Slide 1: Investor Presentation May 2004
Investor Presentation May 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: Investment Highlights
Low-cost producer of cement and wallboard Stable earnings and cash flow from cement business Strong earnings and cash flow upside from wallboard business Strong balance sheet and cash flow supports growth, dividends, and stock repurchases Investment Highlights The Nation's Highest Margin Constructio
Slide 4: Product Lines
Gypsum Wallboard Cement Paperboard Concrete & Aggregates Product Lines
Slide 5: Eagle Materials' Portfolio of Construction Products Businesses
Eagle Materials' Portfolio of Construction Products Businesses Wallboard Paperboard Cement Concrete & Aggregates Pie 2 51.2 28.7 55.4 9 Wallboard Paperboard Cement Concrete & Aggregates Pie 1 272.9 63.1 178.9 62.1 EXP FY 2004 Revenues $ 503 million EBITDA** $ 139 million Net Income $ 67 million Empl
Slide 6: Financial History
Financial History Fiscal Years Ended March 31st ($ Millions) 94 95 96 97 98 99 00 01 02 03 04 Revenue 193 223 259 278 344 382 470 441 471 501 579 Free Cash Flow 22 35 42 57 81 60 93 84 102 109 101 Revenues* Free Cash Flow** EPS ($) 0.95 1.47 1.89 2.56 3.71 5.63 3.22 2.15 3.11 3.57 * Total of Segment
Slide 7: Value Creation at Eagle Materials
Value Creation at Eagle Materials Acquire assets at attractive prices Maintain assets in "better than new" condition Optimize the interaction between people, complex machinery, and raw materials Enhance assets through efficient investment in incremental capacity End Result - Highest Margins and Low
Slide 8: Cement Demand Drivers
Cement Demand Drivers Residential Bldgs Non-Residential Bldgs Public Construction Other 2003 28 17 49 6 2001 2002 2003 2004e 2005e Residential Buildings 389.9 421.5 465.6 481.7 483.7 Non-Residential Buildings 201.5 166.2 157.2 165.2 190.8 Public Construction 195.9 211.3 216.7 225.2 236.4 Other 65.2
Slide 9: Cement Industry Overview
Cement Industry Overview High Barriers to Entry Capital intensive with 3-5 year lead-time for new capacity Lengthy environmental permitting process Regional markets are severely impacted by size of new plants Increased U.S. capacity not justified at current price level Favorable Growth Prospects Bro
Slide 10: Cement Industry Overview: 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 11: Cement: Strong Regional Operations
Cement Strong Regional Operations (31% of FY04 Revenue) 40-year history 2.3 million tons of capacity (net of joint ventures) - sold out each of last 18 years 2% of U.S. market share (11th) Cement Plants Cement Terminals Markets Served Cement Plants Cement Terminals Markets Served
Slide 12: Cement Production & Cost
Cement Production & Cost Fiscal Year Ended March 31st 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total Net Tons Produced 1474 1614 1660 1694 1752 1838 1952 1958 1924 2043 2085 2270 2390 Average Net Production Cost* 40.31 36.9 38.72 38.94 38.31 38.93 37.55 39.14 41.83 39.75 40.8
Slide 13: Cement Low-Cost Production
Cement Low-Cost Production ($/Ton) Industry Average* EXP** Gross Sales $78.5 $75.5 Regional price differences Freight 5.0 6.5 Market proximity Plant Costs 52.5 41.5 3 of 4 plants in top quartile Gross Margin 21.0 27.5 SG&A (Segment) 4.5 2.5 Lean, decentralized Operating Earnings $16.5 $25.0 Margin A
Slide 14: Concrete & Aggregates
Concrete & Aggregates Both Industries are Highly Fragmented Over 7,000 independent quarries with top two aggregates producers controlling 13% of the market 2,700 concrete companies owning approximately 6,000 plants Concrete and Aggregates Represent a Very Small Part of EXP Strong competitive positio
Slide 15: Wallboard Demand Drivers
Wallboard Demand Drivers Manufacturing Housing & Export New Residential Residential Repair & Remodel New Non-Residential Non-Residential Repair & Remodel 2003 6 47 16 12 19 2001 2002 2003 2004e 2005e Residential Buildings 389.9 421.5 465.6 481.7 483.7 Non-Residential Buildings 201.5 166.2 157.2 165.
