Steven R. Rowley – President and Chief Executive Officer D. Craig Kesler – Executive Vice President, Finance and Administration and Chief Financial Officer.

Trey Grooms – Stephens Inc. Todd Vencil – Sterne, Agee & Leach, Inc. Kathryn I. Thompson – Thompson Research Group Garik Shmois – Longbow Research James Richard Barrett – C. L. King & Associates, Inc. Brent Thielman – D.A. Davidson John A. Baugh – Stifel, Nicolaus & Co., Inc. John F. Kasprzak Jr.

– BB&T Capital Markets Jerry Revich – Goldman Sachs Glenn Wortman – Sidoti & Company, LLC Kevin Money – Cleveland Research Company.

Good day, ladies and gentlemen, and welcome to the First Quarter 2015 Eagle Materials Incorporated Earnings Conference Call. My name is Kim, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Steve Rowley, President and CEO of Eagle Materials. Please proceed..

Thank you, and welcome to Eagle Materials conference call for the first quarter of fiscal year 2015. Joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President, Strategy, Corporate Development and Communications. There will be 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. Eagle’s first quarter revenues at $266 million set an all-time high record for any quarterly period.

First quarter operating earnings and earnings per share increased significantly as a result of improved pricing and strong volumes across all of our major business lines. Our construction products and building materials businesses remain very well positioned as we begin the next construction up cycle.

And with receipt of our final permit necessary to operate our frac-sand mine, we anticipate our frac-sand business to become a material contributor to Eagle’s cash flow by the end of this fiscal year.

A 4% increase in our cement sales volumes and a 5% increase in our cement sales price were the primary drivers of the increase in Eagle’s quarterly comparative of cement, concrete and aggregates revenues. Major maintenance at five of our six cement plants impacted this quarter’s earnings by about $5.2 million.

Cement shipments this quarter were impacted by rail congestion in the Midwest, the result of winter weather, bunching up railcars and slowing down rail line speed. Year-over-year our first quarter cement prices have increased $4.50 per ton as we successfully implemented price increases across all our cement markets.

Additionally, cement price increases have been announced for later this summer and fall in the West Mountain in Texas regions. Increased Wallboard sales prices and increased sales volumes drove an 18% increase in our quarterly comparative of Wallboard and Paperboard revenues.

Operating earnings in our Wallboard and Paperboard business increased 27% to $45 million for the first quarter. Our paper mill continues to perform exceptionally well and remained sold out. It is my pleasure to begin reporting on a new segment for Eagle Materials, Oil and Gas Proppants. This segment will be increasing in importance in the coming years.

During our first quarter, we received the final permit necessary for us to begin shipping frac sand from our mine in Utica, Illinois. First shipments of our own sand will occur this quarter and because of the barge transit time for sales of our own sand will occur during our fiscal third quarter in Corpus Christi, Texas.

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

Thank you Steve. Cash flow from operations during the first quarter was $40.3 million, up 114% from the prior year. Capital spending of approximately $23.2 million was used primarily towards the continued build out of our frac sand business and maintenance capital. Excess cash flow was used to pay dividends and reduced outstanding borrowings.

Interest expense was $18.3 million during the quarter, down 18% from the prior year. Effective tax rate for the quarter was 32.4%.

As this last slide reflects, Eagle was generating meaningful cash flow from operations as we benefit from improvement in market conditions across a larger footprint of operations while improving on our low cost competitive position. We have primarily used this cash flow to reduce debt and improve our financial flexibility.

Our net debt-to-cap ratio was 29% at June 30, 2014. Thank you for attending today’s call, we’ll now move to the question-and-answer session.

Kim?.

(Operator Instructions) Your first question comes from the line of Trey Grooms from Stephens Incorporated. Please proceed..

Hi guys..

Good morning..

First question is on frac sand, Steve you mentioned that it will be a material contributor to your cash flow by the end of this fiscal year. Just wondering if you could give us a little bit more color on that.

And also it’s kind of how we think about the rollout of that 1.5 million tons of capacity that I believe it will be going into the Eagle Ford? How to think about the timing of that rollout, how quickly you’ll ramp into that market?.

So we received our permit kind of mid-June and we have now completed the construction of the plan or actually just really in the commissioning phase of starting the wet plant of in Utica.

We anticipate the plant to be fully operational by the end of August, so we start shipping sand by the end of August, takes about a month to get the sand down to Corpus Christi and then, it’s just constantly moving. So that’s kind of the timing of getting our sand down into the dry plant at Corpus Christi and then, we’ll steadily ramp it up.

