Eagle Materials Inc · NYSE:EXP
Eagle Materials — Wells Fargo Securities Housing and Building Products Conference 2010
46 slides from Eagle Materials's conference presentation, Feb 23, 2010
Slide 1: Wells Fargo Securities Housing and Building Products Conference
Wells Fargo Securities Housing and Building Products Conference February 2010 Low Cost Producer Exhibit 99.1
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified b
Slide 3: Agenda
Agenda • Who We Are • Industry Outlook • Eagle Materials Outlook
Slide 4: Eagle Materials
Eagle Materials • Major North American cement producer • Four geographically diversified plants, supported by 10 cement terminals • Lowest cost producer -- profitable through the cycle • Complimenting the cement business are concrete and aggregates operations, which enjoy strong competitive position
Slide 5: Ten Hallmarks of How We Operate
Ten Hallmarks of How We Operate • Decentralized, profit center model with low overhead -- no frills • Intense focus on operating metrics • Provide the most demanded commodity products with consistent high quality • Focus of innovation on operating efficiency improvement – to maintain and extend low
Slide 6: Criteria for Major New Investment
Criteria for Major New Investment • Strengthens core business position in gypsum wallboard, cement or aggregates • Improves low-cost producer positions • Improves regional market diversification • Provides superior return on investment • Preserves balance sheet health and financial flexibility Track
Slide 7: Multiple Sources of Cost Advantage
EXP Industry EXP EXP EXP EXP EXP EXP Industry Industry Industry Industry Industry Industry Multiple Sources of Cost Advantage Raw Materials and Inputs Manufacturing and Overhead Raw Materials Cost Paper Weight Production Waste Natural Gas Usage G&A Construction Cost Eagle Cost Advantages Operating E
Slide 8: Low Cost Commodity Producer Advantages
Low Cost Commodity Producer Advantages
Slide 9: Agenda
Agenda • Who We Are • Industry Outlook • Cement • Gypsum Wallboard • Eagle Materials Outlook
Slide 10: Cement
Cement
Slide 11: US Cement Industry Outlook
US Cement Industry Outlook • Demand has declined approximately 26% year-over-year in calendar 2009 • Several plant closures and delays of expansion projects have been announced, however several new plants came on-line last year, representing nearly 11 million short tons of new clinker capacity • Imp
Slide 12: US Cement Consumption Outlook
US Cement Consumption Outlook Million Metric Tons US Capacity Source: Portland Cement Association 2010 Winter Forecast and Eagle Materials analysis Imports
Slide 13: Regional Cement Consumption Forecasts
Regional Cement Consumption Forecasts Metric Tons Source: Portland Cement Association State Forecast Reports, Winter 2010, Eagle Materials Analysis Core Regional Capacity Core Regional Capacity Illinois (IL and WI) Core Regional Capacity Nevada (W. NV and N. CA) Core Regional Capacity
Slide 14: Infrastructure Update and Outlook
Infrastructure Update and Outlook Silver lining: Sustained gains in cement consumption in 2011-2014 as projects are pushed forward
Slide 15: Eagle Materials
‘Eagle. Materials
Slide 16: Gypsum Wallboard Industry Update
Gypsum Wallboard Industry Update Demand • Demand is half of what it was at the peak • We anticipate the start of a cyclic recovery next year, with 2010 being relatively flat Supply • Capacity has not dropped materially from the 2005 peak What’s Needed for Higher Industry Profitability • Demand needs
Slide 17: US Demand for Gypsum Wallboard Closely Linked with Housing
US Demand for Gypsum Wallboard Closely Linked with Housing New Home Sales (000) BSF Source: US Census Bureau, company analysis
Slide 18: Base Case Demand Outlook
Base Case SF Starts 2009 440,000 2010 560,000 2011 870,000 Base Case Demand Outlook Single Family Housing Starts, in Millions, SAAR Source: Moody’s Economy.com, December 2009
Slide 19: Architectural Billings Index
Architectural Billings Index December 2009 As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag between architectural billings and construction spending. Any score above 50 indicates an increase in billings. Source: American Institute of
Slide 20: Geographic Wallboard Supply/Demand Imbalance
% of Capacity in East USG 70% National 74% Koch 45% CertainTeed 37% Eagle (AGC) 21% Lafarge 100% Temple 58% Geographic Wallboard Supply/Demand Imbalance Supply 15.5 Demand 8.7 Difference 6.8 Fact Eagle has •Strong West positions •Low exposure to east •Low-cost eastern plant is in favorable Carolina
Slide 21: Capacity Balancing at the Trough
Capacity Balancing at the Trough Supply Supply Demand On On On On On On Off Off Off
Slide 22: Capacity Balancing at the Trough
Capacity Balancing at the Trough On Off Creates Diseconomies Curtail / Start-Stop Permanent Shut-Down Mothball Not Always Necessary Reduces Capacity Preserves Option Lowers System Delivered Costs
Slide 23: A Tale of Two Industries
A Tale of Two Industries The Same … Billion Square Ft. Million Squares
Slide 24: A Tale of Two Industries
