Eagle Materials Inc. (EXP) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Quarter One 2016 Eagle Materials, Inc. Earnings Conference Call. My name is Carolyn, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. As a reminder, the call is being recorded for replay purposes. I would now like to turn the call over to Steve Rowley, President and CEO. Please go ahead. Steven R. Rowley - President, Chief Executive Officer & Director: Thank you and welcome to Eagle Materials conference call for the first quarter of fiscal year 2016. Joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President of 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 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. Eagle's first quarter revenues and operating earnings were up 7% and 4% respectively. We are very pleased with these results in light of an unprecedentedly wet spring and early summer literally and figuratively a washout of the start of the construction season in some of our most important markets, most notably Texas, Oklahoma and Colorado. However, the underlying demand for construction materials remains strong across all of our markets, and we've continued to experience improved pricing in all of our construction products segments. We have taken the opportunity to complete all of the major maintenance outages at our cement facilities during this time and have continued to improve our cost position in our new frac sand business while oilfield continues its rebalancing. We believe we are exceptionally well positioned to benefit from the recovery in both construction and oilfield services markets in the U.S. As you can see by the 25% decline in Texas sales volumes, the rain had an unusually profound effect on the quarter. These weather conditions were highly unusual. After 24 days of rain in Texas in May, we were greeted with a tropical depression in June that dumped tremendous amounts of rainfall in a month where we are typically parched dry and construction is very busy. The skies are now clear. Foundations are being cleaned and reinspected, and we are starting to see a growing backlog of business in Texas, Oklahoma and Colorado. August through the rest of calendar year looks to be – remain stronger than normal. Average net sales prices increased 9% from the prior year as price increases were implemented in all of our cement markets earlier this year. Increased wallboard average net sales prices and sales volumes were offset by lower paperboard sales volumes which effectively kept our quarterly comparative of wallboard and paperboard revenues flat. However, the operating earnings in our wallboard and paperboard businesses increased 4% to $46.9 million for the first quarter. Eagle's oil and gas profits annual financial results reflect the ramp-up of our greenfield frac-sand business during 2015, as well as the acquisition of CRS Proppants. As was highlighted in the press release, depreciation, depletion and amortization increased $7 million in this segment. The reduction in oil and gas rig counts over the last six months and declining well completion activity has affected near-term demand for proppant. We have worked closely with our customers to navigate the cycle and strengthen our customer relationships. From a strategic perspective, we will take advantage of this opportunity to cost effectively build our outreach to targeted shale plays and strengthen our long-term low cost position. Now let me turn this over to Craig for more details. D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Thank you, Steve. Cash flow from operations during the quarter was impacted by increased working capital as the wet weather kept inventory levels higher than typical while payables declined. We also invested $27 million in capital expenditures during the quarter which included completing the build out of our frac sand position and cost control projects in the cement business. Interest expense during the quarter increased 11% on the prior year's quarter reflecting increased borrowings under our bank credit facility post the acquisition of CRS Proppants. The effective tax rate for the quarter was approximately 32%. As this last slide reflects, Eagle's net debt to cap ratio was 33% at June 30, 2015. Thank you for attending today's call. We will now move to the question-and-answer session. Carolyn?

Thank you. First question comes from the line of Todd Vencil. Please go ahead.

Thanks. Morning, guys. Steven R. Rowley - President, Chief Executive Officer & Director: Good morning.

Steve, first of all, I mean, there was about a $5.50 sequential decline from the March quarter on the wallboard price. I was wondering if you can talk about what was behind that. I mean, we're used to seeing them drift lower with freights, but this seemed the magnitude was significantly bigger here. Is there anything going on? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. We actually had some volume reduction, some of which was associated with the weather that we talked about, severely impacting the cement business. So, we did have some competitive pressures that reduced the January 1 price increase. Those, however, have abated as demand has steadily increased in July. And we're very, very happy with both our order backlog and current level of sales at American Gypsum.

When you talk about the competitive pressures that reduced the January price increase, what form has that taken? Is that just outright reductions in price or is it some other sort of structure? Steven R. Rowley - President, Chief Executive Officer & Director: In some places, it's one-offs. And in other cases, it's just a function of product mix and delivery cost.

