Eagle Materials Inc · NYSE:EXP
Eagle Materials — Investor Presentation (November 2004)
31 slides from Eagle Materials's investor presentation, Nov 30, 2004
Slide 1: Investor Presentation December 2004
Investor Presentation December 2004
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: Gypsum Wallboard, Cement, Paperboard, Concrete & Aggregates
Gypsum Wallboard Cement Paperboard Concrete & Aggregates Aggregates Aggregates
Slide 4: Revenue and EBITDA by Segment - FY 2005E
Wallboard Cement Paperboard Con/Agg Revenue 317.7 187.6 129.2 62.7 Wallboard Cement Paperboard Con/Agg EBITDA 93.4 67.3 32.9 11 Revenue by Segment - FY 2005 E EBITDA* by Segment - FY 2005 E Eagle Revenues $590 million Eagle EBITDA $195 million 54% 22% 13% 11% 48% 33% 17% 6% Eagle Materials *See slid
Slide 5: Why Eagle Materials?
Why Eagle Materials? Strong Cash Flow Very Good Operators of Modern Assets High-speed wallboard lines and dry process cement plants Maintained in "better than new" condition Operated significantly above rated capacity Low cost producer in all segments Strong Industry Dynamics Wallboard and cement de
Slide 6: Key Demand Indicators: Construction Spending
Key Demand Indicators Construction Spending 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04E 05E 06E 07E 08E Spending 464 455 424 465 535 568 589 585 583 580 561 504 533 544 574 570 616 633 665 694 718 709 701 697.6 724.3 745 764.2 782.7 802.7 YTD Spending Up Over 9% Throu
Slide 7: Wallboard - Industry Overview
Wallboard - Industry Overview The Industry is Operating at 90+% Capacity Utilization Over Time Consumption is Expected to Grow at Historic Levels of 3%+ Driven by Population and Construction Spending New Capacity will be Limited Over the Next Few Years Very limited available restarts from the 2000 c
Slide 8: Wallboard Supply / Demand
Consumption Capacity 74 12.91 16.22 75 10.74 15.96 76 13.12 15.22 77 15.37 16.5 78 16.41 17 79 16.74 17.5 80 14.13 18.25 81 13.76 18.67 82 13.09 19.14 83 16.82 18.5 84 18.32 20 85 19.43 20.87 86 20.42 21.63 87 20.63 23.37 88 20.61 25.11 89 20.87 24.08 90 20.45 24.04 91 18.32 24.35 92 20.18 24.11 93
Slide 9: Wallboard Demand Drivers
Wallboard Demand Drivers Consumption: 2005CY Projection % of WB Demand Change (bsf) New Residential -4% 47% -.63 Residential Repair/Remodel +3% 16% +.16 New Non-Residential +7% 12% +.28 Non-Residential Repair/Remodel +5% 19% +.32 Manufactured Housing/Other +7% 6% +.14 Capacity: Capacity Additions +.
Slide 10: Wallboard Utilization and Pricing
Fiscal Years Capacity Utilization AGC Net Sales FY86 0.93 140.32 FY87 0.95 140.69 FY88 0.88 114.31 FY89 0.82 94.89 FY90 0.87 96.11 FY91 0.85 76.07 FY92 0.75 74.36 FY93 0.84 67.34 FY94 0.88 80 FY95 0.94 103.53 FY96 0.92 101.23 FY97 0.96 111.07 FY98 0.98 121.33 FY99 1 137.5 FY00 1.01 169.26 FY01 0.89
Slide 11: Strong Wallboard Western U.S. Operation
18-Year History 2.7 Billion Sq. Ft. of Capacity 8% U.S. Market Share (5th) Vertically Integrated with Light-Weight Paper Wallboard Plants Reload/Distribution Yards Markets Served Wallboard Plants Reload/Distribution Yards Markets Served Strong Wallboard Western U.S. Operation (54% of FY 05E Revenue;
Slide 12: Wallboard Production & Cost
Wallboard Production & Cost FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 Total BSF Produced 0.323 0.376 0.487 0.586 0.672 0.714 1.091 1.151 1.374 1.649 1.89 1.956 2.496 Production Cost / MSF 61.92 53.3 56.43 65 59.74 61.42 64.58 64.02 63.02 65.95 61.38 63.69 63.85 (BSF) ($/MSF) E
Slide 13: EXP Wallboard Sales Price Trend
EXP Wallboard Sales Price Trend 9/30/2003 12/31/2003 3/31/2004 6/30/2004 9/30/2004 Average Net Sales Price 83.67 86.41 94.67 101 109 (Quarter Ending) $/MSF $83.67 $86.41 $94.67 $101.00 $109.65 Average Net Sales Price
Slide 14: Wallboard Performance
Wallboard Performance Operating Earnings/ Segment Operating Earnings (in millions) MSF of Capacity FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05E FY06E East 7 12 22 36 56 108 27.1 5 27 36 74.8 85 West North 10.98 17.08 19.21 32.71 39.28 72.23 10.07 1.85 9.96 13.04 27.17 30.8 Current Profita
Slide 15: Growing the Wallboard Business
Growing the Wallboard Business FY1995 FY2000 FY2005E FY2006E Target BSF Sold 0.6 1.4 2.5 2.6 3.8 Targeting 50% Volume Growth in Wallboard 0.6 1.4 2.5 3.8 (bsf ) Market Share 3% 5% 8% 8% 10% BSF Sold BSF Estimate Target 2.6
Slide 16: Cement Industry Overview
Cement Industry Overview High Barriers to Entry Capital intensive with 3-5 year lead-time for new capacity Regional markets are severely impacted by size of new plants Greenfield investments at current prices have marginal returns Favorable Supply/Demand Dynamics 20% - 25% imports needed to meet dom
