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Executives

Steven Rowley – President & CEO

Craig Kesler – CFO

Bob Stewart – EVP of Strategy, Corporate Development & Communications

Analysts

Kathryn Thompson – Thompson Research Group

Trey Grooms – Stephens

Todd Vencil – Sterne Agee

Jerry Revich – Goldman Sachs

Neil Frohnapple – Northcoast Research

Jim Barrett – CL King & Associates

Chris Olin – Cleveland Research

Garik Shmois – Longbow Research

Glenn Wortman – Sidoti & Company

Ivan Sacks – Institutional Equities

Eagle Materials, Inc. (EXP) F3Q 2013 Earnings Conference Call February 7, 2013 10:00 AM ET

Operator

Good day and welcome to the Third Quarter 2013 Eagle Materials Incorporated Earnings Teleconference. My name is Kandus and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator Instruction).

I will now turn the presentation over to your host for today’s conference, Mr. Steven Rowley, President and Chief Executive Officer. Sir, you may proceed.

Steven Rowley

Thank you, and welcome to Eagle Materials conference call for the third quarter fiscal year 2013. Joining me today are Craig Kesler, our Chief Financial Officer, Bob Stewart Executive Vice President, Strategy Corporate Development and Communications.

There will be a slide presentation made in connection with this call. To access it, please go to www.eaglematerials.com and click on the link to the webcast.

While you’re accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release.

Increased demand for our products, combined with higher net sales prices during the second quarter, resulted in a 33% year-over-year increase in Eagle’s consolidated revenues. Segment operating earnings and earnings per share were up sharply this quarter, primarily because of improved wallboard net sales prices, strong sales volumes across all our business lines and lower recycled fiber input cost.

As previously announced, we completed the acquisition of the Lafarge Target Business on November 30 and integration process has been going very well. As we mentioned in the press release during the quarter, we incurred non-routine costs associated with completing the acquisition as well as litigation costs associated with our lawsuit against the IRS that impacted our quarterly EPS by approximately $0.06.

The 17% increase in our quarterly cement sales volumes and a 3% increase in our average net cement sales prices were the primary drivers of the increases in Eagles quarterly Cement, Concrete and Aggregates revenues. During the quarter our cement operating costs were impacted by the replacement of kiln gear, a portion of the kiln (inaudible) riding ring and kiln system support equipment at our Nevada cement facility.

Increased wallboard average net sales prices and increased sales volumes resulted in a 37% increase in our quarterly comparative of Wallboard and Paperboard revenues. Operating earnings in our Wallboard and Paperboard business improved to $24.8 million for the third quarter versus $5.4 million a year ago. The improvement was driven by improved Wallboard pricing, improved Wallboard and gypsum facing paper demand and lower recycled paper input costs. Our paper mill remains sold out and continues to perform exceptionally well allowing them to report record high quarterly earnings.

Now let me turn this over to Craig for more details on the financials.

Craig Kesler

Thank you, Steve. During the first nine months of the year we generated $107 million of cash flow from operations, a 147% increase from the prior year. Cash flow from operations was used to - utilize to fund $28.8 million of capital expenditures, acquisition spending of $448.4 million and dividends of $3.6 million.

In addition to the cash flow from operations, we funded the acquisition with proceeds from an equity offering completed on October 3, 2012 along with borrowings under our bank revolver. Interest expense during the quarter declined 9% to $3.8 million reflecting lower average borrowing levels and lower borrowing costs under our bank credit facility. After considering the impact of the acquisition funding interest expense should run approximately $5.5 million per quarter. Our effective tax rate for the quarter was 34% reflecting improved earnings.

This last Slide reflects Eagle’s balance sheet post the transaction. Our balance sheet remains healthy December 31 with $483 million of gross debt, $474 million of net debt and with a net debt to cap ratio of 41%.

Thank you for attending today’s call. Candice, we’ll now move to the question and answer session.

Question-and-Answer Session

Operator

Thank you sir. (Operator Instructions) Our first question will come from the line of Kathryn Thompson with Thompson Research Group. You may proceed.

Kathryn Thompson – Thompson Research Group

Thanks for taking my questions today. With the implementation of large Wallboard price increase in January, could you give us an update on the progression of Wallboard shipments and how much an estimation, there was some amount of pre-buy in Q4, but where do we stand as we are in early February in terms of order trends for Wallboard and your assessment of the acceptance of the price increase.

