FINANCIAL ANALYSIS REPORT Recommend: BUY

We are issuing a BUY rating on MLM stock because we believe that

the market is undervaluing the stock. Our different methods of

valuation gave us a target price range of 100-107. We expect the

MLM stock will be boosted in the short term when the economy of

the US rebound.In addition, the company's strengths can be seen in

multiple areas, such as its robust revenue growth, increase in net

income, largely solid financial position with reasonable debt levels

by most measures, solid stock price performance and growth in

earnings per share

HIGHLIGHTS:

Martin Marietta is an enterprise with a cyclical tempo and because

of it, several elements let us think that we are in decrease, which

projects a strong regain for the upcoming five years…

…It is also, an enterprise based on a strong and intensively

concurred sector demanding strong capital investment, therefore a

high negotiation power from providers and costumers…

…It is also an enterprise well based in the United States, developing

an external growth strategy, having as a goal to develop strategic

implantations, in order to strongly reduce transportation costs, which

are so important to the value chain.

12/12/2011 Martin Marietta’s announcement of proposal with VULCAN ownership, the change into 2 VULCAN shares vs 1 MLM share.

05/07/2012 Chancellery court of DELAWARE rejects Martin Marietta’s proposal because it revealed confidential information about this subject

06/11/2012 Announcement of the earning of Q3 2012

Price close: 95.32 Target 12 mouth: 107 Stock type: cyclical

EPS basic : 1.79 EPS diluted : 1.78 Cash dividend/share : 1.60

Net sales : 1.5 billion Net earnings :82.4 currency :$USD Responsible for analysis: Loic.fournier@live.fr Team member: duyanh.nguyen@hotmail.fr thierry.foguembah@skema.edu

Please read the disclaimer at the end

of this report for important information

Dividends

ENTERPRISE PRESENTATION & HISTORY

Martin Marietta Materials (NYSE: MLM) is in

the aggregate, chemical, and composite material business. It is the

second largest producer of crushed stone, sand, and gravel in

the United States behind Vulcan Materials Company.

It is a leading U.S. producer of magnesia-based chemical

products used as additives inapplications including ceramics, paper,

sugar, animal feed, and water treatment. It produces dolomitic

lime used as a fluxing agent by the steel industry. It is a supplier

of fiber-reinforced polymer products for use in infrastructure such as

panels, bridge decks and transportation components such as truck

trailers andrailroad cars.

It was established as an independent company in 1996, spun off from

the newly created Lockheed Martin after having been part of Martin

Marietta since 1961. Itdates its origins back to 1939, when Superior

Stone, an aggregates company inRaleigh, North Carolina, was

founded. The company's corporate headquarters is located in

Raleigh.

1961: Martin Marietta formed by merger of the Glenn L. Martin

Company and American-Marietta Corporation

1994: Martin Marietta Corporation completed its initial public

offering of 19% of the common stock of Martin Marietta Materials,

which is listed on the New York Stock Exchange as MLM.

1995: Martin Marietta merged with Lockheed Corporation to

form Lockheed Martin

1996: Lockheed Martin splits off Martin Marietta Materials as a

separate and independent entity

GOURVERNANCE

C. Howard Nye

President and Chief Executive Officer, Martin Marietta Materials Holdings: 63,988 shares

C. Howard (Ward) Nye is President and Chief Executive Officer for

Martin Marietta Materials. Effective January 1, 2010, Mr. Nye was

also elected to the Board of Directors. Mr. Nye served as the

Company's Chief Operating Officer from 2006 to 2009. Immediately

prior to joining Martin Marietta Materials in 2006, he was employed

by Hanson Aggregates North America for nearly 13 years holding

various positions of increasing responsibility, most recently

Executive Vice President.

80%

4% 2% 2% 9%

3%

% Net sales per product 2011

Aggregates Asphalt Ready Mixed Concrete

Road Paving Magnesia-Based Chemicals Dolomitic Lime

0

100

200

300

400

500

600

700

800

2012 2011

711,2

483,4

151,6 149,1 213,1 217,4

305 295,3

Sales by sector nine mouth ended

Midest

Southeast

West

Spécialty

COMPETITORS

Competivity on this sector is really intense, noting that all enterprises

of this sector have suffered the impact of economic crisis in 2007,

and thereafter its consequences.

In fact, after Lehmann brother’s bankruptcy ,and undercapitalization

that they faced, a secondary effect being the justification of raw

materials , such as fuel has had important impact on these

enterprises margins.

Nevertheless the impact of politic choices in the United States has

lead us to come back to the analysis of 2009, with shares price

stabilization at the same time that a progressive growth.

Accordingly, new trends are being developed in aggregates supply,

this is also a relevant factor of explanation for upcoming growth.

As we can observe, the spending on infrastructure and roads are top

trends , while the spending on household buildings and for other

purposes are having a decrease.

By using PORTER’s forces, we infer the competition character of

this sector .

- Power of new entrants is very limited, in fact we can justify it

by two major elements: scarcity of job careers on aggregates

available, and the necessary capital to get inside.

- As previously quoted, the suppliers force is relevant, we will

precisely remark the augmentation of fuel price and its

importance in value chain, energies represent 14% of value

estimate by the direct costs method.

- Despite of this scarcity in terms of aggregates in the south of

United States, we also highlight that costumer negotiation

power stays preeminent . Indeed, directly linked to the intense

competition, at the same time that there is no distinction on

products quality, the only reasonable selling justification is

price.

We can conclude that competitive advantage to develop is the

research of costs domination.

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

2007 2008 2009 2010 2011

COGS

Sales

CORPORATE STRATEGY

MLM has his headquarters based in the United States, it delivers

aggregates in 31 states, Canada, Bahamas and Caribbean with 287

facilities. MLM estimates its 12,5 million tons of reserves are

enough for 50 years of production, even when these reserves are

variable from a place to another.

MLM strategy consists in developing a competitive advantage

around cost domination.

To do this, it has invested on performing information systems ,

which allow every year reducing expenses (SGA-6ppm for 2011)

At the same time, its policy is development through strategic

implantation, in a general way in the United States, but also more

specifically in the southwest, especially from Texas to the west

coast.

It takes in consideration several elements, first of all, the migration

fluxes highly oriented to this region, subsequently, 74% of

aggregates consumption is done over there, et finally, this region

presents scarcity on available aggregates quantities, that eventually

will lead to price increase.

MM considers that the best way to spend less is by logistic

transportation of its products mostly by boat, all along the coasts

and the rivers. Indeed, ground transportation, costs around 15-45

cents usd/ ton per miles, 6-11 cents by train and only 4 to 1.2 cents

by boat.

Not only is there the Mississippi river on the south but also 2 other

rivers, where the three of them get together in a joint called the

three rivers, it is then a very strategic place for MM, since a very

long time the enterprise is organized and located under

circumstances that allow it to develop a strategic advantage of

costs domination .

migration

STRONG & WEAKNESSES

Diversifying means of Transport in order to reduce Costs.

As an outcome of consolidation and purchases over the last years, Martin Marietta

has gained access to various means of transport for its aggregates. As Martin

Marietta keeps transporting more aggregates by rail and water, embedded freight

costs reduce also overweight margins by less than if these shipments were

transported by truck. Most of the rail and water transportation happens in the

Southeast branch and the West branch. Though, the enlargement of MLM's rail

distribution network increases its dependence on railroad performance, such as track

congestion, crew availability, and the ability to negotiate favorable railroad shipping

contracts. Likewise, the aquatic distribution network increases MLM’s exposure to

risks such as negotiating favorable shipping contracts, fuel costs, charge or ship

availability, and weather troubles

Construction Weakens, Aggregate Demand Drops.

Most of MLM's aggregate products are for construction industry, so its results

depend somewhat on the power of the construction industry. The housing fall since

2007 has affected in a negative way MLM's business as new home construction fell,

reducing the number of residential homes to be built (and of course supplied with

aggregates). Whereas private residential construction is a small market for MLM, the

severe decreasing in activity impacts business.

