of profitability.