Slide 17: Cement Industry Capacity vs. Consumption
Capacity Consumption 75 91 72 76 90 76 77 92.5 82 78 91.5 89 79 94 88 80 91 79 81 94 75 82 91 67 83 93 74 84 92 85 85 89.5 88 86 88.5 91 87 87.5 94 88 88 93 89 86 91 90 85 90 91 86 80 92 87 84 93 87 88 94 87.5 94 95 88.5 95 96 88 100 97 89 106 98 91 114 99 92.5 120 0 94 121 1 96 124 2 98 120 3 100.4
Slide 18: Strong Cement Regional Positions
40-Year History 2.65 Million Tons of Capacity (Net of Joint Venture) - Sold Out Each of Last 18 Years 3% of U.S. Market Share (10th) Cement Plants Cement Terminals Markets Served Cement Plants Cement Terminals Markets Served Strong Cement Regional Positions (22% of FY 05E Revenue; 33% of FY 05E EBIT
Slide 19: Cement Production & Cost
FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 Total Net Tons Produced 1474 1800 1800 1800 1900 1900 2000 2050 2070 2250 2240 2270 2390 Average Net Production Cost 40 37.5 38.5 39 38 38.77 37.48 39.16 41.82 39.77 40.8 42.01 43.95 (000's Tons) ($ per Ton) EXP has Increased Same-Site
Slide 20: Stable Cement Performance
Stable Cement Performance FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05E FY06E Cement Earnings 26 35 40 48 57 53 59.6 60 54 50 57 72 Operating Earnings ($ in millions)
Slide 21: Growing the Cement Business
Growing the Cement Business We Have Agreed to Purchase Our Partner's 50% Stake in Illinois Cement Company for $72 Million in Our Fourth Fiscal Quarter. Impact of the Buyout: Nominal impact to FY 05 earnings A 15% increase in annual cement capacity from 2.3 million tons to 2.65 million tons Consolida
Slide 22: Growing the Cement Business: Volume Targets
Growing the Cement Business FY1995 FY2000 FY2005E FY2006E Target West 1800 2100 2300 2650 3600 Targeting 35% Volume Growth in Cement (tons in 000's) 1,800 2,100 2,650 3,600 Domestic Clinker Capacity 2% 2% 2% 3% 4% Tons of Capacity Tons of Capacity Estimated Tons of Capacity Target 2,300
Slide 23: Gypsum Paperboard Industry
Gypsum Paperboard Industry 7 Out of 8 U.S. Wallboard Producers Own Integrated Paper Assets Market Dynamics are Improving Increased wallboard demand is causing shortages of gypsum paper Gypsum paperboard producers are choosing to make non-gypsum products as those related markets improve Our Assets La
Slide 24: Paperboard Production & Cost
FY01 FY02 FY03 FY04 FY05E Total Net Tons Produced 160 196.7 231.7 251.2 277.8 Average Net Production Cost 368.17 350.64 330.16 337.44 344.45 (000's Tons) ($ per Ton) High Productivity, Costs Flat Overtime Paperboard Production & Cost
Slide 25: Eagle Materials: A Cash Flow Company
94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05E FY06E Revenue 193 177 205 224 279 311 392 367 395 429 503 587 687 Free Cash Flow 22 41 52 63 88 93 119 97 117 118 113 156 182 Revenues Operating Cash Flow Eagle Materials A Cash Flow Company ($ Millions)
Slide 26: Shareholder Return Through Dividend
Shareholder Return Through Dividend 25% 31% *Industry average includes Vulcan Materials, Rinker Group, Florida Rock, Martin Marietta, Lafarge NA, and Texas Industries. (1) Based on $70 per share stock price (2) Based on TTM reported earnings EXP's Annual Dividend of $1.20 Per Share Payout (2) Yield
Slide 27: Where Eagle is Going
Where Eagle is Going . . . . . . We have a balanced strategy focused on enhancing and improving our existing asset base and pursuing growth opportunities in both cement and wallboard We have demonstrated patience and a willingness to return cash to our shareholders when available growth opportunitie
Slide 28: Guidance
Guidance* ($ in millions) EXP FY05E EXP FY06E Target Year Revenue $575 - $600 $675 - $700 $830 Net Income $98 - $106 $115 - $125 $200 EPS $5.25 - $5.65 $6.40 - $6.90 $12.50 Employees 1,475 1,500 1,750 *Target year defined as mid-cycle.
Slide 29: Eagle's Commitment to Shareholders
Eagle's Commitment to Shareholders Protect the Value of Existing Assets Maximize Shareholders Returns with World Class Operational Excellence Maintain a Steady and Disciplined Approach to Growth Pay an Attractive Annual Dividend Repurchase Shares When Appropriate
Slide 30: 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 Boor, Senior Vice President-Strategic Planning / Investor Relations Telephone: 214
Slide 31: Explanation of Non-GAAP Items
Explanation of Non-GAAP Items EBITDA represents net income, plus interest expense (less interest income), provision 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 with
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