Government Subsidy Lacks delay Construction

The stability of government-funded infrastructure projects provides isolation to a

general economic recession, but the level and timing of federal and state funding are

important in order to keep this stability. A lack of funds can delay current

construction and put new projects on hold. For example, the North Carolina

Department of Transportation has a lot of construction projects on hold due to a lack

of federal funding. Indeed, publicly-funded construction around the country is

decreasing due to budget deficits. Such deficits, especially in MLM's in the five most

important revenue-generating states such as North and South Carolina, will put a

obstruction on demand for aggregates.

Operation and Transport logistic are more costly due to energetics prices.

Martin Marietta needs continuing supply of diesel, fuel, natural gas, coal, petroleum

coke and other forms of energy for production. Growing energy costs, affect

negatively on the production of MLM's aggregates, but also make their transport

more expensive, as mentioned above.

Weather Circumstances Can affect Aggregates Operations

The aggregates industry is by nature seasonal; as construction takes place outdoors;

most business is done during the better weather of the second and third quarters of

the year, while the first and fourth quarters see lesser activity. Nonetheless, hostile

weather conditions can at any time reduce demand for MLM's products, at the same

time that increases costs and reduces production.Business in the southeastern U.S.

and the Bahamas is particularly vulnerable to interruption by hurricanes and tropical

storms or heavy rainfall, for example, dry weather causes low water levels and

results in reduced tonnage able to be shipped on a charge, while heavy rainfall and

flooding in Texas, Oklahoma, and Kansas can affect shipments and logistic

operations.

MARKET

The United States of America is the third most populous in the

word, and its economy is the largest in the word with GDP closed to $

1504bn in 2011, despite it has faced an economic downturn since

2008. In 2007, GDP expanded by nearly 2% year-on-year, but in 2008

growth was flat and in 2009 the country saw a 3.5% contraction in its

economy. In 2010, this contraction was reversed, with 3% growth. In

2011, the economy grew slightly more slowly, with 1.6% growth.

However, the first quarter of 2012 saw an improvement of 2.1%

comparing to 2011. The level was down on analyst’s predictions, but

the US Federal Reserve increases its 2012 growth forecast from 2.2 –

2.7% to 2.4 – 2.9% in late April 2012.

The US cement industry is one of the largest in the world, with an

estimated installed capacity over 100Mt/yr. The 2012 edition of the

Global Cement Directory puts the country third in terms of active and

mothballed capacity (>113Mt/yr), behind China (>1400Mt/yr) and

India (>230Mt/yr). The current economic downturn affected the US

cement industry. From 2005 to 2010, the two states seeing a net

increase were Louisiana and Nord Dakota (+17% although at a low

level).

Forecast: The construction materials is currently engaged capacity

expansion. By 2012 more than 25 million metric tons of new capacity

is expected to come on line, representing more than $6 billion in

investment. Cconstruction in the United States, as estimated by the

Portland Cement Association (PCA), increased by 3% to 77.5 million

short tons in 2011. Building materials Consumption depends on the

seasons related to weather conditions. Demand for products is

generally cyclical and seasonal, depending on economic and

geographic conditions. PCA reported that it expects consumption to

increase by 3.7% in 2012 over the 2011 level. This will result to a

marginal improvement in non-residential constructions, an anticipated

15% improvement in new housing starts and an increase in the

cement-intensity of projects. Beyond 2012 the PCA estimates

accelerated expansion: 7.6% in 2013 and 14.1% in 2014. By 2016, it

expects cement consumption will increase by 35Mt/year.

Opportunities

- The recovery of the housing market USA. It might

be slow to start, but once it gets going it keeps on

going for a while

- Government spending increased makes the demand

for the construction industry also increase.

Threats

- Adverse weather conditions.

- Availability of raw materials.

- Changes in energy costs including, without limitation, natural gas and oil.

- Changes in the cost and availability of transportation.

- Competition; announced increases in capacity in the gypsum wallboard

and cement industries.

- Changes in the demand for residential housing construction or

commercial construction

FINANCIAL STRUCTURE

The financial structure of MLM is clean, as we can observe

the graph showing the extent of Beneish, all accounts could

not be used manipulated.

First of all, we’d get interested on the working capital requirements,

and the working capital of this enterprise. These two measures

highlight the cyclical character of investment done by MM.

The working capital, has been almost multiplied by two in 2008,

meanwhile the working capital requirement kept the same.

it’s related then, to a process consisting on the enterprise to stretch

out its short term debts, in order to reduce de liquidity requirements.

We can confirm the different levers that have allowed these actions, in

particular, the debt lever to equity that has a lever going from 0.56 en

2006 to 1.19 in 2007.

These different operations show that the enterprise has known how to

make the good decisions in the right time. We can place on this

the current treasury ratio, and also the charts of flux coming from

operations and also investment….

….The essential remark that I would highlight is the capacity shown

by the enterprise to get rid of debt in spite of a very uncertain and

difficult context, this point shows a very reactive direction and

visionary ensuring the most skeptical…

….We can, therefore, conclude that this enterprise has a strong

capacity to generate cash flow, this is not an easy path to follow,

taking in consideration the importance of financial cycles and the

treasury requirements.

BENEISH

M 5

variable

M 8

variable

2011

-3,70

-3,32

Clean Clean

2,46 2,93 3,06 3,01 1,88

1,24 1,91 2,29 1,81

3,79 3,62

0,00

2,00

4,00

1 2 3 4 5 6 7 8 9 10 11

Current ratio

-500 000

-400 000

-300 000

-200 000

-100 000

0

100 000

200 000

300 000

400 000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

CFO (Cash flow from operations)

CF form investing activities

0

1000

2000

3000

4000

5000

6000

7000

8000

7638,3

4918,5

25,7

in Mil USD

fund institutions other

INVESTMENT SUMMARY

It is a public enterprise, however, it is on our highest interest remarking that it is partially handled by funds, in fact taking in

consideration several approaches from financial history, when the latter needs liquidity, they sell massively the shares they own,

producing sometimes important loose in terms of actives values.

It is important to follow very carefully the needs they have,

at the same time that their selling intentions

We strongly believe that MM share is facing an excellent perspective. Indeed, the series

of different evaluations show us growth perspectives for 11% from now to the next year.

The enterprise presents a great chance, beyond its cost domination policy, it is a positive

strategy being performed by the enterprise letting us estimate a strong value for the

upcoming years. We have also observed that the enterprise has strong chances of

providing products that are rare that would consent increasing of prices. To conclude, we

think that the enterprise confirms it is highly profitable. Moreover, we have also observed the enterprise is located on a phase of

growth recovering on its cyclical character, taking in consideration from the cost control policy established that has endorsed and

intentionally debt reduction in spite of an uncertainty phase. We have also detected that economic situation in the US finds itself in a

recovering phase, and this is why it presents all the necessary indicators for the viability of the latter. A last idea, would be to make a

zoom on the moving average on the title having a recent growth, empirically, that announces a regain of activity, however this

indicator must not be appreciated more than it’s worth.

INVESTMENT RISK

The business is affected by the level of demand in the construction industry, which is currently experiencing a significant

downturn. Activity in the infrastructure construction business is directly related to the amount of government funding available for

such projects, which is very limited in light of the budget constraints being experienced by federal, state and local governments. Any

decrease in the amount of government funds available for such projects or any decrease in construction activity in general (including a

continued weakness in residential construction or commercial construction) could have a material adverse effect on our business,

financial condition and results of operations.

The business is seasonal in nature, and this causes our quarterly results to vary significantly. Quarterly results have varied

significantly in the past and are likely to vary significantly from quarter to quarter in the future. Such variations could have a negative

impact on the price of the common stock. Because a majority of the business is seasonal, unfavorable weather conditions and other

unexpected operational difficulties during peak construction periods could adversely affect operating income and cash flow and could

have a disproportionate impact on the company’s results of operations for the full year.

The customers participate in cyclical industries, which are subject to industry downturns. A majority of MLM revenues are from

customers who are in industries and businesses that are cyclical in nature and subject to changes in general economic conditions. In

addition, since MLM operations are in a variety of geographic markets, our businesses are subject to the economic conditions in each

such geographic market.

The results of operations are subject to significant changes in the cost and availability of fuel, energy and other raw materials.

