Slide 1: Low Cost Producer – Autumn 2013
Low Cost Producer Autumn 201 3 Profitable Growth • Smart Investments • Up-Cycle Tailwinds • Favorable Secular Trends • Low-Cost Advantages • Healthy Balance Sheet Exhibit 99.1
Slide 2: Forward Looking Statement
Forward Looking Statement forward-looking statement to reflect future events or changes in the Company's expectations. 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 Pri
Slide 3: Eagle Materials Business Definition
Eagle Materials Business Definition Minerals-Based Commodity Products Infrastructure and Related Construction Materials Residential and Commercial Construction Materials Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Asset Optimization Cyclical Recovery Cost Position
Slide 4: Extension of Low Cost Producer Positions
Extension of Low Cost Producer Positions Eagle Materials Low Cost Producer Focus Minerals-Based Commodity Products Infrastructure and Related Construction Materials Residential and Commercial Construction Materials Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Oil W
Slide 5: Multiple Sources of Cost Advantage
EXP Multiple Sources of Cost Advantage Lowest Cost Position is Important in a Commodity Industry Operational Execution Low-Cost Focused Innovation Technology and Engineering Eagle Cost Advantages Industry Sustained Innovation Focus on Cost Reduction Across Every Aspect of the Business System Inputs
Slide 6: Low Cost Producer Strategy Aligned with Sustainability Objectives
Strategy Objective Sustainability Result Our Low Cost Producer Strategy Is Closely Aligned with Our Sustainability Objectives Less waste Reduced cost Responsible use of resources Less energy used Reduced cost Smaller environmental footprint Less mineral resource used Reduced cost Greater conservatio
Slide 7: Shareholder Value Creation Track Record - TSR
Shareholder Value Creation Track Record - TSR Some Say “The Best Predictor of Grades is Grades” 1-Year 3-Year Since Inception (April 15, 1994) Source: Longnecker & Associates. All measures are as of 3/31/13 fiscal year end. Direct Peers: Martin Marietta, Texas Industries Inc., USG Corp., Vulcan Mate
Slide 8: Aggregates and Concrete, Construction Cement
Aggregates and Concrete Construction Cement Eagle Materials Business Definition Minerals-Based Commodity Products Infrastructure and Related Construction Materials Residential and Commercial Construction Materials Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Oil We
Slide 9: Central US Cement System
A Central US Cement System New Cement Plants “Filled in a Missing Puzzle Piece” • Kansas City and Tulsa cement plant acquisitions (Nov. 30, 2012) link east-to-west and central-to-south • Heartland focus also limits impact of imports Acquired Cement Terminals Eagle Cement Terminals Eagle Cement Plant
Slide 10: System Scale
System Scale Recent Acquisitions Increased Cement Capacity by 60% Texas Lehigh (50%) Illinois Cement 1,100 Mountain Cement Nevada Cement Central Plains Kansas City 1,150 Central Plains Tulsa Total 4,900 Cement Short Tons Capacity (000)
Slide 11: US Cement Consumption Outlook
US Cement Consumption Outlook Million Metric Tons Source: Portland Cement Association US Capacity • New capacity -- and capacity expansion -- is constrained for the foreseeable future • Some existing capacity may be closed by 2015 due to NESHAP compliance • Imports will be required again to meet dem
Slide 12: EPA Regulatory Developments
EPA Regulatory Developments Final Rule Issued – Extension Granted On February 12, the EPA published the final rule amending • National Emission Standards for Hazardous Air Pollutants (NESHAP) for the Portland Cement Manufacturing Industry • New Source Performance Standards (NSPS) for Portland Cement
Slide 13: EPA Regulatory Developments: Standards Tough to Meet
Pollutant Existing Source Standard New Source Standard EPA Regulatory Developments Standards Tough to Meet, Will Chill New Capacity Addition Particulate Matter 0.07 lb/ton clinker 0.02 lb/ton clinker Mercury 55 lb/MM tons clinker 21 lb/MM tons clinker Nitrogen Oxide 3.5 -10 lb/ton clinker (varies) 1
Slide 14: Concrete/Cement Value Proposition
