Eagle Materials : 2020 Investor Presentation

Company Overview

Evolution and Outlook

2020 Investor Presentation

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 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 belief at the time the statements were made regarding future events which are subject to certain 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 businesses; public infrastructure expenditures; adverse weather conditions; the fact that our products are commodities and that prices for our products are subject to material fluctuation due to market conditions and other factors beyond our control; availability of raw materials; changes in energy costs including, without limitation, natural gas, coal and oil; changes in the cost and availability of transportation; unexpected operational difficulties, including unexpected maintenance costs, equipment downtime and interruption of production; material nonpayment or nonperformance by any of our key customers; fluctuations in or changes in the nature of activity in the oil and gas industry; inability to timely execute announced capacity expansions; difficulties and delays in the development of new business lines; governmental regulation and changes in governmental and public policy (including, without limitation, climate change and other environmental regulation); possible outcomes of pending or future litigation or arbitration proceedings; changes in economic conditions specific to any one or more of the Company's markets; competition; cyber-attacks or data security breaches; announced increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction or construction projects undertaken by state or local governments; risks related to pursuit of acquisitions, joint ventures and other transactions or the execution or implementation of such transactions, including the integration of operations acquired by the Company; general economic conditions; and interest rates. For example, increases in interest rates, decreases in demand for construction materials or increases in the cost of energy (including, without limitation, natural gas, coal and oil) could affect the revenue and operating earnings of our operations. In addition, changes in national or regional economic conditions and levels of infrastructure and construction spending could also adversely affect the Company's result of operations. With respect to our acquisition of certain assets from Kosmos Cement Company, factors, risks and uncertainties that may cause actual future events and developments to vary materially from those anticipated in such forward-looking statements include, but are not limited to, failure to realize expected synergies from or other benefits of the transaction, significant difficulties encountered in integration or unexpected ownership transition costs, unknown liabilities or other adverse developments affecting the assets acquired and the target business, including the effect on the acquired business of the same or similar factors discussed above to which our Heavy Materials business is subject. Additionally, the proposed separation of our Heavy Materials and Light Materials businesses into two independent, publicly traded corporations is subject to various risks and uncertainties, including risks related to conditions in debt and equity markets and risks related to the effects of the COVID-19 pandemic, and may not be completed on the terms or timeline currently contemplated, or at all. Finally, any forward looking statements made by the Company are subject to the risks and impacts associated with natural disasters, pandemics or other unforeseen events, including, without limitation, the COVID-19 pandemic and responses thereto designed to contain its spread and mitigate its public health effects, as well as their impact on economic conditions, capital and financial markets. The COVID-19 pandemic and responses thereto may disrupt our business and are likely to have an adverse effect on demand for our products, attributable to, among other things, reductions in consumer spending, increases in unemployment and decreases in revenues and construction budgets of state or local governments. These and other factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 and subsequent quarterly and annual reports upon filing. These reports are filed with the Securities and Exchange Commission. All forward-looking statements made herein are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein 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

Eagle Materials Company Overview

§ Founded in 1963 as a subsidiary of Centex Corp.

• In 2004, Centex spun off Centex Construction

Revenue (FYE March 31, $ in millions)

Products which became Eagle Materials Inc.

(NYSE: EXP)

§ Two primary business lines: Portland cement and

gypsum wallboard

$898

$1,066 $1,143 $1,211

$1,387 $1,211 $1,451

• • Basic building products used in construction: primarily in infrastructure, residential, repair and remodel, and to a lesser degree non-residential
• Well-recognizedas a low-cost producer through cycles
• • 100% of revenues are generated within the US
• Geographically diverse across the US heartland and sunbelt with 70 production facilities
• • No one customer accounts for more than 5% of revenue; top 10 customers represent less than 25%

Adjusted EBITDA1 & Margin (FYE March 31, $ in millions)

$460 $462 $463 $507

$349 $384

$280

31% 33% 34% 35% 33% 33% 35%

FY14

FY15

FY16

FY17

FY18

FY19

FY20

1 Adjusted EBITDA is a non-GAAP measure; see appendix for reconciliation

3

Comparative on Building Products EBITDA Margins

Calendar Year 2020 Estimate

40.0%

30.0%

20.0%

10.0%

0.0%

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Source: Truist Securities - Building Products Monthly Update October 2020