Major cost components in each of the businesses are the costs of fuel, energy and raw materials. Significant increases in the costs of

fuel, energy or raw materials or substantial decreases in their availability could materially and adversely affect MLM sales and

operating profits.

The risk of become subject to significant clean-up, remediation and other liabilities under applicable environmental laws.

MLM operations are subject to state, federal and local environmental laws and regulations, which impose liability for cleanup or

remediation of environmental pollution and hazardous waste arising from past acts. Any future laws or regulations addressing

greenhouse gas emissions would likely have a negative impact on the business or results of operations, either through the imposition

of raw material or production limitations, fuel-use or carbon taxes or emission limitations or reductions.

Football Field

100 000

150 000

200 000

250 000

300 000

350 000

Forecast OFCF

VALUATION

Valuation:

Valuation method used: We evaluated MLM using Discounted Cash Flow and

Multiples Analysis. We are convinced that the most appropriate techniques for EXP

are the Free Cash Flow to Equity (FCFE) and the Price/Earnings Ratio (PER). The

former incorporates the long-term growth opportunity of the company, while the

latter reflects the market valuation. We found a 12 month target price of $107. The

Holding Period Return is 12.25% for 12 months.

Discounted Cash Flow Model: Free Cash Flow to Equity (FCFE):

Sales forecast: Regression Analysis and Assumptions

We regressed the product revenues from the different business segments against

GDP and unemployment. The regression assumptions are the following:

- GDP

We decided to use the Economist Intelligence Unit’s estimates because their

previous projections have been impressively accurate. For full disclosure, the EIU’s

estimates were within 0.6% accuracy from 2000 to 2005 where the economy was not

under stress. However, during the crisis period of 2006-2009, EIU’s predictions were

more inaccurate, within 1.2% accuracy.

Actual Forecast

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GDP growth rate -3.1 2.4 1.8 2.2 2.1 2.3 2.3 2.4 2.4 2.4

- Unemployment rate:

The concrete industry is strongly correlated with unemployment; much of this has to

do with infrastructure efforts and fiscal policy—in times of how unemployment the

government will typically seek to stimulate the economy by pursuing infrastructure

development, thereby creating jobs. As part of the annual budget, the Obama

Administration released underlying economic assumptions earlier in the year. For

unemployment, the forecast is for an average of 7.6% in 2013, 9.2% in 2014, 8.1%

in 2015 and 7.7% in 2016.

year

SG&A Growth when Sales Growth: We believe the SG&A will be stable in

percentage of sales because headquarter administrative expenses will increase when

Martin Marietta Materials purchases to growth.

Terminal Value Component Assumptions: Because the cash flows of MLM are

truly cyclic, the assumption of a constant perpetual growth rate after one cycle of

forecasted cash flows is incorrect. Therefore, we apply the “Cyclic Terminal Value

Method” to Firm Valuation; we found a terminal Value of 6,471,666 for MLM. It is

assumed that the components of the free cash flow (FCF) have four phases: an

Actual Forecast

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Unemployment rate 5.8 9.3 9.6 8.1 7.6 7.8 8.1 7.7 7.8 7.7

107

Effective Tax rate 26% 10k

Rd 6.8% av cost of debt 10k

Rf 1.81% Fed 10 yr treas rate

Equity risk premium 6.17% Damodaran

βe 1.15 sur 2 années

D/E 0.75 D/E+D 0.43

βa 0.66 E/E+D 0.57

Re 5.86%

WACC 6.00% 0.5% spread added

g 2.4%

Fama French

ku 3.63%

wacc 0.03424

PER Quartile 1 Mean Quartile 3

Quartile 29.90 46.32 59.50

EPS 1.80 1.80 1.80

Price 53.82 83.38 107.10

MLM

upward phase, followed by a “leveling off” or “peak” phase, followed by a

downward phase, and a second “leveling off” or “trough” phase. These phases do not

need to be in this order and the cash flows can begin in the middle of any given

phase. The phases are labeled as: upward, peak, downward, and trough to mimic the

business cycle.

Cost of Equity: The Cost of Equity was calculated by the CAPM model, using the

FED 10-year Treasury bond rate of 1.81%, the expected market return of 6.17% and

the adjusted beta of 0.66 to reflect the Cost of Equity of 5.86%.

Weighted average cost of capital: 0.5% spread is added to the WACC to account

for future risk.

With all the forecast, we found a target price of $108.95 with the FCFE method.

Multiple Valuations:

Price to Earnings Ratio (PER) and EV/EBITDA:

We derived a target price range from $53.82 (bear case) to $107.10 (bull case), with

$107 being our base case price target under the multiples-based valuation method.

MLM’s peer group is currently trading at approximately 17x 2013 EV/EBITDA and

47 2013 P/E. On our base case estimates, MLM is currently trading at 17.64x 2013

EV/EBITDA and 62x 2013 P/E.

We believe a target multiple of 18x 2013 EV/EBITDA and 62 PER is appropriate in

our base case scenario. MLM has for the most time during the past 6 years traded at

a premium in PER to its major competitors. In our view, MLM’s valuation premium

will widen going forward given the following reasons:

- The construction industry of the US is expected to rebound over the next few years.

- MLM is focusing on reducing cost and improving its operations for being the

lowest cost producer among its peers.

The 2013 EV/EBITDA and P/E multiples of listed peers most comparable to MLM

are as follows:

EV/EBITDA Quartile 1 Mean Quartile 3

Quartile 10.42 16.65 17.41

*EBITDA 270 270 270

= 2,814.42 4,494.75 4,700.06

Price 61.30 97.90 102.38

Dollar in millions PER EV/EBITDA

TXI TEXAS INDUSTRIES INC 89 40.96

MLM MARTIN MARIETTA MATERIALS 62 14.59

EXP EAGLE MATERIALS INC 56.9 27.27

VMC VULCAN MATERIALS CO nm 18.11

GVA Granite Construction Incorporated 30.47 9.43

SHW The Sherwin-Williams Company 29.33 14.74

USG USG Corporation nm 15.09

MDU MDU Resources Group Inc. 33.32 5.81

MAS Masco Corporation nm 12.47

PWR Quanta Services, Inc. 23.14 10.73

APPENDIX

. Appendix 1: History

1939: the history began by an enterprise specializing in aggregate.

1959: Superior stone merges with the American-Marietta Corporation, a national producer of construction materials,

paints chemicals and other buildings products. That after the merge with the Glenn L. Martin Company, in 1961 what

become Martin Marietta Corporation, leader in aerospace, cement, aggregates, electronics & chemicals.

1994: Martin Marietta Materials, incorporated as part of the Martin Marietta Corporation in 1993, appears on the New

York Stock Exchange, with MLM symbol, after offering 19 per cent of common stock to the public. MLM financial

model pursues growth strategy through the acquisition of quarries in South Carolina, Virginia and Georgia. Martin

Marietta Materials purchases the aggregates business of Dravo Corporation, that shift the corporation at the second place

of aggregates producers in U.S. Then Martin Marietta Corporation merges with Lockheed Corporation to form Lockheed

Martin Corporation.

1996: Lockheed Martin Corporation disposes of remaining interest in Martin Marietta Materials through a split-off

transaction, making Martin Marietta Materials a separate and independent entity. During the same time, Martin Marietta

continues to purchases many quarries and that at this time her pursues opportunities for composite material technology,

which will potentially be used on a wide range of applications.

1997: Martin Marietta Materials purchases American Aggregates Corporation, expanding its aggregates business in

Indiana and becoming a leading producer in Ohio, where it install its first composite bridge deck. Highlighting its fifth

year as a public company, Martin Marietta achieves over $1 billion in sales for the first time and establishes a strong

coast-to-coast platform for continued growth. Martin Marietta purchases Redland Stone in 1998, expanding aggregates

operations into Texas and positioning the Company as the leading aggregates and asphalt provider in Houston and San

Antonio. Redland Stone provided an extensive rail network in Texas. Martin Marietta purchases an interest in Meridian

Aggregates Company, a Colorado-based producer that serves 14 western states; 11 acquisitions completed by the end of

the year.

