Eagle Materials Inc · NYSE:EXP
Eagle Materials — Q3 FY2006 Earnings Presentation
91 slides from Eagle Materials's earnings presentation, Jan 26, 2006
Slide 1: Mapping a Strong Future Investor Conference
Mapping a Strong Future Investor Conference January 26, 2006 Eagle Materials Inc. NYSE: EXP and EXP.B www.eaglematerials.com
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: Eagle Materials Inc. agenda
Eagle Materials Inc. 1. Eagle Materials 2. Third Quarter Results 3. Growth Initiatives 4. Corporate Actions 5. Conclusion 3
Slide 4: Eagle Materials Inc.
Eagle Materials Inc. Gypsum Cement Wallboard Concrete & Paperboard Aggregates 4
Slide 5: Eagle Materials' operations are well positioned
Eagle Materials Eagle Materials’ operations are well positioned – Excellent Operators – Maintained in excellent condition – Operated significantly above rated capacity – Low cost producer in all segments American Gypsum Company Cement – Duke – Illinois Cement Company – High speed board line – 4 stag
Slide 6: A disciplined approach to capital investment
Eagle Materials A disciplined approach to capital investment – Eagle’s growth strategy is straightforward • Invest in high return modernizations of our current plants – 50% increase in cement capacity – Reduce exposure to rising energy costs • Add low cost greenfield production capacity in growing m
Slide 7: Eagle's portfolio of building materials and construction products businesses
Eagle’s portfolio of building materials and construction products businesses Revenue by Segment* Operating Earnings by Segment* Concrete/Aggregates Concrete/Aggregates 10% Wallboard 5% 50% Paper Wallboard 10% 52% Paper 9% Cement Cement 31% 33% *TTM including Joint Venture revenues, excludes other, n
Slide 8: Steady top and bottom line growth
Steady top and bottom line growth ($ in millions) Revenues Operating Earnings 02-07E CAGR – 16% 02-07E CAGR – 30% $1,000 $900-$950 $400 $300-$340 $800-$820 $800 $300 $230-$250 $617 $600 $503 $200 $172 $429 $395 $400 $115 $102 $100 $79 $200 $0 $0 02 03 04 05 06E 07E 02 03 04 05 06E 07E For Fiscal Yea
Slide 9: Eagle generates significant cash flow
Eagle generates significant cash flow ($ in millions) (L) Revenues (R) Operating Cash Flow * $1,000 $225 $200 $800 $175 $150 $600 $125 $100 $400 $75 $200 $50 $25 $0 $0 5 6 7 8 9 0 1 2 3 4 5 E E 9 9 9 9 9 0 0 0 0 0 0 06 07 FY FY FY FY FY FY FY FY FY FY FY FY *Cash from operations including changes in
Slide 10: Macro market dynamics of Eagle as a whole
Macro market dynamics of Eagle as a whole Other 1% Repair and Public Remodel 18% Construction 19% New Non- New Residential Residential Construction 41% Construction 21% 10
Slide 11: New residential construction has remained strong
New residential construction has remained strong (L) Single Family Starts-000’s (R) 30 Yr. Rates Housing Starts Mortgage Rates 1,800.0 18.00 1,600.0 16.00 1,400.0 14.00 1,200.0 12.00 1,000.0 10.00 800.0 8.00 600.0 6.00 400.0 4.00 200.0 2.00 - - 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 9
Slide 12: Unemployment rate
Unemployment rate When interest rates are not extremely low or extremely high, housing starts are highly correlated with unemployment 8.0 7.0 6.0 5.0 % 4.0 3.0 2.0 1.0 0.0 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 E E 06 07 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 2
Slide 13: Non-residential recovering from a severe recession
Non-residential recovering from a severe recession Private non-residential construction output, 1994 – 2006E (U.S. billions 1996$) 220 200 180 160 140 120 100 94 95 96 97 98 99 00 01 02 03 04 E E 05 06 19 19 19 19 19 19 20 20 20 20 20 20 20 Non-residential construction has been on an upward trend si
