UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 15, 2009
Eagle Materials Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-12984 | 75-2520779 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 3811 Turtle Creek Blvd., Suite 1100, Dallas, Texas | 75219 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number including area code: (214) 432-2000
Not Applicable
(Former name or former address if changed from last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure
Eagle Materials Inc., a Delaware corporation (“Eagle”), has prepared presentation materials that will be used by management in investor presentations on September 15, 2009 and from time to time thereafter. The presentation materials are being furnished with this report as Exhibit 99.1 and are incorporated herein by reference. Pursuant to the rules of the Securities and Exchange Commission, the information contained in this report (including the exhibits) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing by Eagle under such Act or the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits
| Exhibit Number |
Description | |
| 99.1 | Investor Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EAGLE MATERIALS INC. | ||
| By: |
/s/ D. Craig Kesler | |
| D. Craig Kesler | ||
| Executive Vice President – Finance and Administration and Chief Financial Officer | ||
Date: September 15, 2009
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Investor Presentation |
 J.P. Morgan 4th
Annual Diversified Industries Conference September 2009 Low Cost Producer Exhibit 99.1 |
 Forward Looking
Statement 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 by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not historical facts or guarantees of future performance but instead represent only the Company’s beliefs at the time the
statements were made regarding future events which are subject to significant risks,
uncertainties and other factors many of which are outside the Company’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal
risks and uncertainties that may affect the Company’s actual performance include the
following: the cyclical and seasonal nature of the Company’s business; public infrastructure expenditures; adverse weather conditions; restrictive covenants contained in our debt agreements; availability of raw materials;
changes in energy costs including, without limitation, increases in natural gas and oil;
changes in the cost and availability of transportation; unexpected operational difficulties, equipment failures and catastrophic events; inability to timely execute announced capacity expansions; governmental regulation
and changes in governmental and public policy (including climate change regulation); changes in
economic conditions specific to any one or more of the Company’s markets; competition; announced increases in capacity in the gypsum wallboard and cement industries; changes in demand for
residential housing construction or commercial construction; environmental liabilities; general
economic conditions (including the possibility of the deepening of the current economic recession); and interest rates. For example, increases in interest rates, decreases in demand for construction
materials or increases in the cost of energy (including natural gas and oil) could affect the
revenues and operating earnings of our operations. In addition, changes in national and regional economic conditions and levels of infrastructure and construction spending could also adversely affect the
Company’s results of operations. These and other factors are described in the Annual
Report on Form 10-K for the Company for the fiscal year ended March 31, 2009 and in its quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2009. These reports are filed with the Securities and Exchange Commission and may be obtained free of charge through the website maintained by the SEC at www.sec.gov. All forward-looking statements
made in this presentation are made as of the date hereof, and the risk that actual results will
differ materially from expectations expressed in this presentation will increase with the passage of time. The Company undertakes no duty to update any forward-looking statement to reflect future events or changes
in the Company’s expectations. 2 |
 Agenda 3 • Who We Are • Industry Outlook • Eagle Materials Outlook |
 Eagle Materials 4 • Major North American cement producer • Four geographically diversified plants, supported by 10 cement terminals • Lowest cost producer -- profitable through the cycle • Complimenting the cement business are concrete and aggregates operations, which enjoy strong competitive positions in TX and CA • Vast aggregates reserves (over 1 billion tons) in Northern CA • National gypsum wallboard producer • Five manufacturing plants • Lowest cost producer • Paper needs met through owned lightweight paperboard mill • Distribution yards enable service coast-to-coast |
 Ten Hallmarks of How We
Operate • Decentralized, profit center model with low overhead -- no frills • Intense focus on operating metrics • Provide the most demanded commodity products with consistent high quality • Focus of innovation on operating efficiency improvement – to maintain and extend low cost producer positions and to add incremental capacity • Assets are maintained in “like new” condition • Projects on-time and on-budget due to rigorous engineering discipline • Customers find us easy to do business with, a preferred supplier • Close attention to safety and environmental/community stewardship • Principles-based management culture, low turnover, deep experience • Financial transparency, internally and externally 5 |