The good news is the plant Corpus has been fully commissioned, easy to ramp that up to full capacity. So, we’ll work at the king set of some of the transit as we already have, we just finished also another milestone this quarter was completing the barge dock to receive it.

We had been bringing the sand and through a third party dock and then trucking into the plant in Corpus Christi, but we also completed that construction this last month, and have successfully started offloading our own barge and save us a lot of money and do much faster in turning the barges back and forth from Illinois down to Corpus Christi.

So, we don’t so far all that stuffs going very smoothly and we anticipate a steady ramp up into this marketplace..

Perfect.

And then, looking at some of the other market that you’ve kind of identified or basins that you are targeting, is there any I know I think it was last quarter you’ve mentioned 4 million to 5 million tons in two years to three years, but how quickly can you ramp into some of the other basins that you are targeting here?.

Yes. So some of that requires a little more detail than we want to give right now, and Trey we are making steady progress on acquiring and accumulating that the property required to do it, and going through the entitlement process to make it all flow and it happen the way that we wanted to happen.

So we are very pleased with the progress there and don’t see the reason why we can’t live up to those expectations..

That’s fair enough. I just – if I could slip on last one in, on the congestion from the rail that you mentioned in the quarter, is there any way to give us a ballpark rough estimate on how to quantify that, and how much it really impacted some shipments in the quarter.

And then also, do you expect this to be an ongoing issue and then, any commentary on the underlying demand, thank you..

Yes. So let’s hope it’s improving, but I mean it was to the tune of let’s say, 60,000 tons to 70,000 tons, the shipments that we missed because of the rail congestion.

So it was significant and while it is getting a little bit better, it’s still not perfect and we will see at the end of this quarter, how close we are in meeting our scheduled shipments for going forward. The rail did say that they got per sure by the fall it would be un-congested.

But that is just good as we could get out of the railroad as to when there is and we’d flowing smoothly again..

And then just on the underlying demand that you’re seeing trends there?.

Yes. So all of our markets – all of our cement markets, the six markets that we have showed double-digit growth with the exception of the west. So through the first half of the year.

So we are really seeing double-digit growth and demand and on some even stronger the Mountain region in Texas still very, very strong, and cement very tight both of those markets. But all the rest of our markets with the exception of the West Coast which had single-digit improvement and kind of mid to upper single-digit improvement even our west.

So, your are seeing very strong improvement for cement demand, which is for us the best proxy. And then the Wallboard demand in our local markets is getting very, very strong. So we are very fortunate to have our Wallboard plants, located in markets that are exceptionally strong right now..

All right, I will pass it on. Thanks for the color and good luck guys..

Your next question comes from the line of Todd Vencil from Sterne Agee. Please proceed..

Hi, thanks guys. Good morning..

Good morning..

Steve on the last call, just following up on some of the trades that you said that you expect an upper single-digit growth in cement volumes for this year. And that April had been consistent. Just gave some details I think that implied that the quarter would have been there, if not for the rail congestion.

Given the rail congestion and the demand picture, you see, do you think that you can see upper single-digit growth in cement volumes for the year or is the rail congestion gone all that bad?.

Yes, so we are in a lot of market that’s where the impact in one market over there. And so but the reality of the first half was, even with the weather the first half was very, very strong. And it really is very, very close if not double-digit growth in most of the markets with the exception of the West Coast..

Okay, got it. Thanks for that. And you mentioned price increases I guess three of your markets.

Can you talk about the magnitude of those?.

Well, we really got price. We got some price in all the markets and in some markets we got all the price. But in most of the markets we got a fair amount of price improvement. And so if you think about it year-over-year to on a quarterly basis, to be up $4.50.

That’s a pretty nice change in mill nets and a very strong trend and with some markets right now tight enough to require another price increase between now and the end of the year..

Sure, and I’m sorry. I was referring to the prospective price increases that you’ve announced, the second round in Texas and the Mountain and the northern California, northern Nevada.

What’s the magnitude of the ones you’ve announced for the summer and fall there?.

Again in the same range, let’s say, $5 to $7 in those marketplaces and don’t see why that shouldn’t stick very, very tight supply right now on those marketplaces..

That’s great.

Again you said you’ve done maintenance on five of your six cement plants in the quarter, means it’s safe to assume that we’re not going to see a lot for a couple of quarters or is there something out there?.