Steven Rowley

So, American Gypsum fully implemented the price increase January 1 and while our sales volumes are slower than December, they are currently greater than last January. So our January sales volumes this year are slightly greater than they were a year ago. However, price remains more important to volume for American Gypsum.

Kathryn Thompson – Thompson Research Group

Have you seen any acceleration in trends which you’ve gotten into early February?

Steven Rowley

Yeah as always, it’s hard to really tell on a day-by-day basis in early February. We’re pleased with where we are and again we remain committed to the price increase.

Kathryn Thompson – Thompson Research Group

Okay. Could you give any update as far as Lafarge integration goes? What additional costs should we expect to see going forward? In general not only the cost but what are some of the savings we should also see once you chew through some of the integration cost?

Steven Rowley

So, I’ll let Craig speak briefly about the transition or purchase accounting, which certainly has some impact both this, the one month that we had at the last quarter and in this quarter it should be flushed through this quarter. But in general, we’re very pleased with how the integration is going and should see the full, the impact of that the purchase to our earnings in the first quarter of next year.

Craig Kesler

Kathryn this is Craig. When we perform purchase accounting, obviously there is a step-up in the value of the property, plant and equipment. You also write up inventory to its fair value and so your first couple of sales out of the facilities post the transaction will be at a much lower margin and as Steve mentioned that impacted us here in the December quarter about a million dollars. There’s a little left to be flushed in the March quarter, but then once you get through that initial inventory quantities, you’ll be back to a normal operating margin for those assets and it’s just a function of the valuation accounting.

Kathryn Thompson – Thompson Research Group

But the March quarter won’t have as great of an impact as the December quarter?

Craig Kesler

Correct.

Kathryn Thompson – Thompson Research Group

And could you give an update on well grade cement demand not only in Texas, but any updates for your Illinois facility?

Steven Rowley

So the demand remains about the same here in Texas, about half of our business is manufactured product is going to our well customers in the Texas market. And the product that we’re producing is of a high quality in Illinois and we’re just starting to get that into the marketplace there, continue to look at the ability of few little capital projects that we have to put in place at the new facilities to be able to produce the product at those facilities.

Kathryn Thompson – Thompson Research Group

Okay. Any update on the Lafarge assets and progress in getting those up to making well grade cement?

Steven Rowley

We are making progress there. There is some capital that we need to spend at both those plants and those plans are well underway.

Kathryn Thompson – Thompson Research Group

Okay. Thanks for taking my questions.

Operator

Our next question will come from the line of Trey Grooms with Stephens, you may proceed.

Trey Grooms – Stephens

Hey, good morning guys.

Steven Rowley

Good morning.

Trey Grooms – Stephens

Steve, I may have missed this, but you touched on replacement of a kiln gear there in one of your plants. Can you quantify kind of what the impact was there? I think you said there was an impact from purchase accounting of about a million bucks. What was the impact of replacing the kiln gear there? Forgive me if I missed that?

Steven Rowley

We had (inaudible) of 50-year-old kiln gearbox that it was finally time to replace, not a gear box, but the actual main gear, I think we had turned that gear about 25 years ago. So we’ve got the useful life out of it. We know it was coming, we’re not sure, we’re hopeful that it would wait till a normal (inaudible) or a little later in the year, but it hit a little early on us. So when you shut it down, you take advantage of because it’s a long process to put the new gear on the kiln, you take advantage and you fix some kiln shell, you put a new riding and ring and a few other large maintenance items that we had and then you go through a full maintenance and repair of the rest of the kiln system.

So the impact of that was significant, which is really probably the difference that we’d see in what we anticipated in our earnings for this quarter.

Trey Grooms – Stephens

So, excluding all of these one-time things or extraordinary things with the kiln demand, with the purchase accounting and other things there, so you’re thinking that margins would have been you said as planned. But is that similar to the year ago period or how do we think about that?

Steven Rowley

Yes, that’s correct.

Trey Grooms – Stephens

Okay, perfect. Thanks for that color. And then you guys are I think you should be getting pretty close to having your plan up and running in Corpus, your frac sand plant; I’m hoping you can give us some color there, what is the size of the plant, an annual output of the Corpus plant there. If you could give us any color on that?