Slide 16: Wallboard - Industry Overview
Wallboard - Industry Overview Consolidating Industry 8 U.S. producers - down from 13 ten years ago Top 5 producers represent approximately 87% of capacity Production Capacity Returning to Equilibrium Broad-based demand directly linked to construction industry Consumption has grown at a 3.2% CAGR his
Slide 17: 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 18: Wallboard Utilization and Pricing
Fiscal Years Capacity Utilization USG Net Price (2001 $/msf) AGC Net Sales 86 0.93 164 140.32 87 0.95 166 140.69 88 0.88 141 114.31 89 0.82 117 94.89 90 0.87 106 96.11 91 0.85 93 76.07 92 0.75 84 74.36 93 0.84 82 67.34 94 0.88 89 80 95 0.94 112 103.53 96 0.92 122 101.23 97 0.96 119 111.07 98 0.98 13
Slide 19: Wallboard Sales Price Trend
Wallboard Sales Price Trend 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 Price 79 82.72 83.67 86.41 94.67 105 (Quarter Ending) $/MSF $79.00 $82.72 $83.67 $86.41 $94.67 $105 Projection
Slide 20: Wallboard: Strong Western U.S. Operations
Wallboard Strong Western U.S. Operations (47% of FY04 Revenue) 18-year history 2.7 billion sq. ft. of capacity 8% U.S. market share (5th) Vertically integrated with light-weight paper Wallboard Plants Reload/Distribution Yards Markets Served Wallboard Plants Reload/Distribution Yards Markets Served
Slide 21: Wallboard Production & Cost
Wallboard Production & Cost 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total BSF Produced 0.323 0.376 0.487 0.586 0.672 0.714 1.091 1.151 1.374 1.649 1.89 1.956 2.496 Production Cost / MSF 61.92 53.3 56.43 65 59.74 61.42 64.58 64.02 63.02 65.95 61.38 63.69 63.85 (BSF) ($/MSF) E
Slide 22: Wallboard Low-Cost Production
Wallboard Low-Cost Production (1/2" Basis) ($/msf) Industry Average* EXP** Gross Sales $116 $110 Regional / mix differences Freight 20 22 Market proximity Plant Costs 76 62 3 of 4 plants in top quartile Gross Margin 20 26 SG&A 9 5 Lean organization Operating Earnings $11 $21 Margin Analysis Gross Ma
Slide 23: Paperboard
Paperboard Lawton is a low-cost producer Capacity has increased from 180,000 tpy to 270,000 tpy in three years Product mix improvements are under way Low capital capacity improvements exist 7 out of 8 U.S. wallboard producers own integrated paper assets Market dynamics are improving Two competing mi
Slide 24: EXP Estimates
EXP Estimates* EPS FY 2003 FY 2004 FY 2005E EBITDA 129 139 175 15 EBITDA** FY 2003 FY 2004 FY 2005E EPS 3.11 3.57 4.75 0.5 31% 40% $129 $139 $175-190 $3.11 $3.57 $4.75-5.25 FY 2003 FY 2004 FY 2005E Revenue $429 $503 $547-562 Net Income $58 $67 $90-100 ($ millions) ($ per share) ** EBITDA is a non-GA
Slide 25: Debt vs. Capitalization
Eagle Materials Inc. Debt vs. Capitalization 3/31/03 3/31/2004 Debt 81 83 Equity 480 439 ($ Millions) $81 $480 Ratio 14% 16% $83 $439 - - Debt-free prior to $113 million special dividend paid January 29, 2004. - - Purchased approximately 60,000 shares of Eagle Materials in the 4th quarter of Fiscal
Slide 26: Increasing Value Through Growth
Increasing Value Through Growth Focused on operational excellence to enhance existing operations and rapidly integrate new acquisitions Share Repurchases Return Through Dividends Shareholder Value Creation
Slide 27: Shareholder Return Through Dividends
Shareholder Return Through Dividends EXP Recently Increased its Annual Dividend from $0.20 Per Share to $1.20 Yield (1) Payout (2) (1) Based on $62 per share stock price (2) Based on TTM reported earnings EXP's Increased Dividend Industry Average* * Industry average includes Vulcan Materials, Rinker
Slide 28: Increased Shareholder Value Through Growth
Increased Shareholder Value Through Growth $750 Million Projected to be Available (Cash & Debt Capacity) Over the Next 5 Years with 40% Debt-to-Capital as the Upper Target Focused on cement and wallboard growth Project returns above cost-of-capital Projects consistent with strategic plan Growth Oppo
Slide 29: Balanced Strategy Focused on Cement and Wallboard
Balanced Strategy Focused on Cement and Wallboard Disciplined Asset Management Strategic Expansion Strong Cash Flow from Low-Cost Operations Strong Pricing Upside in Wallboard Operations Attractive Annual Dividend The Nation's Highest Margin Construction Products Company* A Solid Foundation with a B
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-Corporate Development / Investor Relations Telephone:
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
Slide 32: Explanation of Non-GAAP Items
Explanation of Non-GAAP Items "Free Cash Flow" as used on slide 6 represents "Net Cash Provided by Operating Activities" plus "New Cash Used in Investing Activities" (excluding acquisitions). Free Cash Flow is a non-GAAP measure that provides supplemental information regarding the operating performa