2000: the Corporation embarked on the largest capital investment program in its history. With increased emphasis on

internal growth, major plant construction projects were initiated at the Freeport, Bahamas, quarry and locations near Hot

Springs, Arkansas; Parkersburg, West Virginia; Raleigh, North Carolina and Dallas/Ft. Worth, Texas. 2001 is an

important year for Martin Marietta, were he completes the purchase of Meridian Aggregates Company. Along with the

1998 purchase of Redland Stone, Meridian is a key component of the western expansion strategy and significantly

enhances the Corporation's rail distribution network. Martin Marietta Magnesia Specialties' refractory business is sold to

Minerals Technologies Inc. The Company brings on line its new, highly automated Bahamas Rock facility at Freeport,

Bahamas. This state-of-the-art aggregates plant and ship-loading facility serves customers from Maryland to Texas, as

well as throughout the Caribbean. The Bahamas Rock facility is the largest, new plant investment in the Company's

history. Martin Marietta reaches $1.5 billion in sales. The first two phases of a new enterprise-wide computer information

system is successfully implemented. This project replaces old systems with state-of-the-art technology that supports future

growth and enables better access to information. A record 13 acquisitions are completed. As a result of the extensive

distribution network established over the past several years, a record 23 percent of aggregates shipments were made via

water or rail.

2002 to 2008: Martin Marietta recorded a great success of net earnings, EBITDA and free cash flow; Expansion

continues in the Composite Products business. This includes the announcement of the opening of a manufacturing facility

in North Carolina where the Company will begin to assemble specialty composite truck trailers. The Company also

acquired the rights to manufacture high strength composite sandwich panels for a variety of industries. Moreover Martin

Marietta records safety performance (2004), strongest pricing environment in corporation history (2005) and Magnesia

Specialties earnings from operations up 50% on a 16% increase in net sales in 2006. 11th consecutive quarter of declining

aggregates volume, with a 22% decline from the peak to year end 2008 and they have Heritage aggregates product line

pricing increased 6.7%; volume decreased 13.1%. The same year, MLM record net sales of $167.2 million for Specialty

Products segment, net earnings of $176.3 million, or $4.20 per diluted share and capital expenditures of $258.2 million

focused on capacity expansion and efficiency improvement projects.

The last 3 year, MLM have resisted the international crisis, despite the consequence on the sector. In 2009, they

recorded net earnings of $85.5 million, or $1.91 per diluted share, heritage aggregates product line pricing increase of

1.9%, despite a volume decrease of 23.0%, record financial results by the Specialty Products segment, which provided

earnings from operations of $35.7 million. Furthermore, effectively managed controllable costs as evidenced by a 17%

decrease in cost of sales and an 8% decrease in selling, general and administrative expenses and they improved financial

flexibility by securing two new credit facilities providing $230 million of incremental liquidity; issuing 3.8 million shares

of common stock providing net proceeds of $293.4 million; and reducing capital expenditures by $119 million. Their

complete acquisition and successful integration of 3 quarries from CEMEX inc. They have a new record of employee

safety performance as measured by total injury incidence and lost time incidences rates. Martin Marietta is ranked #1

“World’s Most Admired Company for Building Materials Industry” by Fortune Magazine and is only company in

industry selected to the InformationWeek 500 for eighth year in a row.

2010: the company continued the same policy, its record on employee safety performance, as measured by a 14%

reduction in Total Case Incident Rate from prior year. The net earnings were $97.0 million or $2.10 per diluted share and

aggregates product line volumes increase for the first time in four years. The heritage aggregates product line volume

increased of 5.3% and pricing decreased of 3.4%. In addition, the effective management of controllable costs, as

evidenced by a 70-basis-point decreased in selling, general and administrative expenses as a percentage of net sales. Same

year, it had a repayment of $217.6 million of Floating Rate Senior Notes through use of cash and an successful integration

of the acquisitions of an aggregates distribution facility in Port Canaveral, Florida and a sand and gravel business near

Charlotte, North Carolina. Martin Marietta is only company in industry selected to the InformationWeek 500 for ninth

year in a row.

The last year, Martin Marietta improved employee safety performance as measured by the Corporation’s total injury

incidence and lost time injury rates, earnings per diluted share of $1.78, inclusive of $0.25 per diluted share impact of

business development costs and the heritage aggregates product line pricing increase of 2.7% and volume decrease of

3.5%. To pursues the effective management of controllable costs as evidenced by selling, general and administrative

expenses decreasing $6.3 million, or 60 basis points. According to that, it made new acquisition of three aggregates-

related businesses: aggregates, asphalt and ready mixed concrete operations in western San Antonio, Texas; aggregates

sites, as well as vertically-integrated ready mixed concrete and asphalt plants and a road paving business, in and around

Denver, Colorado, resulting from an asset exchange with Lafarge North America Inc. and a ready mixed concrete

company in Denver, Colorado. We can note the successful integration of the San Antonio acquisition and the strategic

divestiture of certain operations along the Mississippi River (“River District operations”) to facilitate the asset exchange

with Lafarge while maintaining balance sheet strength and financial flexibility. The capital expenditures included a new

aggregates sales yard near Tampa, Florida and the initiation of construction of a new dolomitic lime kiln at the Specialty

Products’ Woodville, Ohio facility.

Appendix 2: Management Team

Membership

C. Howard Nye

President and Chief Executive Officer, Martin Marietta Materials

C. Howard (Ward) Nye is President and Chief Executive Officer for Martin Marietta Materials. Effective

January 1, 2010, Mr. Nye was also elected to the Board of Directors. Mr. Nye served as the Company's

Chief Operating Officer from 2006 to 2009. Immediately prior to joining Martin Marietta Materials in

2006, he was employed by Hanson Aggregates North America for nearly 13 years holding various

positions of increasing responsibility, most recently Executive Vice President.

Mr. Nye received a bachelor's degree from Duke University and a law degree from Wake Forest University. In addition to

his educational and industry background, Mr. Nye has been active in a number of various business, civic, and educational

organizations, including serving as a member of the Board of Directors for the National Stone, Sand & Gravel Association

(NSSGA), the American Road & Transportation Builders Association (ARTBA) and Romeo Guest Associates, Inc. Mr.

Nye is also a member of the Duke University Alumni Board, as well as a former Gubernatorial appointee to the North

Carolina Mining Commission.

Holdings: 63,988 shares

Anne H. Lloyd

Executive Vice President, Chief Financial Officer and Treasurer

Anne H. Lloyd is Executive Vice President, Chief Financial Officer and Treasurer for Martin Marietta

Materials. Ms. Lloyd has served as CFO since June 2005 and was elected Treasurer in March 2006. Ms.

Lloyd joined Martin Marietta Materials in 1998 as Vice President and Controller and was promoted to

Chief Accounting Officer in 1999. Before joining Martin Marietta Materials, she was with Ernst & Young,

LLP, an international public accounting firm.

Ms. Lloyd is a graduate of the University of North Carolina at Chapel Hill. She holds a Bachelor of Science degree in

Business Administration and is a Certified Public Accountant.

Ms. Lloyd is active in various business, education and civic organizations. She currently serves as Treasurer, member of

the Executive Committee and Board Member of the National Stone Sand and Gravel Association (NSSGA). She also

serves on the SAFETEA-LU Reauthorization Committee of the NSSGA and the Blue Ribbon Panel of Transportation

Experts for the National Surface Transportation Policy and Revenue Study Commission. Ms. Lloyd is a Board Member of

the North Carolina Chamber of Commerce and serves on its Finance and Audit Committee. She is also a Member of the

NC Chamber Infrastructure and Economic Development Policy Committee. Ms. Lloyd is a Board Member of Terra

Nitrogen Company, L.P. and serves as the chair of its Audit Committee and as a member of its Corporate Governance and

Nominating Committee.