Slide 14: Public construction is expected to remain strong
Public construction is expected to remain strong Public Construction put-in-place with cement consumption Billions of ’96 $ (L) Public Construction (Billions of '96$) Public Cement Consumption (000 Tons) Millions of Tons (R) $200.0 60,000 50,000 $150.0 40,000 30,000 $100.0 20,000 10,000 $50.0 0 84 8
Slide 15: Repair and remodel construction has seen significant growth
Repair and remodel construction has seen significant growth Repair and Remodel construction 1995 – 2006E $300 100% $250 80% $200 60% $ in billions $150 40% $100 20% $50 $0 0% 1998 1999 2000 2001 2002 2003 2004 2005 Repair and Remodel Spending % Equity in Homes Source: Harvard University Joint Center
Slide 16: Positive fiscal 2007 outlook for Eagle
Positive fiscal 2007 outlook for Eagle For fiscal 2007, we expect high capacity utilization of the U.S. wallboard industry (>95%) Eagle Materials will sell out its cement capacity for the 21st consecutive year and the U.S. Cement Industry will have another record cement consumption year Soft landing
Slide 17: Eagle's Wallboard Operations
Eagle’s Wallboard Operations Wallboard 52% Wallboard Industry Overview – 37 BSF of capacity – Industry operating at 95%+ capacity – 15% capacity additions announced for 2007 – 2009 timeframe – National market supplied by regional plant network – Historic growth levels of 3%+ Eagle Operations Overvie
Slide 18: Eagle's Wallboard Performance
Eagle’s Wallboard Performance $160 $140 Operating earnings (real $ in millions) $120 $100 $80 $60 $40 $20 $0 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06E Operating margins per msf sold (Real $) $12.41 $18.05 $28.33 $32.86 $48.98 $78.96 $17.11 $2.59 $13.97 $14.77 $29.45 $53.00 18
Slide 19: Wallboard industry market dynamics
Wallboard industry market dynamics Manufactured Housing, 2% Repair and Remodel, 29% New Residential, 51% New Non- Residential, 18% Source: Eagle estimates 19
Slide 20: Wallboard utilization outlook
Wallboard utilization outlook (numbers in billion square feet) Calendar Calendar 2005 2006 Consumption Estimates: New Residential (51% of Demand) 18.5 17.4 New Commercial (18% of Demand) 6.5 6.9 Repair & Remodel (29% of Demand) 10.5 10.8 Manufactured Housing (2% of Demand) 0.7 0.7 Total 36.2 35.8 Av
Slide 21: Wallboard Supply / Demand
Wallboard Supply / Demand (Billions of Square Feet) 40 35 Consumption Capacity 30 25 20 15 10 5 0 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06E Calendar Years Gypsum Association Historical Data and EXP Projections. 21
Slide 22: Eagle's Wallboard Quarterly Net Sales Price Trend
Eagle’s Wallboard Quarterly Net Sales Price Trend $/MSF $160 $155 $150 $144 $140 $132 $130 $119 $120 $115 $110 $109 $110 $101 $100 $95 $90 $86 $80 $70 nt 4 4 4 5 5 5 3 4 5 /0 /0 /0 /0 /0 /0 /0 /0 /0 re 31 30 30 31 30 30 1 1 1 ur /3 /3 /3 C 3/ 6/ 9/ 3/ 6/ 9/ 12 12 12 22
Slide 23: Eagle's wallboard production and cost
Eagle’s wallboard production and cost Total BSF Produced Production Cost / MSF 3.0 $90 Record production for Eagle – 2.8 BSF! 2.5 $75 2.0 $60 ($ / MSF) (BSF) 1.5 $45 1.0 $30 0.5 $15 0.0 $0 E 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY Increasing energy c
Slide 24: Rising natural gas rates
Rising natural gas rates Annual Average NYMEX Settlement Prices Annual Average American Gypsum Price $10 $9 $8 $7 $/mmbtu $6 $5 $4 $3 $2 $1 $0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 3Q06 Average NYMEX settlement price was $13/mmbtu Our purchasing programs have allowed us to
