Eagle Materials (EXP) 8-K Results of Operations and Financial Condition

Contact at 214/432-2000
Steven R. Rowley
President & CEO

Arthur R. Zunker, Jr.
Senior Vice President & CFO

News For Immediate Release

EAGLE MATERIALS INC. REPORTS
RECORD SECOND QUARTER RESULTS
HIGHEST QUARTERLY NET EARNINGS ($43.3 MILLION) AND
DILUTED EPS ($2.41) IN COMPANY HISTORY AND
RAISES ANNUAL EARNINGS GUIDANCE

     (Dallas, TX November 1, 2005): Eagle Materials Inc. (NYSE: EXP and EXP.B) today reported financial results for the second quarter of fiscal 2006 ended September 30, 2005 and raised its annual earnings guidance. Eagle produces and distributes Gypsum Wallboard, Cement, Recycled Paperboard and Concrete and Aggregates. The following are highlights of our second quarter results:

• HIGHEST QUARTERLY OPERATING EARNINGS IN WALLBOARD AND CEMENT IN COMPANY HISTORY

• RECORD HIGH QUARTERLY SALES VOLUME IN WALLBOARD

• GYPSUM WALLBOARD AVERAGE NET SALES PRICE INCREASED 21% FROM LAST YEAR’S SECOND QUARTER

• RECORD HIGH SECOND QUARTER SALES VOLUME IN CEMENT

• HIGHEST QUARTERLY CEMENT AVERAGE NET SALES PRICE IN OUR HISTORY — INCREASED 18% FROM LAST YEAR’S SECOND QUARTER

     For the quarter ended September 30, 2005, revenues and net earnings were $222 million and $43 million, respectively. Revenues increased 36% over the prior year second quarter and net earnings increased 44% over the same period last year. Diluted earnings per share for the second quarter of fiscal 2006 were $2.41 compared with $1.62 in the same period a year ago, a 49% increase.

     The Company also raised its earnings guidance for fiscal 2006 to a range of $7.60 to $7.90 per diluted share, and expects to report earnings ranging from $1.80 to $2.00 per diluted share for the third quarter of fiscal 2006 ending December 31, 2005.

     Eagle remains well positioned to continue to achieve outstanding results given our strong operations, which enable us to supply building materials to a vibrant construction industry. According to the U.S. Census Bureau, total construction spending during August 2005 was estimated at a seasonally adjusted annual rate of $1.11 trillion, 6% above the August 2004 estimate. The Gypsum Association reported approximately 27.1 billion square feet of wallboard were shipped in the first nine months of calendar 2005, a 5.5% increase over the same period in the prior record year. For calendar year 2005, we expect Wallboard demand to remain strong and supply to be tight (with 95%+ industry capacity utilization) as a result of continued high levels of activity in residential construction and increasing repair/remodel and commercial construction activity. Wallboard pricing remains strong and a $12 per thousand square feet

(MSF) price increase was implemented on September 19, 2005 in all of our wallboard markets. Also, national demand for cement remains at record levels outpacing last year’s consumption by approximately 5.8% through August 2005 according to the U.S. Geological Survey with imports projected to fulfill over 25% of the U.S. construction industry demand this year. Low inventories and strong demand continue to put upward pressure on cement pricing. We implemented price increases ranging from $3 to $5 per ton between July 1^st and October 1^st, in most of our cement markets.

GYPSUM WALLBOARD

     Gypsum Wallboard revenues for the second quarter totaled $117 million, a 28% increase over the $92 million for the same quarter a year ago. Gypsum Wallboard’s second quarter operating earnings were $37 million, up 62% from the $23 million for the same quarter last year. The revenue and earnings gain for the quarter resulted from higher sales prices and record sales volume. The average net sales price for this fiscal year’s second quarter was $132 per MSF, 21% greater than the $110 per MSF for the same quarter last year. Gypsum Wallboard sales volume of 712 million square feet (MMSF) for the quarter increased 7% from the prior year’s second quarter.