Okay. Turning to oil well cement, CEMEX talked about some pretty significant declines in that business. I'm guessing you guys probably saw that as well. Can you frame up what the declines, if any, specifically in your oil well product have looked like? What that has kind of meant for your price (8:11)? Obviously, I mean, your price was up 9%, so that was a very strong result, but was there any headwind from the reductions in oil well and how do you see that developing? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. So, we really did not have any impact from that as far as the overall business. Oil well sales for the quarter were down about 25% to 35% in both markets. However, manufactured cement product was readily absorbed in both the Texas and mountain construction markets. So, we did because of the weather have to back off on purchase sales, but manufactured product, we don't have any problem at all selling out both of those plants in the construction market, as the demand for oil well cement is down in both those markets.

So, was that a little bit of a headwind on your average price or it didn't that really show up? Steven R. Rowley - President, Chief Executive Officer & Director: That didn't show up. And it'd be small at best.

Got it. And then on the frac sand, Craig mentioned the CapEx, and I think that you completed the build-out. Can you just update us on, is that correct or are we done with the processes that were put in place in Illinois and the build-out at CRS? Steven R. Rowley - President, Chief Executive Officer & Director: So, we're near finished up at CRS and just a small amount really should be finished this month up there. However, we're still working on our delivery system from Utica down to Corpus Christi. I think it'll take about a year and about $15 million more to finish that out, which just finally gets the material from the mine to the dock and into the plant without having to touch it twice or put it in a truck and run it to a third-party barge load out facility. So, it's going to take about another year to complete. And in addition to that, we continue to work on permitting another drying plant to complement the wash plant up in Utica, Illinois. So with that (10:11).

Final question for me, thanks for taking all these. Have you basically gone ahead with your original plans on those expansions? They haven't been trimmed back at all? Steven R. Rowley - President, Chief Executive Officer & Director: Not at all.

Okay. Thanks a lot.

Thank you. The next question comes from the line of Trey Grooms of Stephens. Please go ahead.

Hey, good morning. Steven R. Rowley - President, Chief Executive Officer & Director: Good morning.

Quick question on the cement, Steve, you said you're seeing better than average demand now since the weather has started cooperating. Can you give us a little bit more color about what that means and specifically kind of by geography what you're seeing? Steven R. Rowley - President, Chief Executive Officer & Director: Sure, we'll go market by market. The Upper Midwest has been very strong, really was not impacted by any weather. So, if you get up into the Illinois, Michigan and Wisconsin markets, they're very, very strong markets this year and did not have a weather impact and remain strong. In the Lower Midwest, we did have rain in Kansas and Oklahoma. That has though settled down, and so demand is picking up as far as the market out of the newly acquired plants. And then, Mountain also had a lot of impact by rain. However, that has picked back up and our sales are very, very strong in the Mountain region. And then, the Nevada market, that still remains weak. Northern Nevada, Sacramento markets, that doesn't have anything to do with weather. It's just structurally pretty weak in both of those markets. And in Texas, it was rain, rain and more rain. And we are starting to see business pickup certainly in Austin with our ready-mix business and it just takes a while to clean out and re-inspect all the foundations before you start pouring concrete and so it takes a while to drive and clean out, et cetera, et cetera. But we're slowly starting to see the demand pick up across Texas, so the demand pickup has been a little slow. However, it wasn't just rain that was out, there was a flooding event that occurred which really created a lot of issues to the airport that had not previously been put in place. So A, it's too wet to re-dig anything new and then on top of that, you have to go back and fix what the water had damaged before you can actually start pouring concrete. That's behind us now and you're starting to see the uplift in the marketplace.

All right. Great. And some of the – I guess a few of your competitors have been on the cement side, have been talking about the potential for October price increases in cement. Can you give us a sense of kind of what your thoughts are as we kind of look into the fall in your different geographies and different markets and any thoughts you could give us around maybe magnitude or what you're seeing or thinking around that? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. So that will definitely vary market by market and some markets are going to be tighter than others and then you get into an issue as we'll have in Texas where all of a sudden, because it's raining there's a lot of cement available. But once the demand picks up, you just can't logistically produce it and your silos are full and get your mills to produce it fast enough when the market recovers. So then you end up with another shortage, a near-term shortage as you're trying to catch up with the work that was previously missed. And then as I mentioned before, demand has been very strong in the Upper Midwest, so it would not be surprised to see some price increases in that area, as well as starting to see improvement in the Lower Midwest as well and the potential for another price increase there.