Concrete/Cement Value Proposition In Relation to Asphalt, the Leading Substitute • Historically • Asphalt is used over 85% of the time in US highway and road construction, and this has been the case over many decades • Life cycle costs have always favored concrete over asphalt • Now initial costs pe
Slide 15: Life Cycle Analysis Favors Concrete
Life Cycle Analysis Favors Concrete Pavement Life Expectancy (Before Reconstruction is Required) Asphalt Average: 13.6 Years Concrete Average: 29.3 Years Source: PCA Highway Report 1- 6-10 Years 11-15 Years 16-20 Years 21-30 Years 31-50 Years Asphalt Concrete Years
Slide 16: Asphalt Production Costs Linked to Oil/Bitumen
Asphalt Production Costs Linked to Oil/Bitumen Asphalt Costs Diverging from Historical Relationship with Concrete Ready Mix PPI Dec 1984 =100 Asphalt PPI Dec 1984 =100 Crude Oil $/Barrel Sources: US Department of Labor, International Monetary Fund $0 $50 $100 $150 $200 $250 $300 Dec-84 Dec-90 Dec-96
Slide 17: Concrete Share Has, In Fact, Been Growing
Concrete Share Has, In Fact, Been Growing Growth Since 2008 Has Been Masked by the Recession Concrete Share of Highway Paving Volume Source: PCA June 2012, Oman Data Systems Long-Term Average 14.4% 13.3% 12.1% 15.5% 16.2% 17.5% 8% 13% 18%
Slide 18: Outlook and Strategic Implications
Outlook and Strategic Implications A Game Changer for Cement and Asphalt • The price of asphalt is expected to continue to diverge from the price of concrete as oil price inflation remains higher than the cost inflation of the fuels used in producing cement (e.g., petcoke, shale gas) • High oil pric
Slide 19: Projected Initial Bid Paving Costs: Concrete vs Asphalt
Concrete Asphalt PCA Projected Initial Bid Paving Costs Per Two Lane Road Mile - Urban Parity achieved in Fiscal 2009 Bid costs do not consider life-cycle costs – which further favors concrete $200 $400 $600 $800 $1,000 $1,200
Slide 20: Oil Well Cement
Oil Well Cement Eagle Materials Business Definition Minerals-Based Commodity Products Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Asset Optimization Cyclical Recovery Cost Position Profitable, High-Returning Growth Secular and Cyclical Growth Extension of Low Cost
Slide 21: Close Relationship of End-Uses
Close Relationship of End-Uses Oil Well Cement and Now Frac Sand Important elements for unlocking energy in the shale plays • Specialty oil well cement for casing wells • Special purpose frac sand to keep the fractures “propped open”
Slide 22: Shifting the Cement Product Mix to Oil Well Cement
Shifting the Cement Product Mix to Oil Well Cement A Company Priority • Very few US cement producers have the capability, know-how, permits or customer relationships required to effectively produce and market specialty oil-well cement, especially Class H, the grade used in the most demanding casing
Slide 23: Oil Well Cement Strategic Directions
Eagle Plant Current Production Proportion Target Production Proportion Key Cement Grades Target Shale Plays Plant Capability Status Oil Well Cement Strategic Directions A Mutually Reinforcing Growth Opportunity with Frac Sand Texas Lehigh ~ 50% > 50% Class H Eagle Ford Mature capability Mountain ~ 2
Slide 24: Eagle Ford – Cement Consumption Outlook
Increasing drilling activity should continue to drive growth in cement consumption South Texas represents ~15-20% of US oil well cement spend Eagle Ford – Cement Consumption Outlook Continued Growth is Expected Estimated Annual Oil Well Cement Demand and Outlook
Slide 25: Frac Sand
Frac Sand Eagle Materials Business Definition Minerals-Based Commodity Products Infrastructure and Related Construction Materials Residential and Commercial Construction Materials Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Asset Optimization Cyclical Recovery Cos
Slide 26: Frac Sand is a Natural, Close Adjacency for Eagle
Frac Sand is a Natural, Close Adjacency for Eagle Key Growth Opportunity and a Top Eagle Priority Frac sand entry leverages Eagle’s existing • Customer base (oil well cement) • Owned distribution infrastructure that we have repurposed (Corpus Christi port terminal, proximate to Eagle Ford) • Process