Steven Rowley

Construction of the plant is very nearly complete, in fact shake down and start-up will commence by the end of this month. The plant is rated at about a million and half tons per year. And so we decided to get that up and running. And we should anticipate really kind of hitting the market sometime this spring, early summer with product out of that plant. So, we want to make sure the plant is producing the highest quality product before we sell anything. So, we’ll have an extended start-up period just to assure quality control at that facility.

Trey Grooms – Stephens

And with the 1.5 million tons a year, is that something that takes quite a bit of time to come up to full capacity or is there any way we could think about the timing on something like that?

Steven Rowley

So from an operational perspective, there is not a lot, once we get through the shakedown period the plant should be able to operate at that level. So, then it’s just a function of all the dynamics being a new entrant into the marketplace.

Trey Grooms – Stephens

Okay, and then, I appreciate that color. And then I guess on the same note. Is there something beyond Corpus? I guess this is kind of I heard you guys refer to it as a Phase I. I mean, is there anything beyond that in your mind and if so, what would that entail?

Steven Rowley

Sure. We continue to make significant progress with our plant which is ready to deliver high quality Northern White Sand to all major shale plays in North America, and to be the low cost producer while we do it, and those plans continue to be put in place, milestones that we’ve set continue to be met, you’re starting to develop something in many different areas, so you have to acquire land, you have get land zoned, we have to get permitting done, all of those things are in place to make sure that this process continues. And we continue to grow this over the next couple of years.

Trey Grooms – Stephens

Okay. Well, thanks a lot for all that color and good luck. I’ll jump back in queue, thanks.

Operator

Our next question will come from the line of Todd Vencil with Sterne Agee. You may proceed.

Todd Vencil – Sterne Agee

Hey, thanks good morning guys.

Steven Rowley

Good morning Todd.

Todd Vencil – Sterne Agee

Steve you mentioned that the Wallboard plant remains sold out and I think it was sold out, whole bunch of tons ago as well and I know that is partly due to the shift toward making Wallboard facing paper as opposed to other things. But I mean can you, can you give us some color on where you think volumes at the plant are likely to go and how fast you think we’re going to be shifted around to the sale of Wallboard facing paper?

Steven Rowley

I think you’re talking about the paper mill.

Todd Vencil – Sterne Agee

Yes.

Steven Rowley

So, the answer is there was a huge shift this year, quarter-over-quarter. Our Gypsum liner sales were up 67% versus a year ago. So you know they shift, you know as wallboard demand continues to improve as again producing a very high quality gypsum liner more, more of our competitors realize the advantage of using that gypsum liner. We’re able to sell more and more of that outside as well as inside. So there’s been a very nice turnaround at that paper mill and as noted by the increase in outside primarily in sales of gypsum liner to outside customers.

Todd Vencil – Sterne Agee

Okay. So, I mean as we go forward, I think, I certainly thought we probably hit a wall on what the shipments were going to look like and then you had a nice step-up due to, as you say the shift toward third party sales the gypsum liner. I mean, do you have a feel for how many tons you might sell out of that plant this year?

Steven Rowley

There’s still a lot of room to improve there and this paper mill actually has a lot more capacity. So when you think about paper mills you are always talking about on a ton basis and tons per year and when we’re making gypsum liner at a higher basis weight that we’re making the liner for sack sales. It’s about twice the - so, you get twice the tonnage when you’re making gypsum liner versus when you’re selling into the sack market.

Todd Vencil – Sterne Agee

Got it. That makes sense. And sticking on the wallboard –wallboard/paperboard side, are you guys looking at adding shifts this year or are you getting to the point in these plants where you are thinking about taking the one plant you closed out of mothballs or adding shifts to run the plants. Have you seen any competitors start adding shifts yet?

Steven Rowley

I really can’t speak for what our competitors doing, just knowing that, during the past year we just made a few little tweaks as needed to meet demand, we might added 2 or 3 employees here and then worked a few hours additional on a weekly basis just to kind of balance what our customer demands are with what our production capabilities are and during the course of that we have a couple of our plants that are really the lines that are running very close to be fully utilized couple of plants that we probably still have a few more weeks left. But unless that – unless there is a huge increase in demand, the idea of starting the run plants that doesn’t make sense, unless you know that it’s going to be for an extended period time, because this is very costly to start up a new plant. And if you started up and then demand, softened a little bit you have to shed it back down, then you have to in currently closing cost as well. So we have to see homebuilding improve dramatically from what it is now, before we would consider that.