Great. My last one and then I'll just jump back in queue is going back to wallboard pricing off of Todd's question. So, it is down sequentially. You mentioned that there was some mix there, there was some actual price movement there. Is – so, my understanding and I believe was the case for the last couple of years, you guys had pretty much eliminated kind of individual job quotes. Has that practice changed at all or is this – was this kind of just a short-term anomaly given some very short-term demand trends that you were seeing? Steven R. Rowley - President, Chief Executive Officer & Director: This didn't have anything to do with job quotes. It was just meeting some specific requirements of maybe a few customers. While we said we didn't really eliminate job quotes, we're only doing one quote and that's good for 12 months. And we have received a lot of pressure in kind of the May and June timeframe and finally last month to put out a price increase letter just to make sure that all of the work that's being bid in 2016 that there is, that people understand what the pricing structure is going to be like next year.

And can you give us the color on what that increase is calling for? Steven R. Rowley - President, Chief Executive Officer & Director: Yes, that's 15%.

January 1? Steven R. Rowley - President, Chief Executive Officer & Director: January 1.

All right. Thanks a lot for the color, Steve. Always appreciate it, and good luck.

Thank you for that question. The next question comes from the line of Jerry Revich from Goldman Sachs. Please go ahead. Jerry David Revich - Goldman Sachs & Co.: Hi. Good morning. Steven R. Rowley - President, Chief Executive Officer & Director: Good morning. Jerry David Revich - Goldman Sachs & Co.: I wonder if you gentlemen can talk about the drivers of the sequential improvement in EBITDA in the oil and gas business. Shipments were down for everyone. It looks like your cost did better. Can you just flesh us through the drivers of that EBITDA improvement and if you're willing to share what was the mix between shipments to the Eagle Ford versus the Permian this quarter? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Okay. Thanks, Jerry. I think there's a couple of different things. We walked through a few of them on the call last time in terms of we were still very much into purchase accounting adjustments in the fourth quarter. We had continued to sell purchased sand in the fourth quarter. So, as we've now moved into especially down in the Eagle Ford where we're now just selling internally produced sand, that's certainly a benefit to the bottom line getting through some of the purchase price adjustments. And so, obviously, still in a difficult environment for proppant demand, given the rig count and completion activity declines and, as Steve alluded to, there's some opportunities to continue to invest in the business and lower our cost structure. But the business is starting to look like and the cost structure is starting to improve. Jerry David Revich - Goldman Sachs & Co.: And mix between Eagle Ford versus Permian in the quarter? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Sure. We've got terminals across both of those different shale plays in Texas. It gets a little difficult to start to parse out which is Eagle Ford, which is the Permian. You have customer pick-up especially at the mine in Wisconsin and where they're taking it specifically, but certainly, those volumes are still decent here in Texas given the total change that we've seen in the energy business the last six months or so. Jerry David Revich - Goldman Sachs & Co.: Okay. And then for your cement and wallboard business, as everyone knows, weather was an issue in the quarter. Can you talk about what volume growth was like in June and July just to help us get a sense of the run rate for cement where you've got the capacity issues? I'm assuming you're getting up close to the double-digit range. Is that right? Steven R. Rowley - President, Chief Executive Officer & Director: The volume growth was good in both markets. Craig might have the percentages, which is typical. You start the construction season. And the further north you are, the later it starts. So, it's typical that you would see kind of a big increase June to July. July, August, September, October usually being our strongest sales for the cement business. Jerry David Revich - Goldman Sachs & Co.: Okay. Is it possible to frame those on a year-over-year basis, Steve? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Jerry, I think as Steve was saying earlier in his comments, not only were you dealing with rain in Texas and in some of these other markets, Colorado, Oklahoma, you're dealing with flooding events. And it takes a little bit of time to get back into those individual projects and assess what needs to be either cleaned or, in fact, redone in some of these cases. And so, to look at an individual month year-over-year, I think might be a little too into the weeds. But I think more generally, we've seen good improvement, especially the second half of July across many of these markets as you are starting to get into this process now where work can actually recommence, if you will; wallboard the same way. We've seen a good strong month here in July. And the orders here the last, again, month or so have been very, very good as you're coming out of this. I guess the one point I'd also make, Jerry, is you look at the state of our Texas volumes for the month of June, and if you compare it sequentially, it's actually down 2%. I think that maybe reemphasizes a little bit of what the weather impact was. I can't tell you the last time I've seen our Texas volumes down sequentially June to March. So, it's just an unusual environment to be coming out of. Steven R. Rowley - President, Chief Executive Officer & Director: And the other issue is once you've burned through the inventory that you have as sales pick up this time of year, you just don't have the production capability and logistics to meet the demand. So, it's not as big a surge as you would anticipate. Jerry David Revich - Goldman Sachs & Co.: Thank you.