I sure hope so. So we did one in the last quarter, pretty extensive one at Illinois and then we got all the other plants done this quarter. So now we’re into the busy shipment season and you don’t want a hiccup when the customers need the cement. So we want to make it all the way through until the end of the year, the end of our fiscal year..

Absolutely. Switching to the frac-sand, any update. You mentioned some of the other areas and you said you’re working on getting the land and the entitlements there.

What about the annexation in Illinois? Can you give us an update on how that’s progressing?.

Sure. We’ve had a couple of meetings. We’re going to back and have another one now to get all of the reforms that we need to put a drying plant up in Illinois, as well as improve slightly the transportation down to Corpus Christi.

So I think we had one of the two successful and then we had to modify the request for a second entitlement zoning change there. So we’re working on that and we think that we’ve listened to the community and I think we’ve come up with a solution that makes sense for everybody..

Okay.

So what are you thinking is kind of timeframe to, I guess, get an answer and get that squared away would be?.

Yes, that’s a good question. I wish if I had that answer I wouldn’t be here working..

Fair enough. Fair enough. Okay, that’s it from me right now. I’ll jump back in the queue..

Your next question comes from the line of Kathryn Thompson from Thompson Research Group. Please proceed..

Hi, thanks for taking my questions today. On the cement position, could you clarify what would be the new normal in terms of what we should expect for an annual cement maintenance cost, and how should we think about the general timing of this cash flow through as we model going forward, thank you..

Yes. So I think our maintenance cost really haven’t really changed, other than the fact we have two additional plants. So, you are going to have an order per ton basis. The maintenance costs were roughly about the same as they’ve always been. And the time it is Jerry, you are going to have maintenance outages roughly once a year.

And sometimes, the roll especially if they are hitting at the end of our fiscal year. They might roll forward into one year or backwards into another year. And that is so, but the timing is going to be roughly once a year and generally, our maintenance occurs when the demand is weakest, which is going to be kind of in the winter period.

And it’s a good time for us to get the maintenance done, when we are not worried about meeting the demands of our customers in that busy shipment season. So typically that’s when maintenance is going to occur sometimes you will get more on the our short outage that will occur in this winter..

And what is the estimate just to clarify about show on the same page on the per ton basis for maintenance just the cost..

Let’s just say, $10 to $15 a ton..

And if you could those for Wallboard and for your cement business, just discuss how volumes progressed as weather improved and the quarter came to a close. And also, I think it parse out, how much do you think was driven by whether person just core demand..

So as far as Wallboard volumes and Wallboard has been very, very strong for us. We are again just very, very fortunate to have our Wallboard plants in markets that where construction is strong. So construction is strong in Texas and Colorado. We’ve got two big facilities there. The New Mexico facility produces a lot specialty products.

So it’s able to be sold out and move those product a little bit further, and then South Carolina isn’t too far from Florida, which is a little bit stronger market and some of the other markets right now. We are fortunate to have our facilities close and also, very fortunate to have very low cost facility, which allows us to have big margins.

And so, for us demand remained strong and we are very, very happiest reporting. If we look year-over-year I think Wallboard demand was up 7.5% in this second calendar quarter this year. That sure on a pretty nice trend in improvement. What’s behind it? We still have a very strong multi-family.

And as you know multi-family is not as steady as single-family, so sometimes districts come out a little lumpy on multi-family, but overall, if you look over a trailing 12 that’s been a real strong contributor to the demand for Wallboard.

And then the rest of it is just a function and our price is good, sometimes you have a little product mix so that price goes down a little bit based on some mix during a quarter-to-quarter comparison, but we feel very, very comfortable with both the volumes and pricing that we have right now. And still have a real issue with flat bed trucks.

So it’s really hard to get Wallboard move to where it needs to go, because we’re still at 100% utilization of flat bed trucks in the U.S. We talked about rail congestion associated with cement rail congestions, a problem everywhere. So it will impact the Wallboard as well. So logistically it’s a problem.

And then the last thing that’s an issue in all of our businesses is not only our sales, but our customers really continue to express a great concern for labor shortage.

The businesses that we are in just don’t seem to go on with attract people to come out to go to work, they just don’t want to hang wallboard, or make wallboard, or deliver ready-mix, or work in a cement plant, it’s harder and harder to find qualified employees to come to workforce..

May be this is going to be kind of little bit differently, could you give an estimation of capacity utilization for your wallboard plants, and then also the same for your cement plants?.