Holdings: 43,403 shares

Bruce A. Vaio

Executive Vice President - President of Martin Marietta Materials - West

Bruce A. Vaio is President of Martin Marietta Materials - West, headquartered in San Antonio, Texas, and

is an Executive Vice President of the Corporation. Mr. Vaio was President and CEO of Redland Stone

Products Company from 1996 to 1998, when Martin Marietta Materials purchased it and formed the

Company's Southwest Division. After the Redland Stone purchase, Mr. Vaio served as President of Martin Marietta's

Southwest Division from 1999 to 2006, until promoted to his current position. Before joining Redland Stone, he served

two years, from 1994 to 1996, as vice president and regional manager of Western Mobile Inc. in Denver, Colorado. Mr.

Vaio holds a Bachelor of Arts degree in Political Science from the University of Denver and a Master of Business

Administration degree from the University of Phoenix.

Holdings: 48,069 shares

Roselyn R. Bar

Senior Vice President, General Counsel and Corporate Secretary

Roselyn R. Bar is Senior Vice President and General Counsel for Martin Marietta Materials. She is also

Corporate Secretary. Ms. Bar joined the Company in 1994 as assistant general counsel and assistant

corporate secretary. Before joining Martin Marietta Materials, she was corporate counsel at Sun America Inc. Prior to

working for Sun America, she was a corporate lawyer at Skadden, Arps, Slate, Meagher and Flom in New York and Los

Angeles. Ms. Bar holds a bachelor's degree from the University of Rochester and a law degree from the Brooklyn Law

School. Ms. Bar serves as a member of the Legal Task Force and on the Council of Counsel of the National Stone, Sand

& Gravel Association (NSSGA). She is a member of the New York, California, Florida, and American Bar Associations.

Holdings: 39,069 shares

Dana F. Guzzo

Senior Vice President, Chief Accounting Officer and Chief Information Officer

Dana F. Guzzo is Senior Vice President, Chief Accounting Officer and Chief Information Officer for

Martin Marietta Materials. Ms. Guzzo joined Martin Marietta Materials in 2004 as Vice President,

Financial Systems, Planning and Analysis. Before joining Martin Marietta Materials, she was with W. R.

Grace & Co., a specialty chemical company. Ms. Guzzo is a graduate of Old Dominion University. She

holds a Bachelor of Science degree in Business Administration and is a Certified Public Accountant.

Donald A. McCunniff

Senior Vice President, Human Resources

Donald A. McCunniff is Senior Vice President of Human Resources for Martin Marietta Materials. Mr.

McCunniff joined the Company in 2011 with over 20 years of human resources experience. Before joining

Martin Marietta Materials, Mr. McCunniff held various senior-level human resource positions at

CenturyLink, Inc., Armstrong World Industries, Inc. and Honeywell International, Inc. He began his

professional career as an Army officer where he served in a variety of line and staff positions. . Mr.

McCunniff is a Six Sigma black belt. He graduated from North Georgia College with a bachelor's degree in Political

Science and received a master's degree in Public Administration from the University of San Francisco.

Holdings: 1,819 shares

Appendix 3: Financial data

fiscal year end : 31/12

thousand dollar 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Sales 1 619 877 1 711 453 1 726 102 2 004 243 2 191 052 2 207 141 2 116 421 1 702 603 1 652 885 1 713 823 1 533 596

3,62%

Taxes 32 265 41 047 57 816 72 534 107 632 116 073 72 088 27 375 30 918 20 986 12 146

Interest Expenses 44 028 42 587 42 734 42 597 40 359 60 893 74 299 73 460 68 440 58 586 39 967

Income Tax Receivable 21 387 21 603 5 750 14 989 25 317 44 285 211 596 162 815 83 380 80 674 79 758

Prepaid & other Assets 0 0 0 0

PP&E net 1 067 576 1 042 432 1 065 215 1 166 351 1 295 491 1 433 553 1 690 529 1 692 905 1 687 830 1 774 291 1 750 941

Depreciation 138 696 139 606 132 859 138 251 141 429 150 338 171 129 179 391 181 537 173 407 132 985

immo net 163 840 116 823 31 723 9 111 3 367 -106 638 168 753 184 466 95 076 196 757

-47 017 -85 100 -22 612 -5 744 -110 005 275 391 15 713 -89 390 101 681

-3% -4% -1% 0% -5% 16% 1% -5% 7%

Inventories 239 726 213 843 209 309 22 728 256 287 286 885 318 018 332 569 331 894 322 607 335 092

Note Receivable 0 0 4 655 5 081 2 521 2 078 0 0 0 0 0

Acc receivalbe 232 884 234 578 219 589 225 012 242 399 245 838 211 596 162 815 183 361 203 748 296 947

Cash & Cash equivalents 14 498 125 133 161 620 76 745 32 282 20 038 37 794 263 591 70 323 26 022 35 421

Investment in Joint Venture - - 0 0 0 0 0 0 0 0 0

Goodwill 577 449 577 586 567 495 569 263 570 538 574 667 622 297 624 224 626 527 616 671 615 986

Other Assets 119 508 114 918 122 219 353 147 81 586 76 461 -59 328 364 91 428 123 809 129 059

Current Assets 540 647 621 519 624 253 602 041 592 354 626 010 665 031 856 860 696 211 657 850 785 107

Total assets 2 273 028 2 330 093 2 355 852 2 433 316 2 506 421 2 683 805 3 032 502 3 239 283 3 074 743 3 147 822 3 243 204

Stockholder's equity 1 083 010 1 129 847 1 153 427 1 173 685 1 253 972 945 991 1 965 242 1 832 872 1 425 440 1 409 321 1 430 405

Long-term debt 733 471 717 073 713 661 709 159 579 308 848 186 1 152 414 1 023 492 782 045 1 052 902 1 092 117

Acc payable 73 186 76 576 89 949 93 445 85 237 86 868 62 921 52 107 60 333 92 210 99 628

short term debt 11 389 1 068 970 863 125 956 276 136 202 530 226 119 248 714 7 182 6 671

Deferred Income Taxes 108 796 130 102 139 179 149 972 159 094 160 902 174 308 195 946 228 698 222 064 243 759

Current Liabilities 220 164 212 325 203 813 200 122 315 072 506 616 348 639 373 553 385 493 173 712 217 109

other liabilities 263 176 275 427 258 666 306 192 302 854 365 722 373 069 335 208 286 694 324 600 331 008

Total liabilities 1 190 018 1 200 246 1 202 425 1 259 631 1 252 449 1 737 814 1 965 242 1 832 872 1 606 484 1 698 958 1 773 183

Net Income 86 305 93 623 129 163 192 666 245 422 262 749 176 256 85 459 97 012 82 379 62 940

EBT 118 570 134 670 186 979 265 200 353 054 378 822 248 344 112 834 127 930 103 365 75 086

EBIT 162 598 177 257 229 713 307 797 393 413 439 715 322 643 186 294 196 370 161 951 115 053

CNE 2 338 538 2 556 963 2 468 568 2 424 745 2 549 112 2 744 898 2 924 067 3 810 711 3 396 126 3 234 705 3 574 999

CF form investing activities -102 919 -99 778 -123 325 -213 869 -213 423 -256 027 -450 762 -185 031 -174 182 -238 924 -98 202

Retirement of Common stock 0 13 253 71 507 178 787 172 888 551 164 0 17 060 0 0 0

Dividends 28 278 33 174 36 507 39 953 46 421 53 610 62 511 71 178 73 550 73 648 55 302

Retained Earning 642 734 702 643 795 299 948 012 1 142 084 931 656 1 044 417 1 058 698 1 082 160 1 090 891 1 098 529

Working Capital 423 920 517 513 505 349 245 166 345 092 234 042 513 553 643 564 359 911 533 659 640 919

Working Capital requirement (BFR) 399 424 371 845 338 949 154 295 413 449 445 855 466 693 443 277 454 922 434 145 532 411

% net sales 25% 22% 20% 8% 19% 20% 22% 26% 28% 25% 35%

Stockholder's equity 1 083 010 1 129 847 1 153 427 1 173 685 1 253 972 945 991 1 965 242 1 832 872 1 425 440 1 409 321 1 430 405

Debt 744 860 718 141 714 631 710 022 705 264 1 124 322 1 354 944 1 249 611 1 030 759 1 060 084 1 098 788

Repayment of Debt 5 399 4 156 1 065 532 415 125 342 205 022 236 006 419 680 470 450 142 651