Thank you. The next question we have comes from the line of Brent Thielman from D.A. Davidson. Please go ahead. Brent Edward Thielman - D. A. Davidson & Co.: Good morning. Steven R. Rowley - President, Chief Executive Officer & Director: Morning. Brent Edward Thielman - D. A. Davidson & Co.: Would be interested in any other color on successes you're having in developing your customer base in the proppants business and then kind of what you're seeing from a competitive landscape in that business. Are you starting to see some consolidation develop to a broader degree? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Really have not seen any consolidation and that is a very, very difficult business right now. So there's very little spot available; however, we do have a number of contracts. And we do work those contracts in and we are working as best as we can with all those customers to help them work through a very difficult environment. As the energy companies continue to really put a lot of pressure on the oil services companies, one of the things that happens, of course, when that occurs is that there becomes a lot of consolidation in the oil service business, resulting, at the end of the day, in just a few very large oil services companies. So, when the uptick turns back around, they'll be in a very, very good position, whereas the energy companies will not be in a very good position as we've seen this cycle many times before, we're heading back into that same situation where the pressure from the energy companies while short term it works, long term, is a benefit to the oil service companies. Brent Edward Thielman - D. A. Davidson & Co.: Okay. That's helpful. And then I guess on the paperboard profit and margin came in a bit from last year. Could you just fill us in on the moving parts there? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Sure, Brent. So, we go through a maintenance period at the paper mill from time to time, and that was a pretty significant impact to this quarter's financial results, a little over $1 million impact from the maintenance year-over-year, just timing of when that occurs during the year. And, however, fiber cost and gas cost were down about $15 a ton, and American Gypsum actually cost – went down a fair amount. So, we actually had margin improvement in the wallboard business. Brent Edward Thielman - D. A. Davidson & Co.: Got you. Great. Thank you.

Thank you. The next question comes from the line of Kathryn Thompson from Thompson Research Group. Please go ahead.

All right. Thanks for taking my questions today. The first is on frac sand. When looking at your Illinois and Wisconsin volumes, how much are currently sold at spot price? It would be helpful if you could separate by facility, if Wisconsin has a smaller percentage that were sold by spot versus Illinois. And then a follow-up to that, if you could just discuss around how Eagle competes in an environment of falling prices for frac sand and could you actually be a beneficiary in this environment. Thank you. D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: So, there really is very little spot price aftermarket out there. So, it's a very small percentage that were selling spot and not that we aren't getting some. We are getting some, but that would be a small percentage of our sales. And over time, if the market adjusts and if some of the contractual business are either just delayed or the contracts expire, you would anticipate the spot market to grow. And, certainly, that would be a huge advantage to us to where we have a very, very strong low cost position in South Texas.

Just once again following up separating, could you remind us what percentage of your business from Wisconsin, your volumes at Wisconsin are contract versus spot and just the same for your Illinois facility? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: So, in both cases, it's almost all contract. Might be a little bit more spot with that of Corpus Christi, but almost all of it is contractual business.

Okay. Helpful. I'll follow up post call on that. Second is to your JV cement sales. What percentage of your JV sales were to the energy end market today and how does that compare versus last year at the same time? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: So, while I don't know have I can tell you though in the JV business, it was down about 25% year-over-year, the energy sales. I'm not sure what the balance is between the two, but it was down. The oil well sales of themselves were down about 25%.