And so our plant in the Mexico and our plant at Oklahoma, they are sold out. Plant in Colorado is three quarters plus sold out, wallboard plant in Georgetown is three quarter plus sold out, may be a little bit more there right now. And to the point where our customers in the Texas area really require more wallboard.

So during this quarter, we spent a lot of money and may be maintenance some capital improvements to refurbish the A line and get the A line ready to deliver wallboard in the marketplace.

And it is really simple because our customer just can’t get wallboard anywhere else, and the transportation cost for us to try to deliver it from either Colorado or George Town are prohibited.

So it requires us to start the second line of it in Duke, Oklahoma, and we’re doing this to make sure that long-term customers and relationships are satisfied as the demand is strong..

And, cement capacity utilization?.

Cement, again, our plant in Texas and Mountain remain sold out. Plant in Nevada is not quite sold out in the 3/4 range. Plant Illinois is getting close to sold out not quite, but it’s getting very close to being sold out. Plant in Tulsa is sold out and the plant Sugar Creek is pushing 3/4 to 7/8 sold out.

and on a seasonal basis when it comes to the finish grinding capacity, both the Illinois plant and the Kansas City plant are sold out. So until we have the ability to produce more clinkers then we can quite grind during the heavy shipping season unless we level out some of these sales throughout the winter.

So effectively right now we’re sold out in all of our cement plants..

Perfect. Thank you so much..

Your next question comes from the line of Garik Shmois from Longbow Research. Please proceed..

Hi, thank you. Just a follow-up question to a point that you made, Steve, on the maintenance expenses in wallboard, bringing up the new line.

Was it a material cost drag in the quarter? And, have those expenses been fully realized so that we’re not going to see it come through into the current quarter?.

Certainly there’s a little bit with that material now, but there’s a little bit with that. We still have some legal fees or probably its material that maintenance cost.

So as I think about it, and then the only thing that I would say is ongoing is natural gas costs are up and there’s an impact to both paper and wallboard with natural gas being a little bit higher year-over-year. But everything else is pretty much kind of a one-time cost. The maintenances were quite done with some legal fees..

Okay. And then, just on wallboard pricing. It did tick down a little bit sequentially. I think coming out of the last call you said your April pricing was up from the March quarter levels.

Is this a function mostly of mix that you alluded to? Or, are you seeing any change in the competitive landscape?.

So really we’re, again, very fortunate in our marketplace. It’s really a mix issue. But we have seen or heard that there are some issues in some markets that are really too far for us to get into that there might be a little more competitiveness in some of those markets. But since we’re not really selling into those markets it’s really hard for us.

It’d be just pure speculate..

Okay. Do you anticipate that is you bring on some extra line capacity and presumably to meet demand in Texas maybe fair to assume that your competitors role as well.

Is that a risk that you foresee for the next several quarters that some of the competitive behaviors that you’ve seen is some outlined markets that you are not participating in could end up threatening your market?.

For us there is no need to – the only reason we are bringing the wallboard on is to take care of the customer. For us price remains more important than volume. We don’t need to move it. We’ve added a few bodies, but not that many. Our cost structure is so low, more of the variable cost incremental to produce that wallboard.

If a customer needs that we’ll ship it, but we are not certainly going to try to ramp that line up. And ship it half way across the country and not make any money. We just don’t need to practice in making a wallboard. So it’s – for us it’s really a function of taking care of our customers.

And we are going to makes sure that those relationships are solid, when they need the wallboard we will produce it one..

Okay and just switching real quick – just a follow-up question on cement with 60,000 tons to 70,000 tons that were impacted by the rail constraints in the quarter.

Do you anticipate that volume is going to come back as the rail congestion loosens up or is this volume lost to other competitors?.

Let’s say about half the task, because of our Phoenix grind issue? So we have some storage and the silos we can work off that. But once the Phoenix mill hours are lost, they are lost. And so some of that we probably will not make up..

Okay, and just lastly off of that. I mean as the cycle rebounds presumably rail capacity remain tight. Or is this changing at all how you’re thinking about going to market, perhaps maybe walking away for some business rail served, and focusing more in markets and closer to there maybe trucks.

Is this issue that popped up in the quarter at all impacting.

How you are going to go to market?.

I think you have is difficult an issue with the cracking as you do with the rail right now. It’s always our preference to sell – I’d like to say within the umbrella of a operation. You could get to your highest margin and no body wants to make transportation.

Company is rich, but sometimes if you have a plant that is fairly large in a market, then it requires going to some terminals just to move the product.