Capitaux apportés par les bailleurs de fonds 1 827 870 1 847 988 1 868 058 1 883 707 1 959 236 2 070 313 3 320 186 3 082 483 2 456 199 2 469 405 2 529 193

Other Assets - Other Liabilities -143 668 -160 509 600 510 541 038 589 876 674 585 -396 119 728 228 939 927 765 300 1 045 806

Ratios

Operating profit margin 10,04% 10,36% 13,31% 15,36% 17,96% 19,92% 15,24% 10,94% 11,88% 9,45% 7,50%

Rotation des CNE 0,69 0,67 0,70 0,83 0,86 0,80 0,72 0,45 0,49 0,53 0,43

ROC 7,0% 6,9% 9,3% 12,7% 15,4% 16,0% 11,0% 4,9% 5,8% 5,0% 3,2%

Levier des autres passifs et actifs -0,079 -0,087 0,321 0,287 0,301 0,326 -0,119 0,236 0,383 0,310

Rentabilité pour les bailleurs de fonds 6,39% 8,50% 16,77% 19,87% 20,84% 14,63% 4,31% 7,15% 6,92% 4,22%

Coût apparent des dettes financières 5,91% 5,93% 5,98% 6,00% 5,72% 5,42% 5,48% 5,88% 6,64% 5,53% 3,64%

Levier des dettes financières 0,69 0,64 0,62 0,60 0,56 1,19 0,69 0,68 0,72 0,75 0,77

Rentabilité avant impôts des capitaux propres 6,68% 10,06% 23,29% 27,82% 39,18% 20,93% 3,23% 7,52% 7,97% 4,66%

Tax rate 0,27 0,30 0,31 0,27 0,30 0,31 0,29 0,24 0,24 0,20 0,16

Rentabilité après impôts des capitaux propres 0,05 0,07 0,17 0,19 0,27 0,15 0,02 0,06 0,06 0,04

ROE 0,08 0,08 0,11 0,16 0,20 0,28 0,09 0,05 0,07 0,06 0,04

Ratios de liquidite

Current Ratio 2,46 2,93 3,06 3,01 1,88 1,24 1,91 2,29 1,81 3,79 3,62

Ratios de l'endettement

Debts/Total Liabilities 0,37 0,35 0,34 0,33 0,32 0,49 0,38 0,38 0,38 0,38 0,38

Debts to Equity 0,69 0,64 0,62 0,60 0,56 1,19 0,69 0,68 0,72 0,75 0,77

Short term debts/ Total Debts 0,02 0,00 0,00 0,00 0,18 0,25 0,15 0,18 0,24 0,01 0,01

EBIT/ Interest Expenses 3,69 4,16 5,38 7,23 9,75 7,22 4,34 2,54 2,87 2,76 2,88

Flux de Fonds

Cash variation 110 635 36 487 -84 875 -44 463 -12 244 17 756 225 797 -193 268 -44 301 9 399

Short term investment variation 0 4 655 426 -2 560 -443 -2 078 0 0 0 0

EBITDA - Cap Exp - Var BFR - Taxes 403 173 460 977 772 037 381 479 697 601 851 608 546 757 509 526 574 073 235 828

Div - repurchase of common stock + variation of contributed capital 126 667 81 236 34 137 147 892 ######## 1 194 523 -63 971 -310 420 66 260 84 024

Interest Expenses + Debt - Repayment 783 489 756 572 756 300 752 087 745 208 1 059 873 1 224 221 1 087 065 679 519 648 220 996 104

ebit/cp+dfi 9% 10% 12% 16% 20% 21% 10% 6% 8% 7% 5%

moyenne 11%

ecarttype 6%

MARTIN MARIETTA

Appendix 4: Z score

thousand dollar 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Sales 1 619

877 1 711

453 1 726

102 2 004

243 2 191

052 2 207

141 2 116

421 1 702

603 1 652

885 1 713

823 1 533

596

Working Capital 423 920 517 513 505 349 245 166 345 092 234 042 513 553 643 564 359 911 533 659 640 919

Retained Earning 642 734 702 643 795 299 948 012 1 142

084 931 656 1 044

417 1 058

698 1 082

160 1 090

891 1 098

529

EBIT 162 598 177 257 229 713 307 797 393 413 439 715 322 643 186 294 196 370 161 951 115 053

Total Assets 2 273

028 2 330

093 2 355

852 2 433

316 2 506

421 2 683

805 3 032

502 3 239

283 3 074

743 3 147

822 3 243

204

Book value of total Liabilities 1 190

018 1 200

246 1 202

425 1 259

631 1 252

449 1 737

814 1 965

242 1 832

872 1 606

484 1 698

958 1 773

183

Market Value Equity 1 083

010 1 129

847 1 153

427 1 173

685 1 253

972 945 991 1 965

242 1 832

872 1 425

440 1 409

321 1 430

405

X1 0,19 0,22 0,21 0,10 0,14 0,09 0,17 0,20 0,12 0,17 0,20

X2 0,28 0,30 0,34 0,39 0,46 0,35 0,34 0,33 0,35 0,35 0,34

X3 0,07 0,08 0,10 0,13 0,16 0,16 0,11 0,06 0,06 0,05 0,04

X4 0,91 0,94 0,96 0,93 1,00 0,54 1,00 1,00 0,89 0,83 0,81

X5 0,71 0,73 0,73 0,82 0,87 0,82 0,70 0,53 0,54 0,54 0,47

Z 2,11 2,24 2,36 2,47 2,80 2,28 2,33 2,01 1,91 1,90 1,79

Grey Grey Grey Grey Grey Grey Grey Grey Grey Grey Distress

Z Score above 2.99 -“Safe” Zones. The company is considered ‘Safe’ based on the financial figures only. 1.8 < Z < 2.99 -“Grey” Zones. There is a good chance of the company going bankrupt within the next 2 years of operations.

Z below 1.80 -“Distress” Zones. The score indicates a high probability of distress within this time period.

2,11 2,24 2,36 2,47

2,80

2,28 2,33 2,01 1,91 1,90 1,79

0

0,5

1

1,5

2

2,5

3

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Z Score

Appendix 5: Beneish

thousand dollar 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Net Sales 1 619 877 1 711 453 1 726 102 2 004 243 2 191 052 2 207 141 2 116 421 1 702 603 1 652 885 1 713 823 1 533 596

CGS 1 139 687 1 200 923 1 169 302 1 321 279 1 420 433 1 382 191 1 389 182 1 158 907 1 153 991 1 217 946 415 556

Net Receivables 232 884 234 578 219 589 225 012 242 399 245 838 211 596 162 815 183 361 203 748 296 947

Current Assets (CA) 540 647 621 519 624 253 602 041 592 354 626 010 665 031 856 860 696 211 657 850 785 107

PPE (Net) 1 067 576 1 042 432 1 065 215 1 166 351 1 295 491 1 433 553 1 690 529 1 692 905 1 687 830 1 774 291 1 750 941

Depreciation 138 696 139 606 132 859 138 251 141 429 150 338 171 129 179 391 181 537 173 407 132 985

Total Assets 2 273 028 2 330 093 2 355 852 2 433 316 2 506 421 2 683 805 3 032 502 3 239 283 3 074 743 3 147 822 3 243 204

SGA Expense 114 274 121 373 127 337 130 704 146 665 155 186 151 348 139 400 130 422 124 138 100 398

7% 7% 7% 7% 7% 7% 7% 8% 8% 7% 7%

Net Income (before Xitems) 86 305 93 623 129 163 192 666 245 422 262 749 176 256 85 459 97 012 82 379 62 940

CFO (Cash flow from operations) 203 560 277 169 338 192 317 784 266 841 397 550 345 634 318 368 269 808 259 094 122 044

Current Liabilities 220 164 212 325 203 813 200 122 315 072 506 616 348 639 373 553 385 493 173 712 217 109

Long-term Debt 733 471 717 073 713 661 709 159 579 308 848 186 1 152 414 1 023 492 782 045 1 052 902 1 092 117