Okay. And to follow up on that. Did you see any change on pricing with that decline in volumes, just specifically for (25:54)? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: We did not. We did not.

And then finally, once again, just going to overall net cement pricing. Just helpful color about the coming price increases, but should we see improving momentum as the year progress as you roll – as you continue to roll off lower priced projects? If you could just help in confirming that. That would be helpful. D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Yeah. On the cement side, we do very little direct work. So, most of our cement is really a spot basis. So, we do not have a lot of projects that we bid out. We have a small amount, but not a lot. So, any impact that we would see going forward will be from price increases that occur in the marketplace.

Okay. And then finally, just do you have any thoughts on capital allocation uses of cash kind of midway through the calendar year? And as you look forward in terms of capital projects that are, look to be mostly wrapping up for you frac-sand facility build-out, how else do you think about uses of cash? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: So, we have more than enough cash to fund our past production projects as we look forward. So, then we remain opportunistic to look at other ways to grow our businesses and then remain, if that is not the case, we always have the ability to return some cash to the shareholders if we can't find projects that meet our hurdle rates.

And so in the essence of finding projects that meet your hurdle rate, would you be more inclined over the next six months to buy back your own stock? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Potentially, yes.

Okay. Thank you very much.

Thank you for that question. The next question comes from the line of Garik Shmois from Longbow Research. Please go ahead.

Thank you. Just I have a first question on frac sand. Just wondering if you could talk a little bit about how demand progressed through the quarter? I've heard from some of your competitors that demand actually accelerated June and July. I know you're still ramping up that business, but just wondering if you're seeing a similar type of organic acceleration in frac sand? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah, I really think that becomes basin specific. So I think demand remains fairly strong in West Texas. It may have managed to improve a little bit out in West Texas as it dropped off substantially in most of the other markets. Although there's still a fair amount of cement going East, as well as to South Texas and Oklahoma. So those were the markets that we're familiar with that we don't – if there's any frac sand that goes up into the Bakken area, that would be customer pick up. And we wouldn't really know much about that.

Okay. And then on the DD&A expense in the frac sand business, just wondering if you could talk, Craig, maybe a little bit more on visibility on how we should be thinking about DD&A moving forward, just given the step up in some of the projects that you're still wrapping up? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Sure. Thanks, Garik. I would put this at a pretty good run rate where we were for this past quarter, both for the remainder of the year that'll roughly put you at $98 million to $100 million in total DD&A for all of Eagle. There's a few of these minor projects that will wrap up here this month or so but many of them – or the project, those are smaller dollars and the depreciation has already started on the larger projects that they've been placed in service. So, I think this is a pretty good run rate from where we are.

Thanks. Switching to cement, you had good margins despite challenging volumes. Obviously, you had very strong price increases. But I was wondering if you could maybe speak to any sort of raw material deflation that might've benefited you in the quarter? D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Yeah. So, Garik, that's right. We saw good improvement in the profitability of the wholly-owned businesses. And we were able to achieve some lower energy costs, some raw material just again, as you've heard us talk for many years, cost reduction projects and improvements are our constant focus. And we were able to achieve some of those and our costs reflect that. And the other portion of that, I think Steve mentioned it earlier, is as you switch between purchase product and manufactured product sales, you'll have a benefit from a higher margin on the manufactured sales as well. All those things kind of go into this quarter. Steven R. Rowley - President, Chief Executive Officer & Director: And then the negative piece is all the maintenance. This year, we have maintenance in all of our plants.

Yeah. And then lastly just on paperboard and volumes, you touched upon this briefly. Is it fair to assume that the volume decline in the quarter was driven by weather or is there something else that might have been... Steven R. Rowley - President, Chief Executive Officer & Director: Yeah, I think with paper, it was really an extended maintenance outage. So we had a longer maintenance outage this year, year-over-year than a year ago.

Okay. Is it fair to assume that volumes will improve now that the maintenance is out of the way? Steven R. Rowley - President, Chief Executive Officer & Director: That is a good assumption.

Thanks so much.