So we do that and we clearly look at the most cost effective way to move materials from the plants to the terminals that are associated with each plant, whether it’s one of the newly acquired plants, or whether it’s an existing plant. So you’re always balancing that out.

But I can say in general, with the exception of this one, yes we’ve been pleased with the rail service and we think that’s an effective way to distribute cement from some of our larger facilities..

Okay. Thanks for the help..

Your next question comes from the line of Jim Barrett from C. L. King & Associates. Please proceed..

Good morning, everyone.

Steve, could you talk about the third-party frac sand you are shipping into the Eagle Ford, compared to the product that you were shipping a year ago, any change in pricing currently, and any outlook for taking price increase as you ramp up the Utica sand mine?.

So, the answer is yes, prices have gone up year-over-year for third-party sand and even logistics have gone up from moving the third-party sand down. But we’re still happy with it, and it makes sense to do it ahead of bringing them for business.

So we’re kind of may be just with our head slightly bowing above them below the waterline with the third-party sand. But really makes sense to both commission the plant and get to some of the customers. So that’s working very well for us. And right now cement, our demand for frac sand is extraordinarily tight here in Texas.

So we don’t see any problem moving the third-party sand and moving our sand once our sand gets down to the marketplace. So very excited about it and with typically when you get in tight supply that allows for pricing power..

And actually what I really meant to ask was, what is the current pricing environment in the Eagle Ford for sand, really on a go-forward basis? Would you expect pricing year-over-year, whether it’d be for your third-party sand or competitive frac sand? Do you expect it to be a 5%, 10%, can you give any color on that?.

Yes we really haven’t, we’re just barely getting going and then that in some of this also impacts logistics and how far you’re going to shift the sand from your operation. We even had sand shift from our operation at Corpus making it out to West Texas, demand is so tight in the Texas market right now.

But that all have some impact on pricing, so little hard to answer that question..

Okay. Okay well thank you and good luck with the venture..

Your next question comes from the line of Brent Thielman from D.A. Davidson. Please proceed..

Yes, hi good morning. On the product business, I was wondering how much volume is embedded in that 11 million in sales that you probably have this quarter..

Here, but I think as Steve talked about we are still in a start-up mode for that business, but we’ve been moving roughly a 100,000 tons on a quarterly basis in that range for this quarter as well. And for us, if we can ramp that up what happened is, we didn’t have the sand available in Corpus when the weather hit.

And actually pricing last call was lower, so we are little cautious about how much we brought down ahead of the winter. And then from Minnesota, it’s a little hard to move sand down the river, in the winter time it’s impossible, whereas in Illinois, it’s a different scenario.

So, then we had to wait until the river opened up just like the rail are reach with those from the very cold winter. So it took us a while to start getting sand back down. But it’s actually ramping up to a little higher pace in there right now..

Okay. And then just kind of thinking about it in the next quarter in Q2, should we think that business will be kind of absorbing from larger losses since you all – I guess since you all start moving third-party sand, but not really get the benefit of shipping your own sand until Q3..

I think it’s going to be about where we are, maybe a little bit better. We’ve improved the logistics with our barge operation coming online that will dramatically reduce some of the costs. But the cost have been Wisconsin is little higher as well, so there will be some plusses and minuses.

But I guess fair to assume, we are going to be about a break-even level until we get our mine up in front..

Got it, okay, great. And then, on the cement side you talked about some of the price increases you’re moving through, are you increasing prices on oil well cement as well..

Lot of those things are three year commitments and they are not do for a change.

So in typically when you do a longer-term agreement you will have some escalators in there, so you’ll see some small increases associated, but we are – we are just kind of heading into another cycle of negotiations with that, but typically when as the price of regular cement goes up, the price of oil well cement goes up accordingly..

Okay.

And Steve, could just maybe add some commentary on what you are seeing on the demand side there sort of year-to-date?.

Oil well cement, again it is very, very strong. It gets extraordinarily strong here in Texas..

Okay. And then, that’s great. Just one last one. It looks like aggregates volume was under some pressure this quarter.

Just kind of curious what happened there?.

Some of the aggregates are in the Kansas City market and if you just had to follow the weather in Kansas City, both concrete and aggregates sales were down, did rain most of the quarter up in Kansas City.

I mean it was very, very slow and just had to be where the weather pattern was hit and we still had a lot of rainy days in the Kansas City area this past quarter. So it’s primarily there. That was a toss..

Okay. Thanks, guys..

Your next question comes from the line of John Baugh from Stifel. Please proceed..

Thank you, and good morning. On the frac-sand, if I did the math right that was about $110 per ton of price.