4

Eagle Materials: Two Major Business Lines

Financial Evolution In Millions, Annual at March Year-End

	2011 (Trough)	2020 (Latest)
Revenue
Heavy (Cement+Con/Agg)	$270	$933
Light (Wallboard+Paperboard)	309	668
Operating Earnings + DD&A
Heavy	65	269
Light	44	219
Assets
Heavy	357	2,116
Light	587	559

From a balanced sales contribution a decade ago to a 50% greater heavy contribution today

A balanced earnings contribution today

"Heavy" includes cement, concrete and aggregates, cement intersegment revenue as well as our proportionate share of JV	5
"Light" includes wallboard and paperboard and paperboard intersegment revenue

Eagle Materials Capital Allocation

$1.7 Billion Over the Last Three Years

52% Heavy-Side Growth and Improvement (e.g., Cement Acquisitions)

41% Return of Cash to Shareholders

7% Light-Side Improvement

(e.g., Paperboard Expansion)

Heavy-Side

Growth and

Improvement

Light-Side

Improvement

Share

Repurchases

and Dividends

Note: Excludes divested business units

6

6

Cement US Heartland System

Strategic Geographic Focus, Away from US Coastlines (Imports)

Plants and Capacities1

(ST2 thousands)

Texas Lehigh (50%)	720
Illinois Cement	1,100
Mountain Cement	800
Nevada Cement	550
Central Plains Kansas City	1,300
Central Plains Tulsa	900
Fairborn Cement	980
	Eagle Cement Plants
Kosmos Cement	2,000
	7,800		Eagle Cement Terminals

1	Represents cement grinding production capacity; generally, a plant's cement grinding production capacity is greater than its clinker production capacity	7
2	One short ton equals 2,000 pounds

US Cement Consumption and Clinker Capacity

PCA, Million Metric Tons

120,000

US Clinker Capacity

100,000

80,000

60,000

40,000

20,000

0

2016	2017	2018	2019	2020
	Public		Residential				Nonresidential		Other

New capacity -- and capacity expansion -- is constrained due to regulation (NESHAP)

Imports will be required again to meet demand

8

Gypsum Wallboard and Paperboard System

US Sunbelt Strategic Geographic Focus

Gypsum, CO

700 MMSF

Albuquerque, NM

425 MMSF

Duke, OK

1,300 MMSF

Georgetown, SC

900 MMSF

Bernalillo, NM

550 MMSF

Lawton, OK 390,000 tons paperboard

Total Wallboard Design Capacity

~ 4 Billion SF

9

Gypsum Wallboard

US Demand is Closely Linked with Housing

1,400

1,200

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800

600

400

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0

1980

New Home Sales (000)

Wallboard Shipments (BSF)

1985

1990

1995

2000

2005

2010

2015

48

42

36

30

24

18

12

6

0

Source: Census Bureau, Gypsum Association

10

Eagle is a Low Cost Producer

Using Less Resources to Make Commodity Products

ü Operational Execution	ü Process Management
ü Low-Cost Focused Innovation
ü Smart Design and Scale
ü Technology and Engineering
ü Sustained Maintenance

Sustained Innovation Focus on Cost Reduction Across Every Aspect of the Business System

Inputs

Processing

Waste

Overhead

•	Proximity of	•	Mining	•	Process	•	Streamlined
	raw materials		innovations		control		systems
•	Unique	•	Manufacturing •	Product line	•	Low staffing
	technologies		innovations		focus		requirements
•	Material and	•	Logistics	•	Maintenance	•	No frills, only
	energy		innovations		disciplines		necessities
	usage

Significant, Sustained and Proven Cost Advantages

Eagle

Cost

Advantages

Industry

EXP

Chart above is for illustrative purposes only,

not to scale

11

Eagle Materials Strategy Since 2010

Strategy and Investment Directions

			Results
Heavy Side	Aggressive Growth	ü Tripled Cement capacity through
Cement, plus	acquisitions
•	Cement	ü Achieved scale materiality
Con/Agg
		ü Largest US-only player
			ü Remained profitable each year
			throughout the deepest and longest
Light Side	Aggressive Improvement	construction recession in US history
ü Benchmark margin performance
Wallboard and	•	Brownfield paper	ü Benchmark customer satisfaction
Paperboard		expansion	ü Benchmark safety performance
			ü Secure raw materials for 40 years+