Todd Vencil – Sterne Agee

Got it. And switching over to cement. Can you remind us sort of where we stand early 2013 on cement price increases, but one that we’ve seen put in and ones that are yet to come.

Steven Rowley

Here, when our sales price increases about $5 to $8 per ton are currently being implemented in all of our markets and some of the early stuff, early indications in their early price increases, early winner are very, very positive in many of those cases, we’re actually starting to see price increase letters for the summer for next summer come up.

Todd Vencil – Sterne Agee

Same kind of magnitude.

Steven Rowley

$5 each. Yes.

Todd Vencil – Sterne Agee

Okay. And just on the question maintenance, which is always a little bit of an interesting recall for you guys. I mean is there any outlook you can share for major maintenance costs at your plants in the next quarter or two in cement

Steven Rowley

We’re going to have some major maintenance at the new Lafarge facility this quarter. Lastly, we pretty well taken care of now, but what we’re looking at is some maintenance at both or at least one of the lines and also in major maintenance in Kansas City this quarter.

Todd Vencil – Sterne Agee

Any guess or guidance on how much that might run?

Steven Rowley

Yeah. I don’t get so, little early for me to give those. It’s just first time that we’ve only that it’s gone a little hard for me until I go through on outage to give you any detail there.

Todd Vencil – Sterne Agee

I got it. I am sure if you run out of short of people you can get cracked up there. So we can hammer ourself. Thanks a lot for that guys.

Steven Rowley

Okay.

Operator

Our next question will come from the line of Jerry Revich with Goldman Sachs. You may proceed.

Jerry Revich – Goldman Sachs

Hi, good morning.

Steven Rowley

Good Morning.

Jerry Revich – Goldman Sachs

I’m wondering if you could talk about the seasonality you expect out of your Lafarge cement and concrete businesses compared to your legacy Eagle assets just give us a sense for, what the seasonal pattern from an earnings standpoint might look like, you mentioned you got some maintenance coming up this quarter and I wonder if you just flush that out for us. And also can you comment on how the performance of that asset has been going since you’ve got near your operating folks involved. It looks like based on the 8K you filed, it looks like the operations had been running up a little bit ahead of expectations prior to closing some. Can you just give us an update there as well?

Steven Rowley

Sure. As far as seasonality, it’s going to be about an average were one plant a little bit further to the north in Kansas City, which gets a little bit greater when there is seasonality than plant down south and plant also is going to be a little closer to the Sunbelt and have less seasonality. So, we’re not quite as far as North is the plant in Wyoming or Illinois, but the Kansas City is in the middle and will behave accordingly. Whereas the behave closer to our plant in the Sunbelt. On average, we would say the seasonality would be about the same that we see of the legacy plants so that is as far as sales and how that works. As far as the operations, I’m very, very pleased with these operations, very, very pleased with how the operation is taking place, and how the plants are operating and looking forward to getting these plants fully sold out within the next year or so.

Jerry Revich – Goldman Sachs

And in terms of costs, able to share with us the earnings of the legacy Eagle cement, concrete business excluding the Lafarge ship, the purchase accounting charges with thus. Can you just flush that out a bit more what we’ve been legacy EBIT for cement and concrete business?

Steven Rowley

Sure, so concrete in the 10-Q that will be filed here the next day or so. So for the three months ended December 31 for the quarter. That $6 million in revenues related to the cement business from the Lafarge assets and roughly $1.9 million in concrete and aggregate revenues, first-time up to one month. Profitability wise, that is about $600,000 to the Cement EBIT line. And the concrete and the concrete business was small piece of that.

Jerry Revich – Goldman Sachs

And in terms of the paperboard business you mentioned you’re getting some uptake on additional external sales for the wallboard industry and if you think you have more room to go from a penetration standpoint or are you pretty much in place with the existing customer base. So the mix that we’re looking at this quarter issues should be the right mix going forward?

Steven Rowley

No, it’s actually steadily improving and as wallboard demand increases as home building improves, it would be nice to see more and more of that the paper mill converted to production and sales. So. there is a still plenty of room to improve there.

Jerry Revich – Goldman Sachs

And so you’ve got margins to quarterly record for the paper business at 25% here. I’m wondering if you could frame for us what the ultimate margin opportunity is in this cycle operationally, you changed business around a bit. I’m wondering if you just help us with how you’re thinking about the margin profile once you get past the transition through additional content here?