DERIVED VARIABLES

Other L/T Assets [TA-(CA+PPE)] 664 805 666 142 666 384 664 924 618 576 624 242 676 942 689 518 690 702 715 681 707 156

DSRI (Days' Sales in Receivables Index) 1,05 1,08 1,13 1,01 0,99 1,11 1,05 0,86 0,93 0,61

GMI (Gross Margin Index) 0,99 0,92 0,95 0,97 0,94 1,09 1,08 1,06 1,04 0,40

AQI (Asset Equity Index) 1,02 1,01 1,04 1,11 1,06 1,04 1,05 0,95 0,99 1,04

SGI (Sales Growth Index) 0,95 0,99 0,86 0,91 0,99 1,04 1,24 1,03 0,96 1,12

DEPI (Depreciation Index) 1,03 0,94 0,96 0,93 0,96 0,97 1,04 1,01 0,92 0,79

SGAI (Sales, General & Admin expenses Index) 0,99 0,96 1,13 0,97 0,95 0,98 0,87 1,04 1,09 1,11

Total Accruals/TA -0,05 -0,08 -0,09 -0,05 -0,01 -0,05 -0,06 -0,07 -0,06 -0,06

LVGI (Leverage Index) 1,05 1,02 1,04 1,05 0,71 1,02 1,15 1,14 0,97 0,97

M-score (5-variable model) -2,91 -2,93 -2,94 -2,94 -2,95 -2,69 -2,60 -2,99 -2,98 -3,70

Clean Clean Clean Clean Clean Clean Clean Clean Clean Clean

M-score (8-variable model) -2,73 -2,83 -2,95 -2,78 -2,44 -2,52 -2,44 -2,96 -2,83 -3,32

Clean Clean Clean Clean Clean Clean Clean Clean Clean Clean

Note: if M > -2.22, firm is likely to be a manipulator

M = -4.84 + 0.920 DSRI + 0.528 GMI + 0.404 AQI + 0.892 SGI + 0.115 DEPI - 0.172SGAI + 4.679 Acrrual to TA - 0.327 Leverage

M = -6.065+ 0.823 DSRI + 0.906 GMI + 0.593 AQI + 0.717 SGI + 0.107 DEPI

Appendix 6: Valuation

Discounted Cash Flow

FORECAST

(inthousands dollards) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Agregates 1413405 1459705 1494700 1667307 1767345,42 1873386,15 1985789,31 2104936,67 2231232,87 2365106,85

specialty 159911 193180 219123 202872 215044,32 227946,979 241623,798 256121,226 271488,499 287777,809

total 1573316 1652885 1713823 1870179 1982389 2101333 2227413 2361057 2502721 2652884

5,83% 5,83% 5,83% 5,83% 5,83% 5,83%

CGS 1241749 1331159 1411808 1552248,57 1645382,87 1733599,73 1826478,66 1912456,17 2027204,01 2122307,2

% of total revenus 79% 81% 82% 83% 83% 83% 82% 81% 81% 80%

gross profit 331567,00 321726,00 302015,00 317930,43 337006,13 367733,28 400934,34 448600,83 475516,99 530576,80

SGA 139400,00 130422,00 124138,00 121561,64 128855,29 126079,98 133644,78 141663,42 137649,66 132644,20

% of total revenus 9% 8% 7% 7% 7% 6% 6% 6% 6% 5%

EBIT 192167,00 191304,00 177877,00 196368,80 208150,85 241653,30 267289,56 306937,41 337867,34 397932,60

taxe rate 24% 24% 20% 16% 26% 26% 26% 26% 26% 26%

EBIT*(1-A12) 146046,92 145391,04 142301,60 164949,79 154031,63 178823,44 197794,27 227133,68 250021,83 294470,12

working cap req 443277,00 454922,00 434145,00 532411,00 564355,84 598217,19 634110,01 672156,77 712486,11 729585,77

27% 27% 27% 27% 27% 27% 2%

-23416,00 11645,00 -20777,00 98266,00 31944,84 33861,36 35892,82 38046,76 40329,34 17099,67

Varations immos net

168753,00 184466,00 95076,00 196757,00 208562,49 221076,24 234340,73 248401,23 263305,28 269624,61

10% 11% 5% 10% 10% 10% 10% 10% 10% 2%

275 391 15 713 -89 390 101 681 11 805 12 514 13 264 14 061 14 904 6 319

OFCF -

105928,08 118033,04 252468,60 -34997,21 110281,30 132448,33 148636,96 175026,43 194788,44 271051,13

Terminal Value 6 471 666

2013 2014 2015 2016 2017

5,83% 5,83% 5,83% 5,83% 5,83%

Unemployment rate 5,8 9,3 9,6 8,1 7,6 7,8 8,1 7,7 7,8

GDP growth rate -3,1 2,4 1,8 2,2 2,1 2,3 2,3 2,4 2,4

- Terminal Value’s evaluation

2017

Net Revenues 2 502 721

2038597 Operating Expense 2 154 951

Depreciation & Amortization 50 000 Change in Working Capital 17 100 CAPEX 50 000 Wacc 6,00% Tax rate 26% Cycles inputs

Phase Upward Peak Downward Trough

Phase Length 6 3 4 3

Periods Left in first Phase 5

Cyclic growth 6,00% 0,50% -5,00% 0,50%

Adjusted discount rates (wacc) 0,00% 5,48% 11,58% 5,48%

Initial Cycle Terminal Value Cycle calculation k-cyclic Net Revenues 213,52% 48 644 001 22 781 491 Operating Expense 213,52% 41 347 401 19 364 267 Depreciation & Amortization 213,52% 916 814 429 372 Change in Working Capital 213,52% 313 544 146 842 CAPEX 213,52% 916 814 429 372 Free Cash Flow

4 407 498 2 064 168

TV 6 471 666

The method of valuation specified by Copeland, Koller, and Murrin and Damodaran for firms with cyclic cash flows is to

forecast the cash flows out one full cycle (possibly more if starting mid-cycle) and then use the cash flow one period

beyond the cycle to produce a terminal value assuming a constant perpetual growth rate. Presumably, the perpetual growth

rate should be set to represent any future cash flow cycles and any trends emerging within the future cycles (e.g. a steady

upward or downward drift) reasonably well. One can argue that the future cash flows are so distant, that any error

generated by such an assumption is minimal.

To generate a perpetuity for the terminal value, calculate a ―k-cyclic‖, which is a calculation involving all of the cyclic

growth rates and the adjusted discount rate. For each period within the cycle, take one plus the discount rate and divide it

by one plus the growth rate of the associated cash flow.

- Target Price

EV 5 886 271,37 €

debt outsanding 1 092 000,10 €

equity value 4794271,27

Shares out 45910,00

104,43

0.005 spread is added to the Wacc to account for future risk.

Effective Tax rate 26% 10k Rd 6,8% av cost of debt 10k

Rf 1,81% Fed 10 yr treas rate

Equity risk premium 6,17% Damodaran βe 1,15 sur 2 années D/E 0,75 D/E+D 0,43 βa 0,66 E/E+D 0,57 Re 6% wacc 0,05313 WACC 6,00% = g 2,4% Fama French ku 3,63% wacc 0,03424

*Using Fama French to calculate Wacc: We regressed the returns of the share price over the last 200 days with 3 factors

(Mkt-Rf, SMB, HML) calculated daily founded in the site Fama French to find Ku.

Coefficients Erreur-type

Constante -

0,00020789 0,00096827

RM-RF 0,0100735 0,00126993

SMB 0,00645946 0,0024338

HML 0,00356049 0,00263049

Appendix 7: Other Information about Industry Overview and Competitive Positioning

- The cost of shipping cement is high over long distances. As a result, cement is generally sold from local sources.

Barge and rail modes account for the remaining distribution modes. Much of the industry is still concentrated

along the Mississippi River system in the mid-west because of the ease of transport.

- Domestic production does not satisfy the total U.S. cement consumption, which is filled by about 10 million

metric tons of imported cement and cement clinker. About 90.2% of cement and clinker imported in 2008 came

from five major countries: China, Canada, Columbia, Mexico, and the Republic of Korea.

