Eagle Materials Inc · NYSE:EXP
Eagle Materials — Construction Materials Conference, Longbow Research 2008
48 slides from Eagle Materials's conference presentation, Feb 21, 2008
Slide 1: Construction Materials Conference, Longbow Research
Construction Materials Conference Longbow Research February 21, 2008 New York City ?NYSE: EXP Growing Into the 21st Century - Built to Last
Slide 2: Forward Looking Statements
Forward Looking Statements 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
Slide 3: Agenda
Long-Term Construction Outlook Eagle's Growth Initiatives Near-Term Construction Outlook Industry Outlook Eagle at a Glance Eagle Materials Inc.
Slide 4: Favorable Long-Term Construction Outlook
Favorable Long-Term Construction Outlook Long-term Growth Driven by Demographics Total U.S. Population Additions 65 million people by 2030, 22% increase from 2000 Housing, Retail and Infrastructure - Growth in Households 31 million households added by 2030 Educational Construction - Growth in school
Slide 5: Public Infrastructure Growth
Public Infrastructure Growth
Slide 6: Public Infrastructure Repair
Public Infrastructure Repair
Slide 7: New Residential Construction Long Term Outlook
As the nation's population grows to 376 million, the USA will need 59 million new housing units by 2030. Brookings Institute 12-13-04 "Opportunity to Rebuild America" In thousands of units Long Term Outlook New Residential Construction 9,850 6,278 7,945 3,638 7,120 3,707 14,109 4,597 1,869 Georgetow
Slide 8: Existing homes in need of repair or replacement
Existing homes in need of repair or replacement Approximately 125 million homes exist today Over 50% of homes in the United States today were built more than 30 years ago. Over the past decade, repair and remodeling spending has increased 5% each year. Over the next decade approximately 15% of exist
Slide 9: Commercial Repair and Remodel
Commercial Repair and Remodel
Slide 10: Agenda
Long-Term Construction Outlook Eagle's Growth Initiatives Near-Term Construction Outlook Industry Outlook Eagle at a Glance Eagle Materials Inc.
Slide 11: Current Growth Initiatives
Current Growth Initiatives Estimated Completion Date Approximate Cost Wallboard Greenfield Plant in South Carolina Complete $150 Cement Modernization and Expansion of Nevada Cement Fall 2009 $200 Modernization and Expansion of Mountain Cement 2010 $120 TOTAL $470 ($ in millions)
Slide 12: Georgetown, South Carolina Wallboard Project
Georgetown, South Carolina Wallboard Project Project Background New gypsum wallboard plant with annual design capacity of 750 mmsf Long-term supply agreement for synthetic gypsum with Santee Cooper (South Carolina Public Service Authority) Increases Eagle's annual wallboard capacity by approximately
Slide 13: Georgetown, South Carolina Progress Photos
Georgetown, South Carolina Progress Photos The First Attempt
Slide 14: Georgetown, South Carolina Progress Photos
Georgetown, South Carolina Progress Photos The Second Attempt - Our First Board
Slide 15: Georgetown, South Carolina Progress Photos
Georgetown, South Carolina Progress Photos 8/31/06 2/24/07 12/21/07 1/31/08
Slide 16: Nevada Cement Modernization
Nevada Cement Modernization Project Background Plant located just east of Reno, Nevada Serves the Northern Nevada and Northern California cement markets Approximately $200 million investment Modernization includes: Expanding capacity by approximately 100% to 1.1 million tons Reducing operating costs
Slide 17: Mountain Cement Modernization
Mountain Cement Modernization Project Background Plant located in Laramie, Wyoming (serves the Mountain States region) Approximately $120 million investment Modernization includes: Expanding annual capacity by approximately 30% to 0.9 million tons Reducing operating costs significantly Project Statu
Slide 18: Western Aggregates Expansion
Western Aggregates Expansion Project Background Largest aggregates deposit in California Located approximately 50 miles north of Sacramento Northern California short of aggregates reserves Project includes rail link to aggregate-starved markets
Slide 19: Efficient Facilities Drive High Operating Margins
Efficient Facilities Drive High Operating Margins Cement Illinois Cement Company 5 stage preheater/precalciner Texas Lehigh Cement Company 4 stage preheater/precalciner Mountain Cement Company 5 stage preheater/precalciner Nevada Cement Company 5 stage preheater/precalciner Concrete/Aggregate Domina
Slide 20: Future Growth Opportunities
Future Growth Opportunities Eagle continues to acquire additional raw material resources (Gypsum and Limestone) for future growth opportunities in our two main business lines: wallboard and cement.