Slide 25: Eagle's Cement Operations
Eagle’s Cement Operations Cement 33% Cement Industry Overview – Capital Intensive with 3-5 year lead-time for greenfield capacity – 25%+ imports needed to satisfy domestic demand – Escalating import costs due to Asian economic strength and high ocean freight rates Eagle Operations Overview – Approxi
Slide 26: Cement Performance
Cement Performance Operating Earnings ($ in millions) $80 $70 $60 $50 $40 $30 $20 $10 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06E 26
Slide 27: Cement import tariffs – agreement between U.S. and Mexico
Cement import tariffs – agreement between U.S. and Mexico The settlement resulted in a reduction of the tariff to $3 per ton and imposing a limit on Mexican cement exports to the U.S. for 3 years – Limited to 3 million tons with regional quotas: Region Quota Proposal 2005 Est. imports • Arizona 1.25
Slide 28: Settlement implications for Eagle Materials
Settlement implications for Eagle Materials Minimal impact to Eagle – Eagle’s sales into South Texas are primarily low-margin imports • less than 3% of Eagle’s annual cement volumes 28
Slide 29: Eagle's Cement Quarterly Net Sales Price Trend
Eagle’s Cement Quarterly Net Sales Price Trend $/Ton $90 $88 $83 $83 $80 $79 $74 $72 $70 $70 $68 $66 $65 $60 $50 nt 4 4 4 5 5 5 3 4 5 /0 /0 /0 /0 /0 /0 /0 /0 /0 re 31 30 30 31 30 30 1 1 1 ur /3 /3 /3 C 3/ 6/ 9/ 3/ 6/ 9/ 12 12 12 29
Slide 30: Eagle's cement production and cost
Eagle’s cement production and cost Power and Energy cost components have recently been hard to control (L) Total Manufactured Tons Produced (R) Average Manufactured Production Cost per Ton 2,500 $60 2,300 $50 2,100 $ per ton Tons 1,900 $40 1,700 $30 1,500 1,300 $20 93 94 95 96 97 98 99 00 01 02 03 0
Slide 31: Rising coal and electricity costs
Rising coal and electricity costs Our coal and electricity rates have increased nearly 50% each over the past decade $2.50 $0.07 $0.06 $2.00 $0.05 $/mmbtu $/kwh $1.50 $0.04 $0.03 $1.00 $0.02 $0.50 $0.01 $0.00 $0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E Coal Cost per MMBTU Electrici
Slide 32: Eagle's Gypsum Paperboard
Paper 10% Eagle’s Gypsum Paperboard Gypsum Paper Industry Overview – 7 out of 8 wallboard producers are vertically integrated – Non-gypsum paper markets are struggling Eagle’s Operations Overview – Original design capacity of 220,000 tons has been increased to 320,000 tons – Increased paperboard cap
Slide 33: Eagle's Concrete and Aggregates Operations
Concrete/ Aggregates 5% Eagle’s Concrete and Aggregates Operations Concrete/Aggregates Industry Overview – Both industries are highly fragmented – Over 7,000 independently operated quarries – Top 2 aggregates producers control 13% of the market – 2,700 concrete companies owning 6,000 plants Eagle’s
Slide 34: Eagle Materials Inc. agenda
Eagle Materials Inc. 1. The Eagle Story 2. Third Quarter Results 3. Growth Initiatives 4. Corporate Actions 5. Conclusion 34
Slide 35: Eagle's results
Eagle’s results * ($ millions, except per share data) Third Quarter Nine Months FY 2005 FY 2006 FY 2005 FY 2006 Revenues $149.8 $211.5 +41% $463.2 $638.1 +38% Operating Earnings $41.3 $64.1 +55% $128.9 $189.9 +47% Earnings Per Share Basic $1.41 $2.23 +58% $4.29 $6.59 +54% Diluted $1.40 $2.20 +57% $4
Slide 36: Wallboard revenues
Wallboard revenues ($ Millions) Third Quarter Nine Months $250 $400 $344.4 $300 $261.3 $122.5 $125 $200 32% + $87.2 $100 4 0% + $0 $0 FY 2005 FY 2006 FY 2005 FY 2006 36