- The current economic downturn affected the US cement industry. From 2005 to 2010, 48 of 50 US States

observed a decreased in cement consumption. Most badly affected were Arizona (-69%), Florida (-68%), Nevada

(-68%), Georgia (-61%) and California (-60%). The two states seeing a net increase were Louisiana and Nord

Dakota (+17% although at a low level).

Key point of industry:

Heavy industry: The cost of facilities required to produce one million tons of cement is 150 million Euros it cost equals

their sales for three years.

High consumption of energy: Each ton of cement produced requires the equivalent of 60 to 130 kg of oil, or an

average of 110 kWh.

The production of greenhouse gas emissions: The only cement is responsible for 5% of global CO2 emissions.

These emissions are due: 40% fuel to heat the limestone to 60% decarbonisation of the rock during heating.

When the cement there is no fixed CO2, is taking to the water as opposed to taking the lime which sets the same amount

of CO2 that is emitted during the decarbonation.

Low need for labor: A modern plant one million tons capacity employs less than 150 people.

The obligation to produce locally: The cost of road transport is equivalent to the cost of the product beyond 300 km

(25 t payload per truck) and therefore limits the effective radius of inland transport. This constraint makes the cement

market a regional market. However, the cost of maritime freight transport volumes compared (boats 35 000 tons) allows

intercontinental (per ton transported, it is cheaper to cross the Atlantic in a cargo of cement that move 300 km by road).

Homogeneous characteristics: While the cement is produced from local natural materials, different depending on

where a plant is, the finished product meets the same standards. Therefore, more than the quality of cement is its

availability and customer service that are critical in the deed, after the course price.

Consumption is strongly related to local development: Europe and North America, the market demand for cement

has increased dramatically during the twentieth century and the development of the industry has responded to the needs of

increasing urbanization. After World War II, and despite a cyclical, the consumption of industrialized countries has

increased by a factor of 6-8, until the oil shock of 1975. Since then, the so-called mature Western markets fell by about 20

to 40%, the need for heavy infrastructure having been filled and replaced by the consumption of maintenance. However,

over the past twenty-five years, some European countries (Greece, Portugal and Spain, for example) have doubled or

tripled their consumption due to their high rate of growth (GDP)

From one country to another, cement consumption per capita varies greatly depending on the geographic patterns (tunnels

and bridges in mountainous areas), the seismic constraints (Greece, Turkey) and climatologically (concrete highways in

the country north), local habits, population density and growth cycle. The European average in 2004 (source

CEMBUREAU) of 528 kg per capita, with peaks at 1221 kg for Luxembourg, 1166 kg for 963 kg for Spain and Greece

and hollow Sweden (192 kg) Latvia (200 kg) and the UK (216 kg)

- Competition:

Cement Multinationals

Cement is partly produced by the major multinational cement firms such as Lafarge, Cemex, Holcim and Heidelberg

Cement. Between them the big four control approximately 40% of the integrated cement plants and 49% of the

operational capacity. 8 Smaller multinationals like Titan and Buzzi Unicem and homegrown producers like Ash Grove

Cement and Texas Industries take up the remaining share of the market.

CEMEX: Cemex entered the US market in 1994 with the acquisition of the Balcones plant in Texas, which had

previously been owned by Lafarge. In the autumn of 2000 Cemex acquired the interests of the Texas-based cement,

concrete and aggregates producer Southdown, Inc. Cemex now has 13 plants and 46 terminals stretching from California

to Florida and up into the mid-west.

According to the 2012 edition of the Global Cement Directory, Cemex has an integrated cement capacity of 12.6Mt/yr. In

the first quarter of 2012, Cemex reported a sale growth in its US operations.

In 2011 the group net sales in the US increased by 1% year-on-year to US$2.5bn. The EBITDA was a loss of US$100m.

Cement sales volumes were down year-on-year by 2%.

In the first quarter of 2012 the US operations reported net sales of US$684m, up by 35% from the same period in 2011.

Operating EBITDA for the quarter was a loss of US$24m, an improvement on the US$45m loss made in the same quarter

of 2011.

Lafarge: After establishing a strong Canadian base in Richmond in 1956, the French building materials group Lafarge

entered the US in 1981 with the takeover of US-based cement producer General Portland. Today Lafarge has a strong

presence in the US cement market, with a total of 10 cement plants and 10.4Mt/yr of integrated cement capacity.

For 2011 annual report, Lafarge North American markets remained flat, reflecting the uncertain economic environment. It

sold 13.5Mt in the US and Canada, down on 13.6Mt sold in 2010. The group's operating income for cement in North

America was US$98.2m (- 6.7% compared to 2010). The US Lafarge's total operations brought in US$1.89bn, down on

2010 when it took US$2.06bn.

Holcim: Swiss-based Holcim has eight plants at locations across the US, employs over 1800 people and has a capacity of

15.3Mt/yr. Its plants are well spread out, in Alabama, Colorado, Missouri, Montana, South Carolina, Texas, Oklahoma

and Utah.

The group has the highest average US plant capacity among the multinationals, at 1.8Mt/yr. Part of this is due to its

4Mt/yr Ste. Genevieve development in Ste. Genevieve County, Missouri, which came on stream in July 2009.

While Holcim saw a 5.6% increase in its total cement sales in 2011 compared to 2010 and increased its sales in its North

American cement interests by 2.9%, the US saw only a minimal increase in cement sales. Its US sales rose by 2.7%,

taking volumes from 11.1Mt in 2010 to 11.4Mt in 2011 due to the slight improvement of the US construction sector.

In monetary terms, its sales and EBITDA in North America were both down in 2011, to US$3.27bn and US$380m from

US$3.55bn and US$504m respectively.

Cement - Other multinationals

Buzzi Unicem: Italy's Buzzi Unicem group operates nine cement plants in the US, with a total capacity of 9.5Mt/yr. It

shares ownership of the Louisville, Kentucky plant with Cemex. Buzzi reports that it has approximately 9% of the US

market.

Essroc: The Italcementi group operates cement plants in the US and the rest of North America under the Essroc name. It

has 6.5Mt/yr of cement capacity in the US.

Appendix 8 :

ENVIRONMENTAL

Texas is subject to various federal, state and local environmental, health and safety laws and regulations. These laws and

regulations govern, among other things: air emissions, wastewater discharges, investigations and remediation of

contamination existing at current and former properties, etc...

Appendix 9: SWOT analysis

STRENGTHS

- Leading position in its markets

- Implanted in the two largest cement market

- Well knowledge of markets’ evolution

- Strategy based on acquisitions and synergies

WEAKNESSES

- Slow adaptability of its expenses regarding to

the change of economy market

- Regional position which limits shipments

- Local player which has difficulties to

compete international companies

OPPORTUNITIES

- Increase of the cement consumption for the

years to come

- Recovery of the housing market USA. It

might be slow to start, but once it gets it

keeps on going for a while

- Government spending increased makes the

demand for the construction industry also

increase

THREATS

- Results can be affected by: weather

conditions, fluctuation on the costs of raw

materials, energy, transportation

- Business is cyclical and regional in nature

- Adverse weather conditions

- Availability of raw materials

- Changes in energy costs including, without

limitation, natural gas and oil.

- Changes in the demand for residential

housing construction or commercial

construction increases in interest rates,

decreases in demand for construction

materials or increases in the cost of energy

IMPORTANT DISCLAIMER

Please read this document before reading this report

This report has been written by Master 2 analysis financial, International Program students at FFBC, Lille 2 University in

partial fulfillment of their course requirements. It is intended to serve as an example of student work at the University,

trying to make an investment advice.

The document aims at presenting the operational, economical and financial characteristics of MARTIN MARIETTA

MATERIALS in order to make a recommendation after estimating its stock price. It is based on publicly available

information and may not be complete of all relevant data.

We also make an investment research on two listed companies in NYSE: Eagle Materials Inc and Texas Industries Inc.

Students:

- Thierry FOGUE – Thierry.foguembah@skema.edu

- Loic FOURNIER – loic.fournier@live.fr

- Duy Anh NGUYEN – duyanh.nguyen@hotmail.fr

Profesor: Michel LEVASSEUR