Slide 21: Agenda
Long-Term Construction Outlook Eagle's Growth Initiatives Near-Term Construction Outlook Industry Outlook Eagle at a Glance Eagle Materials Inc.
Slide 22: Residential Construction Near Term Outlook
Residential Construction Near Term Outlook Months' supply of new and existing homes has put downward pressure on new housing starts Months' supply of new homes is approaching 10 months, which is greater than 20 year historical average Permits for new construction continue to fall due to inventory ov
Slide 23: New Home Supply 1972-2007
New Home Supply - 1972 - 2007 New Home Months Supply New Homes for Sale as % of Total Housing Stock Percentage of Loans in Foreclosure 1972 5.2 0.004 5.4 0.004 6.1 0.0042 5.8 0.0044 6.1 0.0046 6.3 0.0048 6.3 0.0049 6 0.0051 6.2 0.0052 5.7 0.0054 6.8 0.0055 6.5 0.0056 1973 6.5 0.0054 6.8 0.0053 7 0.0
Slide 24: U.S. Single Family Housing Starts 1972-2008E
U.S Single Family Housing Starts - 1972-2008E Housing Starts 1972 1309.2 1973 1132 1974 888.1 1975 892.2 1976 1162.4 1977 1450.9 1978 1433.3 1979 1194.1 1980 852.2 1981 705.4 1982 662.6 1983 1067.6 1984 1084.2 1985 1072.4 1986 1179.4 1987 1146.4 1988 1081.3 1989 1003.3 1990 894.8 1991 840.4 1992 102
Slide 25: U.S. Single Family Building Permits 1972-2008E
U.S Single Family Building Permits - 1972-2008E Housing Starts 1972 1033.1 1973 882.1 1974 643.8 1975 675.5 1976 893.6 1977 1126 1978 1182.6 1979 981.5 1980 710.4 1981 564.3 1982 546.4 1983 901.5 1984 922.4 1985 956.6 1986 1077.6 1987 1024.4 1988 993.8 1989 931.7 1990 793.9 1991 753.5 1992 910.7 199
Slide 26: While Real Estate is a Local Business...
While Real Estate is a Local Business... Q189 Q289 Q389 Q489 Q190 Q290 Q390 Q490 Q191 Q291 Q391 Q491 Q192 Q292 Q392 Q492 Q193 Q293 Q393 Q493 Q194 Q294 Q394 Q494 Q195 Q295 Q395 Q495 Q196 Q296 Q396 Q496 Q197 Q297 Q397 Q497 Q198 Q298 Q398 Q498 Q199 Q299 Q399 Q499 Q100 Q200 Q300 Q400 Q101 Q201 Q301 Q401
Slide 27: While Real Estate is a Local Business...
While Real Estate is a Local Business... Q189 Q289 Q389 Q489 Q190 Q290 Q390 Q490 Q191 Q291 Q391 Q491 Q192 Q292 Q392 Q492 Q193 Q293 Q393 Q493 Q194 Q294 Q394 Q494 Q195 Q295 Q395 Q495 Q196 Q296 Q396 Q496 Q197 Q297 Q397 Q497 Q198 Q298 Q398 Q498 Q199 Q299 Q399 Q499 Q100 Q200 Q300 Q400 Q101 Q201 Q301 Q401
Slide 28: While Real Estate is a Local Business, Financing Real Estate is National
While Real Estate is a Local Business, Financing Real Estate is National High level of foreclosure prospects perpetuates falling residential real estate prices Falling prices require larger percentage down payments Even with large down payments, it is increasingly difficult to qualify Bank spreads a
Slide 29: Private Non-Residential Construction Spending
Private Non-Residential Construction Spending - Value Put in Place 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 119.135 127.459 140.386 155.407 168.281 179.913 177.15 183.741 171.905 139.019 127.956 127.569 129.634 144 162.6 157.8 Source: U.S. Bureau of the Census
Slide 30: Public Construction Spending
Public Construction Spending - Value Put in Place Source: Portland Cement Association (Projection from Fall 2007). 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E Public Construction 130.4 129.6 134.3 141 148.2 147.9 155.3 162.3 170.6 175.1 170.8 155 154.6 161.8 176.