Slide 37: Wallboard operating earnings
Wallboard operating earnings ($ Millions) Third Quarter Nine Months $70 $120 $103.8 $38.9 $60.0 $35 $60 $20.1 73% + 9 3% + $0 $0 FY 2005 FY 2006 FY 2005 FY 2006 37
Slide 38: Wallboard quarterly net sales price trend
Wallboard quarterly net sales price trend $/MSF $150 $144 $140 $132 $130 $119 $120 $115 $110 $109 $110 $101 $100 $95 $90 $86 $80 $70 03 04 05 04 04 04 05 05 05 1/ 1/ 1/ / / / / / / 31 30 30 31 30 30 /3 /3 /3 3/ 6/ 9/ 3/ 6/ 9/ 12 12 12 38
Slide 39: Cement revenues
Cement revenues ($ Millions) Third Quarter Nine Months $100 $240 $220.4 $66.5 $180 $161.7 $48.8 $50 $120 36% + 3 6% $60 + $0 $0 FY 2005 FY 2006 FY 2005 FY 2006 - Includes intersegment and joint venture revenues. 39
Slide 40: Cement operating earnings
Cement operating earnings ($ Millions) Third Quarter Nine Months $50 $80 $58.7 $60 $44.3 $25 $20.1 $40 33% $14.5 + 3 8% $20 + $0 $0 FY 2005 FY 2006 FY 2005 FY 2006 40
Slide 41: Paperboard results
Paperboard results ($ Millions) Third Quarter Nine Months FY 2005 FY 2006 FY 2005 FY 2006 Sales Volume (Tons) 69,000 67,000 -3% 209,000 209,000 flat Revenues including intersegment $32.0 $31.5 -2% $96.6 $98.9 +2% Operating Earnings $5.9 $4.2 -29% $19.8 $17.4 -12% 41
Slide 42: Concrete and Aggregates results
Concrete and Aggregates results ($ Millions) Third Quarter Nine Months FY 2005 FY 2006 FY 2005 FY 2006 Sales Volume: Concrete (cubic yds) 173,000 210,000 +21% 590,000 683,000 +16% Aggregates (tons) 1,230,000 1,396,000 +13% 4,114,000 4,584,000 +11% Revenues including $16.0 $21.9 +37% $54.6 $69.3 +27%
Slide 43: Eagle's cash flow information
Eagle’s cash flow information ($ Millions) Nine Months FY 2005 FY 2006 Operating Cash Flow* $128.6 $163.9 Capex, net (15.1) (52.0) Free Cash Flow 113.5 111.9 Dividends Paid (16.7) (16.2) Purchase of Common Stock (31.2) (159.6) (Repayment of) Addition to Debt (52.7) 115.2 Other 2.1 1.7 Increase in Ca
Slide 44: Eagle's Net Debt vs. Capitalization
Eagle’s Net Debt vs. Capitalization ($ Millions) Ratio 14% 24% $600 $500 $485 $433 $400 $300 $200 $140 $100 $78 $0 3/31/05 12/31/05 Net Debt Equity • Purchased approximately 950,000 shares of Eagle Materials in the 3rd quarter of Fiscal 2006 and approximately 1.5 million shares year-to-date. • Issue
Slide 45: Eagle Materials Inc. agenda
Eagle Materials Inc. 1. The Eagle Story 2. Third Quarter Results 3. Growth Initiatives 4. Corporate Actions 5. Conclusion 45
Slide 46: Favorable long-term outlook
Favorable long-term outlook The long term fundamentals support building materials and construction products growth – Household formations expected to grow by 13.3 million over the next 10 years (10% more than the previous 10 years) • Immigration projections assume 8.5 million additional people betwe
Slide 47: U.S. population expected to grow
U.S. population expected to grow By 2050, the U.S. population is expected to grow by 50% 450 400 350 300 Millions of people 250 200 150 100 50 0 2000 2010 2020 2030 2040 2050 Source: U.S. Census Bureau 47
Slide 48: Existing homes in need of repair or replacement
Existing homes in need of repair or replacement Age of Housing Stock 1990 or Later 10% 1980 to 1989 Before 1960 17% 39% 1970 to 1979 20% 1960 to 1969 14% 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,
Slide 49: Improved highway spending
Improved highway spending SAFETEA provides a six-year $286 billion federal highway bill 42% greater than previous bill ISTEA TEA-21 SAFETEA 45 40 35 30 25 $bn 20 15 10 5 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E Annual spending levels Source: U.S