Slide 27: Highest Quality Frac Sand: Northern Illinois, MN/WI
Northern Illinois MN / WI Small Universe of Areas in North America (and in the World) Highest Quality Frac Sand Studies have shown geologic conditions creating these deposits are rare across the globe. England deposits are played out, limited quality deposits in Poland, Asia/Pacific and Arabia have
Slide 28: Sandstone Formation Section View
Sandstone Formation Section View Sandstone Closest to the Surface is Even Less Common
Slide 29: Northern White Sand Sources
Key Northern White Sand Sources Top Players Currently Illinois (Top Quality) ~ 6 million tons capacity 1. US Silica 2. Unimin 3. Fairmount Wisconsin (Top Quality) ~ 10 million tons capacity 1. Badger Mining 2. Unimin 3. Fairmount 4. EOG Resources Minnesota (Top Quality) ~ 4 million ton capacity • Un
Slide 30: Entrance to Eagle's Illinois Mine
Entrance to Eagle’s Illinois Mine Northern White Frac Sand Mine Preparation Processing Construction
Slide 31: Corpus Christi Site Repurposed, Now Operational
Processing Construction Corpus Christi Site Repurposed, Now Operational Third-Party Sand to Initialize Processing/Logistics Systems
Slide 32: Growth in US Rig Activity, Oil and Gas
Growth in US Rig Activity, Oil and Gas Spears and Associates Forecasts Forecast Forecast Forecast • The demands of the oily plays are a good fit with our northern white sand • Horizontal drilling is the most frac sand intensive
Slide 33: Unconventional Oil/Liquids Land Rig Count Outlook
Unconventional Oil/Liquids Land Rig Count Outlook Key Shale Plays ~ 900 ~ 875 Total 2012 Average 2013E Average 2014E Average
Slide 34: Near-Term Oil and Gas Price Outlooks
Near-Term Oil and Gas Price Outlooks Relatively Stable According to Spears Forecasts, July 2013 Forecast Forecast
Slide 35: US Liquids-Focused Threshold Economics
Eagle Ford Oil Eagle Ford Condensate Mississippi Lime DJ Niobrara Granite Wash Bakken Shale Bakken Parshall US Liquids-Focused Threshold Economics Compelling After-Tax Rates of Return at Expected Oil Prices 10% $53.31 $51.53 $48.45 $59.30 $43.16 $62.86 $44.13 15% 60.99 64.49 59.90 68.23 56.17 71.48
Slide 36: North American Proppant Annual Consumption
North American Proppant Annual Consumption Annual million tons, estimated
Slide 37: High Quality White Sand Supply and Demand
High Quality White Sand Estimated Available Supply and Demand Million Tons Inferior Sand Types 2011 Tons Industry Capacity 2012 Tons “Probable” Year End Capacity Demand Forecast High quality northern white sand is increasingly the proppant of choice, especially in oily plays. The industry is relying
Slide 38: Eagle Ford – Proppant Demand Growth is Expected
Demand growth over the next two years is expected to approximate our newly installed drying capacity at Corpus Christi Demand estimates for 2013 range from 8 to 13 million tons Eagle Ford – Proppant Demand Growth is Expected Annual Proppant Demand Outlook
Slide 39: Gypsum Wallboard, Gypsum Paperboard
Gypsum Wallboard Gypsum Paperboard Eagle Materials Business Definition Minerals-Based Commodity Products Infrastructure and Related Construction Materials Residential and Commercial Construction Materials Strategy Emphasis Now Key Demand Drivers Competitive Advantage Innovation Focus Asset Optimizat
Slide 40: Eagle's US Market and Production Locations
Eagle’s US Market and Production Locations Wallboard Paperboard Gypsum, CO 700 MMSF Albuquerque, NM 425 MMSF Duke, OK 1,300 MMSF Georgetown, SC 900 MMSF Lawton, OK 350,000 tons Bernalillo, NM 550 MMSF Currently idled Note: Design capacities here do not necessarily represent current operating rates (
Slide 41: US Demand for Gypsum Wallboard
US Demand for Gypsum Wallboard Closely Linked with Housing 1,000 1,200 New Home Sales (000) BSF Gypsum Wallboard Shipments
Slide 42: Single-Family Housing Starts Outlook
2007 2009 2011 2013 2006 2008 2010 2012 2014 Single-Family Housing Starts Outlook Moody’s economy.com, SAAR in Millions Harvard Joint Center for Housing Studies “conservative” case: 16 million housing units needed 2010-20 (implies an average of 1.6 million/year -- household formations alone are 1.3
Slide 43: Latest Regional Recovery Outlooks – Wallboard