Thank you for that question. The next question comes from the line of Adam Thalhimer from BB&T Capital Markets. Please go ahead. Adam Robert Thalhimer - BB&T Capital Markets: Hey. Good morning, guys. Steven R. Rowley - President, Chief Executive Officer & Director: Morning. D. Craig Kesler - Executive Vice President, Finance and Administration & Chief Financial Officer: Morning. Adam Robert Thalhimer - BB&T Capital Markets: In terms of the operating profit within oil and gas, do you still expect that to improve sequentially as the year goes on? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. What we mentioned before is we think the improvement is going to occur really in the last quarter of our fiscal year or the first quarter of next year. So, we've kind of made our modifications early. And those are good through the end of the year. So, we really see the improvement in our last fiscal quarter, which would be first quarter next year. Adam Robert Thalhimer - BB&T Capital Markets: Okay. I'm not sure we're talking apples. Does improvement equal profitability or improvement versus the Q1... Steven R. Rowley - President, Chief Executive Officer & Director: Profitability. Adam Robert Thalhimer - BB&T Capital Markets: Okay. And then can you give a little bit of color and you talked about geographically what you're seeing in terms of demand, but what are you seeing in terms of public sector spending? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. So, that really is going to vary state by state. So, the answer is, though, we are seeing very, very strong demand in what had been a weak market, the Upper Midwest. And that is really public spending that's occurring in that market that I think I mentioned now for two or three years, the Texas and mountain region has had strong demand, mostly again has to do with the public infrastructure. However, in both of those states, you had growth in population. A lot of people still move into Texas and a lot of people still move into the Denver market. So, that's a combination of single family and multi-family as well as just public infrastructure work. So, those markets remain strong and you still see a tremendous amount of population growth in both of these markets. Adam Robert Thalhimer - BB&T Capital Markets: Okay. And lastly, the $3 million of maintenance cost of cement, does that reduce some of the maintenance spending in the rest of this year? And how should we think about is there anything we should be aware of in terms of additional maintenance costs? Steven R. Rowley - President, Chief Executive Officer & Director: Yeah. So, really, our maintenance budget this year, year-over-year versus last year was about the same. It gets kind of bunched into one quarter. We do have some finishing maintenance that usually occurs when shipments are down in the middle of winter. So, that will still continue to occur some. But usually the finished grinding circuit maintenance is much less than the clinker producing part of the maintenance. Adam Robert Thalhimer - BB&T Capital Markets: Okay. Thank you.

Thank you. The next question comes from the line of Jim Barrett from C.L. King & Associates. Please go ahead. Jim R. Barrett - C.L. King & Associates, Inc.: Good morning, everyone. Steve, could you talk about and what touched upon capital allocation? At this point in time, do you have a preference for cement versus frac-sand assets in terms of when you look longer term in terms of how you're going to grow this company? Steven R. Rowley - President, Chief Executive Officer & Director: So, we like both of those businesses. They're core businesses for Eagle and we also like to have great returns for our shareholders. So, it will come down to what's the better return. Jim R. Barrett - C.L. King & Associates, Inc.: Okay. A competitor did announce today that it had purchased – I'm sorry, it sold a cement plant in California. Was that a property that was of strategic interest to Eagle? Steven R. Rowley - President, Chief Executive Officer & Director: So that is a project – I think it's probably really good for both parties, and it's a property that would be complicated for Eagle because we did not have any other business in Southern California. And that would've been a complicated move for Eagle to get into that Southern California marketplace. Jim R. Barrett - C.L. King & Associates, Inc.: Understood. And although it's very early in the cycle and who knows how long oil prices will stay depressed, but are you starting to see any indication of frac sand assets being made available at lower prices? Steven R. Rowley - President, Chief Executive Officer & Director: It's rumors only. Jim R. Barrett - C.L. King & Associates, Inc.: Okay. Okay. Well, that's good to know, and thank you very much. Steven R. Rowley - President, Chief Executive Officer & Director: You're welcome.

Thank you we have no questions at this time. Ladies and gentlemen, now I would like to turn the call back over to Steve for closing remarks. Steven R. Rowley - President, Chief Executive Officer & Director: Thank you, Carolyn. We appreciate all the questions, and looking forward to our next call in three months. Thank you very much.

Thank you, Steve. Thank you for your participation in today's conference. That concludes the presentation. You may now disconnect. Have a good day.