Slide 50: U.S. Cement Industry Overview Capacity vs. Consumption
U.S. Cement Industry Overview Capacity vs. Consumption (Millions of Short Tons) Capacity Consumption 150 125 Imports 100 75 50 E E E E E E 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 08 09 10 (Calendar Year) Source: PCA Data and Company estimate
Slide 51: Growing our cement business
Growing our cement business We are approaching the point of diminishing returns regarding the creep capacity at our current facilities With rising fuel and energy costs, maximizing fuel and energy efficiencies are crucial for long-term success – Illinois Cement Company • We are expanding capacity by
Slide 52: Illinois Expansion Update
Illinois Expansion Update Project Background – $65 million expansion – Increases capacity by approximately 70% to 1.1 million tons – Expansion expected to be complete in winter of 2006 – Expected to reduce manufacturing costs by approximately 20% – Expanded market share has already been established
Slide 53: New Dome at Illinois Cement
New Dome at Illinois Cement 53
Slide 54: Construction of new pre-heat tower
Construction of new pre-heat tower 54
Slide 55: Nevada Cement Modernization
Nevada Cement Modernization Highlights – Plant located just west of Reno, Nevada • Serves the Northern Nevada and Northern California cement markets – Eagle’s oldest plant (circa early 1960’s) – Approximately $200 million investment – Modernization includes: • Expands capacity by approximately 100%
Slide 56: Mountain Cement Modernization
Mountain Cement Modernization Highlights – Plant located in Laramie, Wyoming (serves primarily Wyoming and Denver) – Approximately $120 million investment – Modernization includes: • Expands capacity by approximately 60% to 1.1 million tons • Reducing heat consumption by approximately 40% to 2.6 mmb
Slide 57: Growing our Cement Business
Growing our Cement Business Approximately 50% growth in manufactured Cement capacity 4.0 4.0 3.5 3.1 3.0 Million Tons 2.7 2.5 2.1 2.0 1.8 1.5 1.0 0.5 FY1995 FY2000 FY2006E FY2008E FY2010E Tons of capacity Tons of capacity after expansion Market Share 2% 2% 2.6% 3.0% 3.4% 57
Slide 58: Modernization projects will reduce fuel consumption
These three modernization projects will reduce Eagle’s Cement plant fuel consumption significantly 4.0/mmbtu/ton -35 % 2.7/mmbtu/ton Eagle’s current fuel Eagle’s fuel consumption rate consumption rate after modernization projects 58
Slide 59: Modernization projects will reduce electricity usage
These three modernization projects will reduce Eagle’s Cement plant electricity usage significantly 150/kwh/ton -25 % 110/kwh/ton Eagle’s current Eagle’s electricity consumption electricity consumption rate rate after modernization projects 59
Slide 60: Modernization projects will reduce maintenance costs
These three modernization projects will reduce Eagle’s Cement plant maintenance costs significantly $12.50/ton -30 $9.00ton % Eagle’s current Eagle’s maintenance costs per maintenance costs per ton ton after the modernization projects 60
Slide 61: Modernization projects will reduce manpower and SG&A costs
These three modernization projects will reduce Eagle’s Cement plant manpower and SG&A costs significantly $15.00/ton -20 $12.00/ton % Eagle’s current Eagle’s manpower and SG&A manpower and SG&A costs costs per ton after the per ton modernization projects 61
Slide 62: Modern, Low-cost Cement plants