 Criteria for Major New
Investment • Strengthens core business position in gypsum wallboard, cement or aggregates • Improves low-cost producer positions • Improves regional market diversification • Provides superior return on investment • Preserves balance sheet health and financial flexibility Track record of returning cash to shareholders when investment criteria is not well-met 6 |
     Low Cost Commodity Producer
Advantages 7 |
 Agenda 8 • Who We Are • Industry Outlook • Eagle Materials Outlook |
 9 Cement |
 U.S. Cement Industry
Update Current Supply/Demand Dynamics • Demand is anticipated to decline approximately 22% in calendar 2009 • Several plant closures and delays of expansion projects have been announced • Landed cost of imported cement has been reduced • Imports of foreign cement have been dramatically reduced • Demand is heavily driven by public infrastructure investment and by non-residential construction • The outlook for 2010 and 2011 is for consumption to increase 11% and 13% respectively, in large measure due to stimulus investment 10 |
     Cement Industry: US
Consumption 11 Source: Portland Cement Association data and company analysis 30% imports Capacity Consumption Imports only 7% today |
 Real Public Construction Source: Portland Cement Association 12 (YOY% Change) |
 Real Non-Residential Construction (YOY % Change) Source: Portland Cement Association 13 • Commercial construction cycles typically lag residential cycles • However not all sectors of commercial are down this year |
 Architectural Billings
Index July 2009 20 30 40 50 60 70 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Commercial/Industrial Institutional Mixed Use 14 Source: American Institute of Architects As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve
month lag between architectural billings and construction spending. Any score above 50
indicates an increase in billings. |
 Infrastructure Update
and Outlook 15 Silver lining: Sustained gains in cement consumption in 2011-2014 as projects are pushed forward Note: Only 2.5% of all AARA highway stimulus dollars have been spent through July (most of this, in fact, the last two weeks of July) |
 Cement Consumption
Outlook 16 Public Construction Non-Residential Residential 000 Short Tons Source: Portland Cement Association, company analysis |
 17
Gypsum Wallboard |
 Gypsum Wallboard
Industry Update Demand • Demand is half of what it was at the peak • We anticipate the start of a cyclic recovery next year, with 2010 being relatively flat Supply • Capacity has not dropped materially from the 2005 peak What’s Needed for Higher Industry Profitability • Demand needs to increase, high-cost capacity needs to shut down or some combination 18 |
 Wallboard Industry Utilization Outlook 19 2005 2006 2007 2008 2009E Consumption Estimates New Single Family Residential 17.0 15.0 10.8 6.6 4.4 New Multi-Family Residential 1.5 1.4 1.4 1.2 1.0 New Commercial 6.5 7.6 7.2 7.0 4.9 Repair and Remodel 10.5 10.6 10.5 9.7 7.4 Manufactured Housing 0.7 0.4 0.3 0.3 0.3 Total 36.2 35.0 30.2 24.8 18.0 Ending Annual Capacity 37.0 37.2 37.9 36.8 36.8 Average Annual Industry Utilization 98% 94% 80% 67% 49% (BSF, calendar years) |
 U.S. Demand for Gypsum
Wallboard 20 New Home Sales (000) BSF |
 Drivers of Residential Demand 21 • What drives residential demand? Job growth Mortgage rates Consumer confidence New home affordability Existing home inventory Existing home prices (ability to sell and buy new) Foreclosures and foreclosure outlook • These factors represent a mixed bag -- the net suggests a recovery beginning in 2010 and then picking up speed in 2011 and 2012 • Also important to note: residential demand outlooks vary
significantly by geography, e.g., TX, CO and SE earlier, CA and FL later
|
 Employment 22 Source: Portland Cement Association |
 Mortgage Rates
23 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 Sources: FreddieMac and bankrate.com (Jumbo) Rates are important but the key issue today is also qualification standards |
 Consumer
Confidence 24 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 Sources: Conference Board (Left Axis) (Right Axis) |
 Affordability
Percent of Median House Price that a Median Income Family can Afford 25 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 20-Year Average Source: National Association of Realtors |
 New and Existing Home
Inventories Millions of Homes 26 (Left Axis) (Right Axis) 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 Sources: US Census Bureau & National Association of Realtors |
 Existing Home
Prices 27 27 FHFA CSW Existing Home Price Indices (1991=100) Year/Year % Change in Price Index FHFA CSW 91 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 92 87 88 89 90 Sources: CSW-Standard & Poors , FHFA-Federal Housing Finance Agency Both indices measure resale price trends for a “constant quality” mix of homes. FHFA index includes homes with conforming mortgages in all metro areas. CSW index includes homes in all price ranges but is limited to larger metro
areas. 91 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 92 87 88 89 90 |
 Foreclosures
28 28 Foreclosure Inventory Percent of Mortgage Loans in Foreclosure, Seasonally Adjusted Annual Rate New Foreclosures New Foreclosures Started, as % of Loans, Seasonally Adjusted Annual Rate 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1987 1988 1989 1990 Source: Mortgage Bankers Association |