A Tale of Two Industries The Same… Gypsum Wallboard Asphalt Shingles Universally used construction product Housing driven demand Sold through wholesale distributors Low industry capacity utilization … yet different
Slide 25: Edize:
Edize: Is
Slide 26: Slide 26
Slide 27: Slide 27
Slide 28: Agenda
Agenda • Who We Are • Industry Outlook • Eagle Materials Outlook
Slide 29: Financial Highlights
Financial Highlights $ in millions, For Fiscal Years Ending March 31 * Estimated Operating earnings are before Corporate G&A Revenues Operating Earnings*
Slide 30: Financial Highlights
Financial Highlights $ in millions, For Fiscal Years Ending March 31 Revenues Operating Cash Flow
Slide 31: Leading Performance
Leading Performance Note: This is based on comparison of EBITDA Margins (TTM) for each of the listed companies for the most recently reported period. EBITDA margins represent earnings before interest, taxes, depreciation and amortization / revenues. EBITDA is a non-GAAP measure. See slide entitled “
Slide 32: The Song Was the Same in 2007 (Peak)
The Song Was the Same in 2007 (Peak) Note: This is based on comparison of EBITDA Margins (TTM) for each of the listed companies for the most recently reported period. EBITDA margins represent earnings before interest, taxes, depreciation and amortization / revenues. EBITDA is a non-GAAP measure. See
Slide 33: Return on Average Assets
Return on Average Assets Five Year Average S&P 1500 Materials Group (N=86) Top 10% Bottom 10% Eagle Materials Source FactSet, December 2009
Slide 34: Return on Average Equity
Return on Average Equity Five Year Average S&P 1500 Materials Group (N=86) Top Quintile Bottom Quintile Eagle Materials Source FactSet, December 2009
Slide 35: Disciplined Use of Cash
Disciplined Use of Cash $ Millions Maintenance Dividends Growth and Improvement Share Repurchases
Slide 36: Capital Structure
A 6/30/08 Capital Structure 9/30/08 12/31/08 3/31/09 6/30/09 9/30/09 12/31/09 $406 $416 $425 $428 $437 $446 $449 $396 $383 $352 $337 $324 $296 $278 $- $100 $200 $300 $400 $500 Equity Net Debt
Slide 37: Debt Maturity Schedule
$in Thousands $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2010 2011 | > |e $127,200 $77,200 $38,600 $36,500 $9,500 $11,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fiscal Years ™ 2005 Senior Notes 2007 Senior Notes
Slide 38: Resilience and Performance
Resilience and Performance Eagle’s ability to perform through down-cycles and thrive in the up-cycles is due to the company’s • Low cost producer position • Strong cash flow from low-cost operations • Low overhead • Consistent quality products • Exceptional customer service and long-term relationshi
Slide 39: Contact Information
Contact Information Steve Rowley President and CEO (214) 432-2020 srowley@eaglematerials.com Craig Kesler Executive Vice President and CFO (214) 432-2013 ckesler@eaglematerials.com Bob Stewart Executive Vice President, Strategy, Corporate Development and Communications (214) 432-2040 bstewart@eaglem
Slide 40: Questions and Answers
Questions and Answers
Slide 41: Eagle Materials' Major Facilities
EAGLE MATERIALS’ MAJOR FACILITIES AMERICAN GYPSUM COMPANY Albuquerque, New Mexico Gypsum, Colorado Duke, Oklahoma Georgetown, South Carolina ILLINOIS CEMENT COMPANY LLC LaSalle, Illinois MOUNTAIN CEMENT COMPANY Laramie, Wyoming NEVADA CEMENT COMPANY Fernley, Nevada TEXAS LEHIGH CEMENT COMPANY LP Bud
Slide 42: Eagle's Wallboard Operations at a Glance
Eagle’s Wallboard Operations at a Glance American Gypsum • 18-year history • Nearly 4.0 bsf of capacity • Est. 10% market share (Top 5 in US) • Lowest cost producer • Consistent quality • Exceptional customer service Wallboard Plants Reload/Distribution Yards Core Markets Served
Slide 43: Eagle's Gypsum Paperboard at a Glance
Eagle’s Gypsum Paperboard at a Glance • Original design capacity of 220,000 tons has been increased to 320,000 tons • Republic produces light-weight gypsum paperboard • 15% lighter than gypsum industry average • Superior wallboard conversion characteristics • Produces uniform cross-directional stren
Slide 44: Eagle's Cement Operations at a Glance
Eagle’s Cement Operations at a Glance Approximately 3.1 million tons of capacity 3.1% market share (Top 12 in North America) Low cost producer Exceptional quality and customer service Cement Plants Cement Terminals Markets Served
Slide 45: Eagle's Concrete and Aggregates Operations at a Glance
Eagle’s Concrete and Aggregates Operations at a Glance • Strong competitive position in local markets • Capacities • Aggregates – 5.5 mil tons • Concrete – 850,000 cu yds • Complimentary to Eagle’s Cement business • Vast aggregates reserves: over 1 billion tons in No. CA • Exceptional quality and cu
Slide 46: Explanation of Non-GAAP Items
Explanation of Non-GAAP Items EBITDA represents net income, plus interest expense (less interest income), provisions for income taxes and depreciation and amortization expense. EBITDA is a non-GAAP measure that provides supplemental information regarding the operating performance of our business wit
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