ü Improved paper capabilities, increasing capacity from 270,000 tons to 390,000+

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Total Leverage

Cash Generation Enables Investment and Provides Flexibility

3.1x

2.0x

1.4x		1.5x		1.3x		1.5x		1.3x		1.5x

FY14

FY15

FY16

FY17

FY18

FY19

FY20

9/30/2020

Leverage defined as Gross Debt/EBITDA

13

Significant Return of Cash to Shareholders

$ Millions

$400

$300

$200

$100

$0

Nearly $2 billion in cash has been returned to shareholders while Eagle has expanded productive capacity and earnings power

MAR '01		MAR '20
		Dividends Paid		Stock Repurchases

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Outlook

Future Determinants of Profitability Favorable for Eagle Businesses

Heavy Side

Winning US Heartland Strategy, Different Than International

• Supply
• Demand
• Substitutes
• Structure
• Sustainability
• Imports
• Logistics

Light Side

Reasons Why Future Cycles May Be More Favorable Than Past

15

Appendix

16

Adjusted EBITDA Reconciliation

$ in millions, Fiscal Year Ending March 31

		FY14	FY15	FY16	FY17	FY18	FY19	FY20
Adjusted EBITDA Reconciliation
Net Income	$124	$187	$153	$198	$257	$69	$71
Income Taxes	58	66	67	96	15	11	(25)
Interest Expense, Net	18	12	17	23	28	28	38
Depreciation, Depletion and Amortization	70	76	97	92	114	123	114
EBITDA	$270	$341	$333	$409	$414	$231	$198
Impairment Losses	-	-	35	1	-	220	224
Acquired EBITDA (d)	-	-	-	30	-	-	48
Write-down of Raw Sand Inventory (a)	-	-	12	9	-	-	2
Reduction of Prepaid Sand Liability (b)	-	-	(11)	(2)	-	-	-
Litigation Losses	-	-	-	-	45	2	-
Business Development Costs	-	-	-	-	-	-	21
Equity in Earnings of Unconsolidated JV (c)	(38)	(45)	(39)	(42)	(43)	(39)	(43)
Distributions from JV (c)	38	40	37	43	32	34	34
Stock Based Compensation Expense	10	13	17	12	14	15	23
Adjusted EBITDA	$280	$349	$384	$460	$462	$463	$507

1. Relating to values associated primarily with a downward revaluation of frac sand.
2. Reflects the forfeiture by a customer of its prepayment of $15.0 million for sand to be purchased at CRS Proppants. Pursuant to the underlying agreement, this prepayment was to be credited to the customer based on future purchases. Because the customer did not make the required purchases in accordance with the terms of the contract, it has forfeited approximately $10.7 million of the prepaid balance as of March 31, 2016. The reversal of the $10.7 million was recorded as a reduction to cost of goods sold in our oil and gas proppants segment during fiscal 2016. The remainder was reversed in fiscal 2017.
3. Reflects our 50% interest in the JV (Texas Lehigh Cement Company LP) using the equity method of accounting
4. Reflects the purchase of the Fairborn Business in Ohio from Cemex in fiscal 2017 and the purchase of Kosmos Cement Business from Cemex in fiscal 2020.

"EBITDA" is defined as net income plus interest, taxes, depreciation, depletion, and amortization. We adjust EBITDA for certain items that are not reflective of the normal earnings of our business ("Adjusted EBITDA"). GAAP does not define EBITDA or Adjusted EBITDA and they should not be considered as alternatives to earnings measures defined by GAAP, including net income. We use Adjusted EBITDA to assess the operating performance of our consolidated business, as a measure within our lending arrangements, and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. As a widely used metric by analysts, investors, and competitors in our industry, we believe Adjusted EBITDA also assists investors in comparing a company's performance on a consistent basis without regard to depreciation, depletion, amortization, and other items which can vary significantly depending on many factors. In addition, our presentation of EBITDA and Adjusted EBITDA may not be the same as similarly titled measures reported by other companies, limiting its usefulness as a comparative measure. The following shows the calculation of EBITDA and Adjusted EBITDA and reconciles them to net earnings (loss) in accordance with

GAAP. "Adjusted EBITDA Margin" is defined as Adjusted EBITDA divided by Revenues.

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