Latest Regional Recovery Outlooks -- Wallboard Single Family Housing Starts, 2012Q4=1 2012 Relative MSA Scale in Starts Source: Moody’s Economy.com, July 2013, Company analysis Phoenix is expected to drive higher than average growth ahead in this region Areas like DFW and Denver have already been on
Slide 44: Repair and Remodeling Outlook
Repair and Remodeling Outlook Harvard’s Outlook Suggests Growing Strength
Slide 45: Financial Discipline is a Key Enabler of Success
Financial Discipline is a Key Enabler of Success An Eagle Hallmark Capital Structure Funding Strategy Use of Cash
Slide 46: Financial Summary
Financial Summary Profitable Performance Throughout the Cycle Note: Dollars in millions. For fiscal years ending March 31. Pro forma LTM periods include Acquired Assets. (1) (2) Adjusted Revenues (1) Adjusted EBITDA (2) $501 $579 $699 $925 $994 $845 $695 $533 $537 $581 $889 $0 $200 $400 $600 $800 $1
Slide 47: Eagle Evolution Since Peak of Last Cycle
Eagle Evolution Since Peak of Last Cycle Long-Standing Goal of Doubling Peak-to-Peak Earnings Power 1. One-third more productive capacity in place Cement: Illinois expansion (additional 470,000 tons) Wallboard: Ultra-efficient plant built in Georgetown Paper: 350,000 ton capacity today (220,000 tons
Slide 48: Capital Structure
Capital Structure Net Debt-to-Cap 38% 35% 41% 40% Net Debt-to-Equity 62% 55% 70% 68% 3/31/11 3/31/12 3/31/13 6/30/13 $462 $473 $696 $725 $285 $260 $485 $491 $- $200 $400 $600 $800 Equity Net Debt
Slide 49: Debt Maturity Profile
Debt Maturity Profile $9.5 $57.0 $8.0 $81.2 $36.5 Fiscal Years $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 2005 Senior Notes 2007 Senior Notes
Slide 50: Disciplined Use of Cash
Disciplined Use of Cash $ Millions Maintenance Dividends Growth and Improvement Share Repurchases Note: Issued 3.5 million shares in FY pursuant to the Lafarge Acquisition Assets. $0 $100 $200 $300 $400 $500 $600 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Slide 51: Investment Summary
Investment Summary Eagle Materials • Low cost producer • Leading positions in attractive markets • Now in early innings of the up-cycle • Favorable secular demand trends, especially for cement and frac-sand • Recently acquired assets have increased Eagle’s cement capacity by 60% • Track record of so
Slide 52: Non-GAAP Reconciliation
Non-GAAP Reconciliation
Slide 53: Non-GAAP Reconciliation: Adjusted EBITDA
Non-GAAP Reconciliation Adjusted EBITDA $ million 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 3/31/09 3/31/10 3/31/11 3/31/12 PF 3/31/13 Net Income $ 57.6 $ 66.9 $ 106.7 $ 161.0 $ 202.7 $ 97.8 $ 41.8 $ 29.0 $ 14.8 $ 18.7 $ 57.7 Plus: Taxes 29.0 35.2 51.4 80.1 101.6 46.6 20.4 10.3 1.9 3.2 26.4 In
Slide 54: Non-GAAP Reconciliation: Acquired Assets EBITDA
Non-GAAP Reconciliation Adjusted EBITDA $ million 6 months ended 9/30/12 2 months ended 11/30/12 8 months Acquired Assets Net Earnings $ 5 $ 4 Plus: Taxes Interest DD&A Overhead Allocation Adjustment Acquired Assets EBITDA $ 32 $ 13 $ 45 The following provides a reconciliation of the Acquired Assets
Slide 55: Non-GAAP Reconciliation: Adjusted Revenue
Non-GAAP Reconciliation Adjusted Revenue $ million 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 3/31/09 3/31/10 3/31/11 3/31/12 PF 3/31/13 Eagle $ 429 $ 503 $ 617 $ 860 $ 918 $ 748 $ 599 $ 468 $ 462 $ 495 $ 643 Joint Venture (50%) Total $ 501 $ 579 $ 699 $ 925 $ 994 $ 845 $ 695 $ 533 $ 537 $ 581
Slide 56: Non-GAAP Reconciliation: Acquired Assets Revenue
Non-GAAP Reconciliation Adjusted Revenue $ million 9 months ended 9/30/12 2 months ended 11/30/12 8 months Acquired Assets Revenue $ 112 $ 38 $ 150 The following provides a reconciliation of the Acquired Assets revenue for the 8 months ended 11/30/12:
Slide 57: Major Facilities
MAJOR FACILITIES GYPSUM WALLBOARD PLANTS AMERICAN GYPSUM COMPANY Albuquerque, New Mexico Bernalillo, New Mexico Gypsum, Colorado Duke, Oklahoma Georgetown, South Carolina PAPERBOARD MILL REPUBLIC PAPERBOARD COMPANY LLC Lawton, Oklahoma LEGEND CEMENT PLANTS CEMENT TERMINALS WALLBOARD PLANTS WALLBOARD
Slide 58: 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