Connections

Issue 2 • Volume 3 • April 10

CORPORATE UPDATES

Message from CEO Doug Black

Doug Black, CEO

As we expected, the start of this year has been very challenging. The sluggish economy was compounded by poor weather through the first three months, which has resulted in very low volumes and an increase in our traditional winter financial losses. However, we continue to be cautiously optimistic about the year in total as we have acceptable backlogs and have seen a pick up in volumes in the last several weeks with improved weather. Our success will depend on how well we work together, communicate and make things happen on a daily basis.

Results
Safety: We are again off to a very good start in safety with zero fatalities and record low results in our recordable and lost-time incident rates.

People: We completed our first round of year-end performance reviews in March utilizing SuccessFactors and are now establishing goals and personal development plans for all salaried/exempt employees in the system for 2010. Additionally, we are planning for new leadership training and sales training across OMG.

Customers: Through our commercial OPS teams and processes, we are implementing strategies to gather more and better customer feedback. Based on this feedback, we are creating ways to provide more valuable services for customers.

Financial: Despite excellent cost performance, profits in the first three months were below budget due to depressed volumes. With better weather and improving market fundamentals, we expect to get back on track in order to hit our goals.

Community/Environment: Oldcastle Materials and Oldcastle matched employee donations in order to give $154,000 to Haiti relief efforts. In addition, we are constructing the first-ever Oldcastle Habitat House for a family in need in Atlanta this spring.

Growth: We continued to grow our business through the purchase of quarry, asphalt and rail assets from Lafarge in Missouri and Ohio and with the acquisition of A.L. Blades Company in upstate New York. We also completed the construction of a new asphalt plant in New Hampshire.

2010 Outlook
Despite the slow start, we are beginning to see signs of stability in 2010. Federal spending for highways and bridges in 2010 has been secured, which will help stabilize state spending for the remainder of the year. Residential construction also continues to show signs of stability at a low level. Commercial construction is still declining, but we will see more federal stimulus work this year that will help to offset this weakness. All in all, our outlook continues to be for a flat year which would mark the bottom of this recession.

Our challenge for this year is the same regardless of the market. We must execute the basics of our business and achieve excellence in safety, quality, customer service, efficiency, cost control, pricing and selling, cash management and getting more done with less. Your teamwork, creativity and perseverance in making positive things happen for the business every day will be crucial. Let’s continue to put our very best into delivering another good year for Oldcastle Materials.

A Special Note on Integrity
Oldcastle Materials is a great company and one of the most successful in our industry. Furthermore, we have achieved success as a decentralized federation of local businesses, which is very different than our peers. Our local teams have a wide degree of latitude to make decisions and run the business to be successful in our local markets. We aggressively share best practices through OPS, safety, profit improvement teams and other initiatives, and we have a uniform measurement and reporting system, but the local company teams run the business.

Accordingly, integrity must be at the core of our decentralized system – a complete and absolute trust in the accuracy of information that is shared between our local teams and CRH/Oldcastle. Without this trust, the entire decentralized system begins to break down.

In January, we discovered such a breakdown in our system. A region was misreporting inventory and several other items in order to make the profits look higher than they really were. This misreporting had been going on and hidden for several years.

The individuals responsible for this fraud have been terminated and the positions of others who knew about the issue but failed to come forward (due to fear or coercion) have been adjusted accordingly. However, we must use this very disappointing event as a lesson learned that fraud can happen and will happen if we don’t hold ourselves accountable and continuously stress integrity in all of our dealings. Both committing fraud or having knowledge of fraud and not raising the issue are unacceptable at Oldcastle Materials.

Whether you are entering production, filling out safety reports, generating quality control information, processing sales or financial data, or sharing information in any form, it is critical that this information is, to the best of your knowledge, 100 percent truthful and accurate. Integrity is not something that you can have some of the time; it is something that is either 100 percent or zero. Integrity is earned every day through your actions and can be lost with one poor choice.

Due to this fraud, we will be making doubly sure that proper financial controls are in place at all of our companies. More importantly, we are going to ensure that each of you understands that committing fraud or having knowledge of fraud with no action is simply unacceptable and will subject you to immediate termination. Finally, we want to reinforce with all employees the need to communicate any fraud or attempted fraud either to the appropriate senior manager who is not involved or through our Oldcastle Ethics and Compliance Employee Hotline at (888) 312-2698.

Every employee in Oldcastle Materials has a role in ensuring that we do business with the highest standards of integrity in everything that we do. Together, let’s make sure that we protect the reputation of our company and enjoy being a member of a truly world-class team.

Summing Up
We have had a rough start to the year in many ways; however the year ahead looks promising, and we are continuing to improve in all areas of the company. Let’s work together and make this year a success. Thank you for your commitment to Oldcastle Materials.

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