CEMENT

     Operating earnings from Cement increased 35% to $23 million for the second quarter this year from $17 million for the same quarter last year. The earnings gain was due primarily to a record high average net sales price, record high sales volumes and the positive impact of the Illinois Cement acquisition. Cement revenues for the second quarter totaled $78 million, 38% greater than the $56 million for the same quarter a year ago. $9 million of the revenue gain is attributable to the acquisition of our partner’s 50% interest in Illinois Cement Company, which closed in the fourth quarter of fiscal 2005. Cement sales volume for the second quarter totaled 887,000 tons, 20% above the 742,000 tons for the same quarter last year. To meet these strong market requirements, Eagle increased its lower margin purchased cement sales volumes to approximately 260,000 tons for the quarter.

PAPERBOARD

     EXP’s Paperboard operation reported second quarter revenues (including sales to EXP’s Wallboard operations — see Attachment 4 for a detail of intersegment revenues) of $33 million which is even with last year’s second quarter. Paperboard operating earnings of $7 million for the second quarter this year were nearly flat with last year’s second quarter operating earnings. For this year’s second quarter, Paperboard sales volume was 69,000 tons, down 1% from last year’s sales volume of 70,000 tons. This year’s second quarter average net sales price of $471 per ton was a quarterly record and was 3% above last year’s second quarter average net sales price of $459 per ton.

CONCRETE AND AGGREGATES

     Revenues from Concrete and Aggregates were $25 million for this year’s second quarter, 16% greater than the $21 million for the second quarter a year ago. Concrete and Aggregates reported a $3.2 million operating profit for this year’s second quarter, up 30% from the $2.5 million operating profit for the same quarter last year, due to increased pricing in both of our markets and increased concrete volumes.

     Concrete sales volume increased 5% for the second quarter this year to 240,000 cubic yards from 229,000 cubic yards for the same quarter last year. Our Concrete quarterly average net sales price of $62 per cubic yard for the second quarter of fiscal 2006 was a record and was

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15% higher than the $54 per cubic yard for the second quarter a year ago. Our Aggregates operation reported sales volume of 1.6 million tons for the current quarter, 3% less than the 1.7 million tons reported in the second quarter last year. Our Aggregates quarterly average net sales price was a record high $5.89 during the second quarter and was 15% above last year’s second quarter Aggregates average net sales price.

DETAILS OF FINANCIAL RESULTS

     We conduct one of our cement plant operations through a 50/50 joint venture, Texas Lehigh Cement Company LP (the “Joint Venture”). We utilize the equity method of accounting for our 50% interest in the Joint Venture. For segment reporting purposes only, we proportionately consolidate our 50% share of the Joint Venture’s revenues and operating earnings, which is consistent with the way management organizes the segments within the Company for making operating decisions and assessing performance.

     Our results for the second quarter of fiscal 2006 include 100% of Illinois Cement Company. During the second quarter of fiscal 2005, Illinois Cement Company was a 50% owned joint venture and was accounted for utilizing the equity method of accounting.

     In addition, for segment reporting purposes we report intersegment revenues as a part of a segment’s total revenues. Intersegment sales are eliminated on the income statement. Refer to Attachment 4 for a reconciliation of the amounts referred to above.

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     EXP’s senior management will conduct a conference call to discuss the financial results, forward looking information and other matters at 3:00 p.m. Eastern Time (2:00 p.m. Central Time) on Wednesday, November 2, 2005. The conference call will be webcast simultaneously on the EXP Web sitehttp://www.eaglematerials.com. A replay of the webcast and the presentation will be archived on that site for one year. For more information, contact EXP at 214-432-2000.

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     Forward-Looking Statements. This press release 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; availability of raw materials; changes in energy costs including without limitation increases in the cost of natural gas; changes in the cost and availability of transportation; unexpected operational difficulties; governmental regulation and changes in governmental and public policy; 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; 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 natural gas) or transportation could affect the revenues or 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 onForm 10-K for the Company for the fiscal year ended March 31, 2005. This report is filed with the Securities and Exchange Commission and may be obtained free of charge through the website maintained by the SEC at http://www.sec.gov. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release 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.

For additional information, contact at 214/432-2000.