Steven Rowley

Kind of get at this point the seeds of all the effort that has been put into that machine to improve its efficiency and performance, but we’re nowhere near the ultimate profitability of that machine. We have a lot of room to go as far as switching sales more profitable gypsum liners, increasing sales tons through more sales of gypsum liner. There is a lot of upside to this machine.

Jerry Revich – Goldman Sachs

And lastly, obviously the price increase in Wallboard are sticking, but I’m wondering if you could just comment on how we should be thinking about mix over the next couple of quarters compared to what we saw in the December quarter here?

Craig Kesler

Mix, were you referring to?

Jerry Revich – Goldman Sachs

No, any different product grades or any other variations or from a regional standpoint, anything at all that might skew the reported price per thousand, as you see it?

Craig Kesler

We’re not seeing any significant change in it, whether it’s our regional sales or product mix, should be the same.

Jerry Revich – Goldman Sachs

Okay. Thank you.

Operator

Our next question will come from the line Neil Frohnapple with Northcoast Research. You may proceed.

Neil Frohnapple – Northcoast Research

Hi, good morning. Last year, I believe, it was in the month of March when you guys announced the Wallboard price increase for 2013 to give customers of longer lead times more 30. Are you planning on announcing an additional price increase in the spring for 2014?

Craig Kesler

Really haven’t decided that. Last year, that occurred when we had a lot of our customers requesting that, they just needed some – something to go to – to bid with, and I have not really had lot of requests for that this year.

Neil Frohnapple – Northcoast Research

Okay. And as the follow-up to Trey’s question regarding, any sense of price per ton at this point that you can kind of lead us to?

Craig Kesler

Little bit early for that.

Neil Frohnapple – Northcoast Research

Okay. And then final one for me, have you been able to begin converting production cement at your new cement plants, and if not, what do you think the timing will look like here?

Craig Kesler

We are currently wrapping our arms around some capital projects needed to go forward to do that, that should – that will – we’ll finally have that beyond this in this quarter and we’ll start putting those capital projects in place or at least on order by the end of this quarter and then sometime during the course of the next year have that all put in place to where I feel comfortable that we can produce a uniform high-quality product by next year.

Neil Frohnapple – Northcoast Research

Great. Thank you, very much.

Operator

Our next question will come from the line of Jim Barrett with CL King & Associates. You may proceed.

Jim Barrett – CL King & Associates

Good morning, Steve and Craig.

Jim Barrett – CL King & Associates

The Texas Lehigh facility 11% increase in tonnage, how much of that was your ability to increase production or does that partly reflects purchases from third party.

Steven Rowley

That really reflects the purchases, we’ve been sold out for a number of years. So the increased sales are all purchase product.

Jim Barrett – CL King & Associates

Okay. And Steve one related point. I understand that’s a baby. Has there been any preliminary discussions to expand capacity at that facility given how robust the Texas market is.

Steven Rowley

Yeah, we have not, we have a very large import terminal or at least a joint venture piece of a large import terminal that we have not fully utilized in Houston. And we also have an import terminal in Corpus Christi, so our plants are really as things grow to bring products as they are needed, but in the near term as some of our competitors have some excess capacity or preferences and to buy from some of our competitors in the local market.

Jim Barrett – CL King & Associates

Makes sense. And with the overall cement pricing up 3% directionally is the Austin market significantly healthier than that.

Steven Rowley

The Austin is complete and aggregates, so we’re starting to see a lot of improvement in demand and in pricing certainly with the, with the concrete as well as the cement.

Jim Barrett – CL King & Associates

Okay. Okay. Well. Thank you very much.

Steven Rowley

Thank you.

Operator

Our next question will come from the line of Chris Olin with Cleveland Research. You may proceed.

Chris Olin – Cleveland Research

Good morning.

Steven Rowley

Good morning.

Chris Olin – Cleveland Research

Just want to talk a little bit more on the big picture side in terms of the Wallboard demand environment. Can you give me your thoughts on where you see total consumption for 2013. I guess, does that include some type of positive impacts from the East Coast hurricane rebuilt.

Steven Rowley

Yeah. I really don’t know about the impact that’s a market that really, we don’t, we don’t play in up in the northeast. But it really is totally a function of housing demand looks like the trend for housing demand is up and if the trend for housing demand continues to go up. What would follow it just exactly is the housing demand improves.

Chris Olin – Cleveland Research

Is there any number you use in terms of starts for planning purposes.