 Adjustable Mortgage
Reset Schedule 29 29 Sources: The Norris Group; Credit Suisse Today 2007 J F M A M J J A S O N D 2009 J FM A M J J A S O N D 2008 J FM A M J J A S O N D 2010 J F M A M J J A S O N D 2011 J F M A M J J A S O N D 2012 J F M A M J J A S O N D |
 Wallboard Industry
30 |
 Wallboard Industry
Capacity Expansions/Closures INDUSTRY CAPACITY ADDITIONS CAPACITY CLOSURES EAGLE PLANTS Capacity Summary (in BSF) 1/1/07 37.9 Additions 5.7 Closures (6.8) Current 36.8 31 |
 Capacity Balancing at the Trough 32 Supply Supply Demand On On Off On On Off On On Off |
     Capacity Balancing at the
Trough 33 On Off Creates Diseconomies Curtail / Start-Stop Permanent Shut-Down Mothball Not Always Necessary Reduces Capacity Preserves Option Lowers System Delivered Costs |
 Agenda 34 • Who We Are • Industry Outlook • Eagle Materials Outlook |
 Financial
Highlights $ in millions, For Fiscal Years Ending March 31 35 * Before Corporate G&A Revenues Operating Earnings* $429 $503 $617 $860 $922 $750 $602 $0 $200 $400 $600 $800 $1,000 2003 2004 2005 2006 2007 2008 2009 $102 $115 $172 $264 $330 $184 $108 $0 $100 $200 $300 $400 2003 2004 2005 2006 2007 2008 2009 |
 We
Continue to Outperform the Group 36 Note: This is based on comparison of EBITDA Margins (TTM) for each of the listed
companies for the most recently reported period. EBITDA margins
represent earnings before interest, taxes, depreciation and amortization / revenues. EBITDA is a non-GAAP measure. See slide entitled “Explanation of Non-GAAP Items” that is appended as a final slide. |
 The
Song Was the Same in 2007 (Peak) 37 Note: This is based on comparison of EBITDA Margins (TTM) for each of the listed
companies for the most recently reported period. EBITDA margins
represent earnings before interest, taxes, depreciation and amortization / revenues. EBITDA is a non-GAAP measure. See slide entitled “Explanation of Non-GAAP Items” that is appended as a final slide. From May 2007 with X’s added X X X X X X |
 Capital
Structure $406 $428 $437 $381 $337 $324 $0 $100 $200 $300 $400 $500 3/31/2008 3/31/2009 6/30/2009 Equity Net Debt 38 Net Debt-to-Cap
48% 44% 43% Net Debt-to-Equity 94% 79% 74% |
 Debt Maturity
Profile 39 Eagle’s balanced debt maturity profile with no near term maturities provides significant
financial flexibility |
 Resilience and
Performance Eagle’s ability to perform through down-cycles and thrive in the up-cycles is due to the company’s • Low cost producer position • Strong cash flow from low-cost operations • Low overhead • Consistent quality products • Exceptional customer service and long-term relationships • Best and most experienced management team in the industry, at all levels • Solid balance sheet • Positioning for the recovery 40 |
 41
Questions and Answers |
 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@eaglematerials.com 42 Eagle Materials
Inc. NYSE: EXP www.eaglematerials.com |
 43
|
 Eagle’s Wallboard
Operations at a Glance American Gypsum • 18-year history • Nearly 4.0 bsf of capacity • 11% market
share (Top 5 in US) • Lowest cost producer • Consistent quality • Exceptional customer service Wallboard Plants Reload/Distribution Yards Core Markets Served 44 |
 Eagle’s Gypsum
Paperboard at a Glance 45 • Original design capacity of 220,000 tons has been increased to 320,000 tons • Republic produces light-weight gypsum paperboard • 15% lighter than gypsum industry average • Superior wallboard conversion characteristics • Produces uniform cross-directional strength, weight and moisture profile • 50% of capacity consumed internally, 40% sold through long-term sales contract with CertainTeed, 10% sold in spot linerboard market, at full utilization • Cost trends: OCC costs are up since year end, energy costs are trending down |
           Eagle’s Cement Operations at a Glance Approximately 3.1 million tons of capacity 3.1% market share (Top 12 in North America) Low cost producer Exceptional quality and customer service 46 Cement Plants Cement Terminals Markets Served |
 Eagle’s Concrete
and Aggregates Operations at a Glance 47 • Strong competitive position in local markets • Capacities • Aggregates – 5.5 mil tons • Concrete – 850,000 cu yds • Complimentary to Eagle’s Cement business • Vast aggregates reserves: over 1 billion tons in No. CA • Exceptional quality and customer service |
 Explanation of
Non-GAAP Items 48 EBITDA represents net income, plus interest expense (less interest income), provisions 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 without regard to financing methods, capital structures or historical cost bases and is used as a benchmark for evaluating the creditworthiness of particular issuers. EBITDA should not, however, be considered as an alternative to net income, operating income, cash flow from operations or any other measure of financial performance in accordance with GAAP. EBITDA for our trailing twelve-months ended June 30, 2009 of $146.3 can be reconciled to net income by adding to net income the following amounts: interest expense, $26.5 million; provision for income taxes, $22.6 million; deprecation and amortization expense, $51.3 million. EBITDA for our trailing twelve-months ended March 31, 2007 of $349.7 can be reconciled to net income by adding to net income the following amounts: interest expense, $5.4 million; provision for income taxes, $101.6 million; deprecation and amortization expense, $40.0 million. |