Steven R. Rowley
President and Chief Executive Officer

Arthur R. Zunker, Jr.
Senior Vice President and Chief Financial Officer

(1)	Summary of Consolidated Earnings
(2)	Revenues and Earnings by Lines of Business (Quarter)
(3)	Revenues and Earnings by Lines of Business (Six Months)
(4)	Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(5)	Consolidated Balance Sheets

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Eagle Materials Inc.
Attachment 1

Eagle Materials Inc.
Summary of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)

			Quarter Ended September 30,
			2005		2004		Change
Revenues			$	221,784	$	163,112		36	%
Earnings Before Income Taxes			$	65,729	$	45,977		43	%
Net Earnings			$	43,322	$	30,119		44	%
Earnings Per Share:
	—	Basic	$	2.44	$	1.64		49	%
	—	Diluted	$	2.41	$	1.62		49	%
Average Shares Outstanding:
	—	Basic		17,749,065		18,406,628		-4	%
	—	Diluted		18,001,934		18,615,388		-3	%

			Six Months Ended September 30,
			2005		2004		Change
Revenues			$	426,583	$	313,403		36	%
Earnings Before Income Taxes			$	115,911	$	81,411		42	%
Net Earnings			$	78,230	$	53,332		47	%
Earnings Per Share:
	—	Basic	$	4.36	$	2.88		51	%
	—	Diluted	$	4.31	$	2.85		51	%
Average Shares Outstanding:
	—	Basic		17,926,216		18,518,556		-3	%
	—	Diluted		18,161,900		18,726,654		-3	%

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Eagle Materials Inc.
Attachment 2

Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)

	Quarter Ended September 30,
	2005			2004			Change
Revenues*
Gypsum Wallboard	$	117,105		$	91,840			28	%
		53	%		56	%
Cement (Wholly Owned) **		60,459			31,400			93	%
		27	%		19	%
Paperboard		18,908			18,743			1	%
		9	%		12	%
Concrete & Aggregates		24,157			20,936			15	%
		10	%		13	%
Other, net		1,155			193			498	%
		1	%		—	%
Total	$	221,784		$	163,112			36	%
		100	%		100	%
Operating Earnings
Gypsum Wallboard	$	37,075		$	22,862			62	%
		52	%		46	%
Cement:
Wholly Owned **		15,759			8,025			96	%
Joint Venture **		6,883			8,789			-22	%
		22,642			16,814			35	%
		32	%		34	%
Paperboard		7,088			7,216			-2	%
		10	%		15	%
Concrete & Aggregates		3,226			2,482			30	%
		4	%		5	%
Other, net		1,155			193			498	%
		2	%		—	%
Total Operating Earnings		71,186			49,567			44	%
		100	%		100	%
Corporate General Expenses		(3,963	)		(2,719	)
Interest Expense, net		(1,494	)		(871	)
Earnings Before Income Taxes	$	65,729		$	45,977			43	%

*	Net of Intersegment and Joint Venture Revenues listed on Attachment 4.
**	Reflects purchase of the other 50% interest in Illinois Cement Company.

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Eagle Materials Inc.
Attachment 3

Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)

	Six Months Ended September 30,
	2005			2004			Change
Revenues*
Gypsum Wallboard	$	221,944		$	174,096			27	%
		52	%		56	%
Cement (Wholly Owned) **		117,794			64,356			83	%
		27	%		20	%
Paperboard		37,997			36,868			3	%
		9	%		12	%
Concrete & Aggregates		46,569			37,890			23	%
		11	%		12	%
Other, net		2,279			193			1,081	%
		1	%		—	%
Total	$	426,583		$	313,403			36	%
		100	%		100	%
Operating Earnings
Gypsum Wallboard	$	64,926		$	39,862			63	%
		51	%		46	%
Cement:
Wholly Owned **		26,261			16,097			63	%
Joint Venture **		12,410			13,713			-10	%
		38,671			29,810			30	%
		31	%		34	%
Paperboard		13,252			13,942			-5	%
		11	%		16	%
Concrete & Aggregates		6,678			4,613			45	%
		5	%		5	%
Other, net		2,279			(639	)		457	%
		2	%		-1	%
Total Operating Earnings		125,806			87,588			44	%
		100	%		100	%
Corporate General Expenses		(7,065	)		(4,598	)
Interest Expense, net		(2,830	)		(1,579	)
Earnings Before Income Taxes	$	115,911		$	81,411			42	%

*	Net of Intersegment and Joint Venture Revenues listed on Attachment 4.
**	Reflects purchase of the other 50% interest in Illinois Cement Company.