Steven Rowley

No, we haven’t. We kind of look at, we were about 19 billion square feet this last year, the year before, which is about 10% up from the year before the trend is along the same path right now for this year.

Chris Olin – Cleveland Research

And then just lastly, looking at commercial construction, I was just wondering if there is any better demand hence west of the Mississippi that would suggest maybe a little bit better position versus may be East.

Steven Rowley

The commercial distruption really has been kind of slow in most markets, just starting to improve where you have a lot of growth really primarily for us associated around these energy play. So in the Texas market and in the Mountain region that’s where we’re starting to see just the overall construction market picking up and in fact that make as for as cement is concerned, a year-over-year cement demand was up above 9% in the US, but in Colorado and Texas was up about double that.

Jim Barrett – CL King & Associates

Thanks a lot.

Operator

Our next question will come from the line of Garik Shmois with Longbow Research. You may proceed.

Garik Shmois – Longbow Research

Hi. Thank you. Couple of questions on cement to start with. I just wondered, and first start in Texas if you are increasing imports, is there are potential risks to margins? Given that the leverage to the purchase product would theoretically be less than year for this product.

Steven Rowley

Yeah. So the answer is, the margin on the – on the purchase product is always less than on the manufactured product absolutely. So, but it’s all incremental and all very positive and we’re excited to have it.

Garik Shmois – Longbow Research

But we shouldn’t expect some structural degradation of margin going forward.

Steven Rowley

No.

Garik Shmois – Longbow Research

About to accelerate? Okay. And then, I guess just on the last quarter, could you walk us through little bit what you on volumes in your cement markets on a year-over-year basis and maybe help us understand what so far as assets also there on year-over-over basis just in a one month you had it?

Steven Rowley

If you just look us, as kind of some of the PCA data, as I mentioned the demand in Texas and Colorado is almost double what the demand increase was for the nation. And if you look at the other markets they’re just slightly below the national average. And so with the national average is 9% were ranging 6%, maybe 5% a couple markets as far as the demand increase year-over-year in those markets.

Garik Shmois – Longbow Research

That was pretty consistent in the third quarter?

Steven Rowley

And I really don’t, we’ve kind of have some temporary numbers and with cement because things can be seasonal and some of the work was pulled forward earlier in the year because we had such a mild winter, it’s really hard to look at that quarterly number.

Garik Shmois – Longbow Research

Okay. I dont want be this point too much, but could you just help us understand you get on the side with early indications into January volume trends that to provide a little bit of outlook on the cement side as well into January, just recognizing that you did have some tough comparisons equity in northern markets.

Steven Rowley

So the answer is, well, this winter is not as mild as last winter. On average, it’s still a pretty mild winter. So our sales volumes are pretty strong.

Garik Shmois – Longbow Research

Okay, okay. That’s good. And then, I guess just my last question, I guess two more questions, real quick on the tax, it was higher in the last quarter, so should we use that 34% run rate going forward, Craig? Given that your sales and profitability outlook has improved?

Craig Kesler

Yeah. That’s not a bad rate to use going forward.

Garik Shmois – Longbow Research

And then just on Wallboard, remember in the year-ago period, believe taking your plants down in December and part to control the pre-buy effect. I imagine you didn’t do that again this year. Now, is there any plans to take your Wallboard facilities down for maintenance in the first quarter at all, just given some of the seasonality in the business?

Steven Rowley

So the answer is, last year we did it as we do every, as we do every winter. We do our maintenance kind of over the holiday period. So it was just plant maintenance that we do every year and we did it last year over the holidays because there’s not a lot of construction work going on, Christmas through New Year and we did the exact same this year. So we did take our plants down.

Garik Shmois – Longbow Research

Okay, great.

Steven Rowley

Nothing really different there.

Garik Shmois – Longbow Research

Okay. Thank you.

Operator

Our next question will come from the line of Glenn Wortman with Sidoti & Company. You may proceed.

Glenn Wortman – Sidoti & Company

Yeah, good morning. Can you just comment on the pressing volume picture for your concrete and aggregates business going forward and then just any level of confidence to return that business to profitability over the next year?

Steven Rowley

Yes. The things are really improving in Austin. Things are just very, very slow in Northern California. So, in one month, we will be really starting to see things improve, but it’s kind of offset by a continued weakness in Northern California.

Glenn Wortman – Sidoti & Company

Okay and Craig, what should be modeling for interest expense.