Slide 31: Improved Highway Spending
Improved Highway Spending Annual Spending Levels 1998 21.5 1999 25.5 2000 27.7 2001 29.9 2002 31.8 2003 31.6 2004 34.4 2005 35.2 2006 36.8 2007 39.8 2008E 40.3 2009E 41.9 Source: American Road & Transportation Builders Association (ARTBA) TEA-21 SAFETEA
Slide 32: Repair and Remodel Construction Spending
Repair and Remodel Construction Spending - Value Put in Place Source: U.S. Bureau of the Census; NAHB Projection 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E Public Construction 148.4 147 144.4 149 152.9 151.7 163.4 160 167.6 171.2 176 172.1 168.9 Repair and Remodel Construction
Slide 33: Agenda
Long-Term Construction Outlook Eagle's Growth Initiatives Near-Term Construction Outlook Industry Outlook Eagle at a Glance Eagle Materials Inc.
Slide 34: Slide 34
Slide 35: U.S. Cement Industry Overview
Imports U.S. Cement Industry Overview Capacity vs. Consumption Source: PCA Data and Company estimates (Calendar Year) 2008 Demand - down 2% 2008 Supply - up 3.5% 50 75 100 125 150 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08E millions of short
Slide 36: Slide 36
Slide 37: Wallboard Industry Update
Wallboard Industry Update Wallboard demand was 30.2 billion square feet (BSF) in 2007 Down 16.5% from 2005 peak 2008 annual year-over-year decline will be greater than 10% Wallboard production capacity continues to increase Primarily synthetic gypsum plants in the East Wallboard production capacity
Slide 38: Agenda
Long-Term Construction Outlook Eagle's Growth Initiatives Near-Term Construction Outlook Industry Outlook Eagle at a Glance Eagle Materials Inc.
Slide 39: Nation's Highest Margin Construction Products Company
Low-cost producer of cement and wallboard Stable earnings and cash flow from sold out cement plants Constructing high return growth projects in both cement and wallboard Repurchased approximately 10% of our stock during fiscal year ending March 31, 2008 and approximately 25% since our January 2004 s
Slide 40: We Continue to Outperform the Group
We Continue to Outperform the Group * USG CRH TXI Cemex Lafarge SA Martin Marietta Vulcan Eagle East 0.037 0.101 0.123 0.136 0.184 0.196 0.211 0.285 EBIT Margins (TTM) * Based on comparison of EBIT Margins (TTM) for each of the listed companies for the most recently reported period.
Slide 41: Financial Highlights
Financial Highlights ($ in millions) 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 Revenues 328 380 463 638 731 605 For the Nine-Months Ending 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 Op Income 84 87 129 190 269 168 * Before Corporate G&A Revenues Operating Earnings *
Slide 42: Eagle's Dividend
Eagle's Dividend Eagle's TTM Industry TTM * Payout 0.288 0.33 Eagle's Dividend (1) Industry Average * Payout 0.023 0.02 * TXI, USG, VMC, MLM, CX, LG, SGO, CRH, HOLN, JHX (1) Based on $35 per share stock price
Slide 43: Share Buybacks and Cash Dividends Paid
Share Buybacks and Cash Dividends Paid 1999-2008 YTD Dividends Share Buybacks 2004 * 116600 3100 2005 22200 43800 2006 21300 165300 2007 34700 100400 2008 YTD 35800 175000 Share Repurchases Since Spin-off Represent 25% of the Company Total since FY2004 - $720 million * Includes special dividend
Slide 44: Creating Shareholder Value
Creating Shareholder Value Strong cash flow from low-cost operations Balanced growth strategy focused on cement and wallboard Attractive regular annual dividend Regular annual cash dividend - $0.80 per share Share repurchase program We repurchased approximately 10% of the Company during fiscal year
Slide 45: Question & Answer
Eagle Materials Inc. Question & Answer
Slide 46: Contact Information
Contact Information Steve Rowley, President and CEO Telephone: 214-432-2020 Email: srowley@eaglematerials.com Arthur Zunker, Senior Vice President and CFO Telephone: 214-432-2010 Email: azunker@eaglematerials.com Bill Devlin, Vice President - Controller Telephone: 214-432-2014 Email: bdevlin@eaglema
Slide 47: Appendix
Appendix
Slide 48: Major Facilities
MAJOR FACILITIES Bera, New Mes MOUNTAIN CEMENT company L2on, Oklhoma [WATHEWS READYMDL Se emma werent cout pus coun Temunas 1ALgDARD DSTREUTION 0S ARCA OPERATIONS e ° e ° © cancer ovcemions ° e © owas vescovares Ba, Texas (05 jin venture)
Eagle Materials — Construction Materials Conference, Longbow Research 2008 on 6ix