Modern, Low-cost Cement plants All of Eagle’s cement plants will be “state of the art” and “ultra modern” • Very low fuel consumption • Very low energy consumption • Very low annual repair costs • Very low manpower costs • Lowest cost producer in all of Eagle’s markets • Put capacity creep potential
Slide 63: Growing the wallboard business
Growing the wallboard business We have announced plans for growth in the Southeast and are in the process of locating additional sources of gypsum for future growth EXISTING PLANTS GEORGETOWN, SC 63
Slide 64: Georgetown, South Carolina Project Update
Georgetown, South Carolina Project Update Project Background – New gypsum wallboard plant with annual design capacity of 750 mmsf – Long-term supply agreement for synthetic gypsum with Santee Cooper, a South Carolina service authority – Construction expected to be completed by late 2007 – Increases
Slide 65: Growing the Wallboard business
Growing the Wallboard business 30% growth in Wallboard (tons in 000’s) 5 4 3.7 Billion Square Feet 2.8 2.8 3 2 1.4 1 0.6 0 FY1995 FY2000 FY2006E FY2007E FY2009E BSF Capacity BSF Capacity after Georgetown, SC Market Share 3% 5% 7.5% 7.5% 9% 65
Slide 66: Nothing but 1st Class Assets at Eagle Materials
Nothing but 1st Class Assets at Eagle Materials American Gypsum Company Cement – Georgetown, South Carolina – Illinois Cement Company – High speed board line – 5 stage preheater/precalciner – Modern dryer and steam – Duke – Texas Lehigh Cement Company – High speed board line – 4 stage preheater/prec
Slide 67: Eagle Materials Total Growth
Eagle Materials Total Growth FY 2006 FY2010E Capacity Capacity Increase Wallboard (BSF) 2.8 3.7 +30% Cement (million tons) 2.7 4.0 +50% Paper (000 tons) 285 340 +20% Aggregates (million tons) 5.5 7.5 +35% Concrete (000 cubic yards) 850 1,000 +20% 67
Slide 68: Eagle Materials Inc. agenda
Eagle Materials Inc. 1. The Eagle Story 2. Third Quarter Results 3. Growth Initiatives 4. Corporate Actions 5. Conclusion 68
Slide 69: Corporate actions
Corporate actions Eagle Materials Board of Directors has approved the following actions: Combination of its two classes of stock 3-for-1 stock split in the form of a 200% stock dividend 75% increase in regular dividend Increased share repurchase authorization up to 1 million shares 69
Slide 70: Eagle announced it will combine its two classes of stock
Eagle announced it will combine its two classes of stock Current structure – 2 class structure created during January 2004 spin-off from Centex – 8.7 million A shares outstanding at December 31, 2005 – 8.1 million B shares outstanding at December 31, 2005 – B shares have right to elect 85% of the Bo
Slide 71: Eagle announced a 3-for-1 stock split
Eagle announced a 3-for-1 stock split Eagle’s Board of Directors approved a 3-for-1 stock split in the form of a 200% stock dividend To be distributed on February 24, 2006 to stockholders of record on February 10, 2006 71
Slide 72: Eagle announced it will increase its annual dividend by 75%
Eagle announced it will increase its annual dividend by 75% Eagle has announced it will increase its annual dividend from $1.20 per share to $2.10 per share (pre-split) with the dividend that will be paid in April 2006 $2.10/share $1.20/share 7 5% + Eagle’s Prior Dividend Eagle’s Increased Dividend
Slide 73: Dividend yield and payout ratio
Dividend yield and payout ratio Payout Yield 27.0% 26.0% 1.8% 1.4% Eagle's Industry EXP TTM Industry Increased Average* TTM * Dividend (1) (1) Based on $120 per share stock price (pre-split) *Industry average includes Vulcan Materials, Rinker Group, Florida Rock, Martin Marietta, LaFarge NA and TXI.