Craig Kesler

About $5.5 million a quarter.

Glenn Wortman – Sidoti & Company

Okay. Thank you.

Operator

Our next question will come from the line of Ivan Sacks with Institutional Equities. You may proceed.

Ivan Sacks – Institutional Equities

Good morning.

Steven Rowley

Hi, Ivan.

Ivan Sacks – Institutional Equities

Congratulations on last quarter’s results. I just wanted to picture, if the macro side of the business as when we look at peak in 2008, around about there we had approximately $350 million in EBITDA, and now we’re running at approximately, we took this last quarter at $167 million and so we still got quite a long way to go in terms of earnings generation going forward and then plus you got the fracking side. And how would one able to picture going forward. Is that a fair?

Steven Rowley

I mean if we had $160 million right now and we did $350 million before, we’ve obviously got a long way to go to begin the cycle that’s correct. And we also have Lafarge assets and as we have our Lafarge assets. And then I think we filed the stuff accordingly, that adds about another $50 million of EBITDA. So if you look at the trading above it’s over $200 million now with the acquisition of Lafarge. So where we’re sitting above that level and really just at the bottom end of the cycle ready to go up. We’ve always wanted to look at our business, looking at growing our to the point where cycle to cycle. We have the ability to dramatically increase earnings and we feel we’re doing a good job that we’re able to double, peak-to-peak hearings potential of company.

Ivan Sacks – Institutional Equities

Okay. And then Steve didn’t you like to add additional capacity as well, we like for example even if we went to 350 from before that you had the 450 for the news at Lafarge. That would put you like at 400 and then you got the tracking sand as well, so?

Steven Rowley

And we’ve added another Wallboard plant and we’ve modernized the cement plant in Illinois. Yes, we’ve been putting pieces in place to steadily grow this business.

Ivan Sacks – Institutional Equities

Ah, ah, so that will probably be more like 450 somewhere around there. I wanted to just getting on as did you say what tons of fracking sand per annum?

Steven Rowley

1.5 million tons per annum.

Ivan Sacks – Institutional Equities

1.5 million tons per annum, okay. That’s too little because if I heard correctly approximately 22 trucks is what you need to fill one horizontal well?

Steven Rowley

If that really is on a case by case basis, a very broad range depending on how many stages of the well is being frac.

Ivan Sacks – Institutional Equities

Right. Just a if you wouldn’t mind a ball park figure and I’m not probably use 22 trucks of fracking sand how much is that, how many tons, approximately?

Steven Rowley

Okay. A truck is about 25 tons, but that sounds a little bit light to me for an average well.

Ivan Sacks – Institutional Equities

Oh I see, okay. Very good. And then just finally, Steve. I mean in terms of supply of the fracking sand itself 1.5 million tons per year. What supply do we have? Do you have an idea of the supply that we had, I thinks it’s next to the Illinois plan that you found this?

Steven Rowley

Yes, we have greater than 50 years supply of the well.

Ivan Sacks – Institutional Equities

And hence finally, I believe there are two kinds of fracking sand is one. One is a mono, one is a poly and one is of a higher grade than the other?

Steven Rowley

Yes. This is all northern white sand and it is all monocrystalline.

Ivan Sacks – Institutional Equities

Okay. That’s at the high end

Steven Rowley

The highest quality

Ivan Sacks – Institutional Equities

Excellent. Thank you so much for that color.

Operator

Our next question is a follow-up from the line of Kathryn Thompson. You may proceed.

Kathryn Thompson – Thompson Research Group

Some of the answers were already addressed, but it was primarily on the opportunity, two-part question on a 12-month basis once you’re up and selling product. How much do you think you can sell in the first 12 months and then for incremental that you want to sell beyond capacity that you currently have? What would be the CapEx to spend and what would be the incremental volumes gained from that CapEx spend?

Steven Rowley

We guess really haven’t gotten into those details yet and if you were – we’ve been in before and we know these things just take a little while to work through work. We’re very comfortable, very comfortable with the amount of CapEx that we spend today and very comfortable that the CapEx going forward is something that we can handle.

Kathryn Thompson – Thompson Research Group

Okay, great. Thank you.

Operator

Thank you, for your questions. I will now turn the call back to management for any closing remarks.

Steven Rowley

Thank you. Look forward to talking again next quarter.

Operator

We thank you for your participation. You may now disconnect. Have a great day.

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