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Eagle Materials Inc.
Attachment 4

Eagle Materials Inc.
Sales Volume, Net Sales Prices and Intersegment and Joint Venture Revenues
(unaudited)

	Sales Volume
	Quarter Ended							Six Months Ended
	September 30,							September 30,
	2005		2004		Change			2005		2004		Change
Gypsum Wallboard (MMSF’s)		712		664		7	%		1,409		1,305		8	%
Cement (M Tons):
Wholly Owned		681		393		73	%		1,352		811		67	%
Joint Venture		206		349		-41	%		433		689		-37	%
		887		742		20	%		1,785		1,500		19	%
Paperboard (M Tons):
Internal		29		28		4	%		58		56		4	%
External		40		42		-5	%		84		84		—	%
		69		70		-1	%		142		140		1	%
Concrete (M Cubic Yards)		240		229		5	%		473		417		13	%
Aggregates (M Tons)		1,616		1,673		-3	%		3,188		2,884		11	%

	Average Net Sales Price*
	Quarter Ended							Six Months Ended
	September 30,							September 30,
	2005		2004		Change			2005		2004		Change
Gypsum Wallboard (MSF)	$	132.35	$	109.65		21	%	$	125.83	$	105.60		19	%
Cement (Ton)	$	82.55	$	70.05		18	%	$	80.54	$	69.18		16	%
Paperboard (Ton)	$	471.39	$	458.88		3	%	$	464.39	$	452.20		3	%
Concrete (Cubic Yard)	$	61.58	$	53.51		15	%	$	60.00	$	54.12		11	%
Aggregates (Ton)	$	5.89	$	5.14		15	%	$	5.79	$	5.32		9	%

     *Net of freight and delivery costs billed to customers.

	Intersegment and Cement Revenues
	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Intersegment Revenues:
Cement	$	1,679	$	997	$	3,277	$	1,778
Paperboard		14,538		14,018		29,400		27,686
Concrete and Aggregates		411		323		858		622
	$	16,628	$	15,338	$	33,535	$	30,086
Cement Revenues:
Wholly Owned	$	60,459	$	31,400	$	117,794	$	64,356
Joint Venture		15,970		24,050		32,826		46,780
	$	76,429	$	55,450	$	150,620	$	111,136

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Eagle Materials Inc.
Attachment 5

Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)

	September 30,						March 31,
	2005			2004			2005*
ASSETS
Current Assets —
Cash and Cash Equivalents	$	11,045		$	6,383		$	7,221
Accounts and Notes Receivable, net		92,053			62,321			70,952
Inventories		60,927			44,388			63,482
Total Current Assets		164,025			113,092			141,655
Property, Plant and Equipment —		825,708			723,670			788,447
Less: Accumulated Depreciation		(282,004	)		(250,031	)		(264,088	)
Property, Plant and Equipment, net		543,704			473,639			524,359
Investments in Joint Ventures		26,340			49,265			28,181
Goodwill		68,552			40,290			66,960
Other Assets		16,191			14,914			18,846
	$	818,812		$	691,200		$	780,001
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities —
Note Payable	$	48,200		$	30,800		$	30,800
Accounts Payable and Accrued Liabilities		98,721			83,443			91,069
Current Portion of Long-term Debt		—			80			—
Total Current Liabilities		146,921			114,323			121,869
Long-term Debt		45,000			19,000			54,000
Deferred Income Taxes		115,468			105,199			118,764
Stockholders’ Equity — Preferred Stock, Par Value $0.01; Authorized 5,000,000 Shares None Issued		—			—			—
Common Stock, Par Value $0.01; Authorized 50,000,000 Shares; Issued and Outstanding 9,517,959, 9,667,907 and 9,726,009 Shares, respectively. Class B Common Stock, Par Value $0.01; Authorized 50,000,000 Shares; Issued and Outstanding, 8,225,584, 8,655,769 and 8,499,269 Shares, respectively.		177			183			182
Capital in Excess of Par Value		—			—			—
Accumulated Other Comprehensive Losses		(1,842	)		(1,877	)		(1,842	)
Unamortized Restricted Stock		(506	)		(573	)		(557	)
Retained Earnings		513,594			454,945			487,585
Total Stockholders’ Equity		511,423			452,678			485,368
	$	818,812		$	691,200		$	780,001

* From audited financial statements.

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