Slide 74: Increase in share repurchase authorization up to 1 million shares
Eagle announced an increase in its share repurchase authorization up to 1 million shares Eagle’s has repurchased 12% of its stock since the spin-off in January 2004 Actual Shares Outstanding * 23.0 18.8 16.8 shares in millions At the IPO At the spin-off Current (April 1994) (January 2004) (January 2
Slide 75: Total capital returned to shareholders
Total capital returned to shareholders Total capital returned as a percentage of average market capitalization 10.5% 6.6% 4.0% 3.9% 3.2% 2.8% 2.8% 0.5% e* IN F K C I X LM TX LA C FR VM gl R M Ea Source: Company filings; TTM as of September 30, 2005. Includes dividends and share repurchases. * - Eagl
Slide 76: Eagle Materials Inc. agenda
Eagle Materials Inc. 1. The Eagle Story 2. Third Quarter Results 3. Growth Initiatives 4. Corporate Actions 5. Conclusion 76
Slide 77: Eagle Materials Growth
Eagle Materials Growth Clear line of sight – Sensible and well-defined plans Balance and discipline – “Smart sized” cement plants • Energy efficient – Modern and efficient wallboard plants • Improved logistics Improved operational excellence – Simple operations • Lower costs to operate – Very low en
Slide 78: Currently, Eagle has the highest operating margins of the group
Currently, Eagle has the highest operating margins of the group 30% EBIT Margins (TTM) 26.4% 19.6% 20% 17.1% 15.4% 15.5% 13.1% 13.1% 13.2% 12.4% 12.4% 10.3% 10% 7.7% 5.4% 4.6% 0% Georgia US TXI CRH Hanson USG LaFarge BPB Martin Cemex LaFarge Vulcan Florida Eagle Pacific Concrete NA Marietta SA Rock
Slide 79: Next Year
Next Year ($ in Millions, except per share data) 4th Qtr FY 2006 FY 2006 FY 2007 Revenues $187 - $197 $825 - $835 $900 - $950 Net Earnings $34.0 - $37.5 $151 - $155 $180 - $200 Diluted EPS $2.00 - $2.20 $8.50 - $8.70 $11.00 - $12.00 79
Slide 80: Question & Answer
Eagle Materials Inc. Question & Answer 80
Slide 81: 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 82: Thank you for participating in today's investor conference
Eagle Materials Inc. Thank you for participating in today’s investor conference. An archive of this webcast will be available at http://www.eaglematerials.com later today. 82
Slide 83: Exhibits
Exhibits
Slide 84: Major Facilities
MAPPING A STRONG FUTURE MAJOR FACILITIES CEMENT PLANTS ILLINOIS CEMENT COMPANY LLC - LaSalle, illinois * MOUNTAIN CEMENT COMPANY - Laren, Homing ‘+ NEVADA CEMENT COMPANY « Ferniey, TEIAS-CCHIGH CEMENT COMPANY LD” Buc, Texas (SO% Joint venture GYPSUM WALLBOARD PLANTS . GYPSUM COMPANY - ‘enicor Gypsum
Slide 85: Wallboard – Capacity Announcements
Wallboard – Capacity Announcements New Capacity Announcements – 5 greenfield plants and 3 modernization projects have been announced for the 2007- 2009 timeframe: Greenfield Plants - • American Gypsum – 750 mmsf (South Carolina) • BPB – 700 mmsf (North Carolina) • National – 1 bsf (North Carolina) •
Slide 86: Eagle's wallboard utilization and pricing
Eagle’s wallboard utilization and pricing Industry Capacity EXP Net Price Utilization (2004 $/msf) 160 100% 140 120 90% 100 80 80% 60 40 70% 20 60% 0 86 88 90 92 94 96 98 00 02 04 06E Fiscal Year 86 Source: Gypsum Association and Eagle
Slide 87: Growing wallboard consumption
Growing wallboard consumption Wallboard consumption per capita in the U.S. Square feet per person 1993 – 2005 2002 – 2005 140 CAGR: 4.20% CAGR: 3.25% 120 100 80 60 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 The U.S. has the highest per capita consumption in the world, growing t
Slide 88: Cement – Capacity Announcements
Cement – Capacity Announcements New Capacity Announcements (in clinker short tons) – The following capacity increases have been announced for the calendar 2006-2008 timeframe Greenfield Plants - • GCC America – 1.1 million tons (Pueblo, CO) • Ash Grove – 2.0 million tons (Las Vegas, NV) • Holcim – 4
Slide 89: Cement industry market dynamics
Cement industry market dynamics Other 3% New Public Residential Construction 50% 23% Commercial Construction 24% We currently produce 2.65 million tons of cement annually Source: PCA and Eagle Materials 89
Slide 90: Continued high ocean freight rates
Continued high ocean freight rates Average Annual Baltic Exchange Panamax Index 5,000 4,000 3,000 2,000 1,000 0 1998 1999 2000 2001 2002 2003 2004 2005 Source: Datastream 90
Slide 91: River system barge costs have also risen
River system barge costs have also risen Annual Average Spot Dry Bulk Barge Rates $25 $20 $15 ($/ton) $10 $5 $0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: River Transport News 91