First of all, is that right? Secondly, how much of that is freight logistics costs, which I assume are largely a pass-through? And then, also on frac-sand, any updated thoughts? I know you don’t want to get into details of what you’re doing to utilize the $5 million, but any thoughts about CapEx totals and timing of CapEx to utilize that full $5 million? Thank you..

So some of the pricing is mix, right, because there are various grades. So that’s going to vary across the grades. That’s close to what’s going on there. As far as CapEx, we’re going to continue – we’ve effectively spent the CapEx for phase 1 now. So the Corpus Christi plant is nearly done.

We’re going to refurbish a few of the old cement silos that we have there as well. A little bit of CapEx to spend over the next six months, but not much. And the plant is all up in running now in Utica. So the rest of the CapEx going forward is to build out the system that we talked about. We continue to acquire properties.

We’re going to build the drying plant up near the mine and we’ll add some drying plants in appropriate marketplaces as well..

Any thoughts, you’re not going to give out numbers or timing for all of that roughly..

Little early..

Okay. Thank you..

Your next question comes from the line of John Kasprzak from BB&T. Please proceed..

Good morning. Again on the frac project, is 1.5 million tons sort of the initial bogie? Is that the rate you think you can get to by the end of the fiscal years. Or will it take a little longer, is that sort of Phase 1 of the project.

Is that how to think about it?.

Yes, that is kind of the design, okay. And we are pretty comfortable that we can meet there, but it’s a start-up. So yes, hopefully, we can get there in six months, sometimes commissioning a new plant takes a little longer than that. But that would be our aspiration..

Okay, and ultimately to get to the sort of 4 million to 5 million tons of capacity. Do you have to do anything incremental will be on the move, you have already discussed in terms of the annexation and then the capital spending. Or is there anything else that will have to happen long-term..

There are a few other things that we are working on which is way too early for us to give any details..

Yes. Okay that does it for me, thank you..

Your next question comes from the line of Jerry Revich. Please proceed..

Good morning..

Good morning..

I am wondering, if one of you can talk about how the logistics is going down the river system there. How are you absorbing that volumes with existing barge capacity any constraints coming up.

We are looking out for more service companies just real concern over since we got short sand shortages, I guess sounds like it’s rail logistics, driven at least in part I’m wondering, has that given you at least better visibility on your ability to break and fit that market without a impacting us quite the demand balance?.

Yes, it is really difficult to get rail from the north down to Texas, right now. And part of what even occurred in the Kansas City area had some impact on them. So, yes we have seen that and that’s one of the reasons why frac sand is very hard to come by, in the Texas market.

One of the other reasons is the demand in the Texas market has grown substantially as the need out in West Texas has grown very, very quickly. Quickly, much quicker than we anticipated. So you have demand coming on, you have some constraints with the rail in the north to south.

And then our barge systems working fine, and we don’t see any issues with bringing barges down, and of course for us that was while there maybe issues from time to time on the waterway system. The way you resolve that is by building up a big inventory.

And we have a very large piece of property in Corpus Christi that we can store up to 500,000 tons of raw sand. So that way if there are any issues in the logistics once we build that inventory, we just carry a little extra working capital of that, then we don’t have to worry about any problem, so as far as the barges moving from north to south..

And in terms of just the timing to ramp up to the full capacity utilization, I guess in the past when we’d seen you add capacity in cement, you pre-built demand with third-party shipments.

Are you ramping up the third-party shipments ahead of your August shipment dates out of your own sand? Or, are you just keeping it at that steady run rate that Craig mentioned until then?.

As best we can. So we started trying to buy sand very, very hard – third-party sand this spring and there’re just only so much that’s available. So we’re doing our best to increase it. We’ll see how successful we are by the end of this next quarter..

In terms of the grades of sand, or the quantities that you are selling now, is that any different from when you start to ship your own? I guess the $110 per ton, the shipment number that Craig mentioned, gets you to – I guess is below some of the grades that we’ve been hearing about in Texas. I’m wondering if you could just flush that out for us..

Yes, I think part of the issue is there are some price increases that occurred in the middle of this quarter. So that pricing is an average of some lower pricing that we had at the beginning of the quarter to where we are at the end of the quarter. So we’ve seen some pretty strong price increases in the middle of this quarter.

And I anticipate that next quarter you’ll see a higher price..

In terms of the cement logistics constraints that you saw in the quarter, have they completely eased? I guess we’re hearing from the rails that they’re still working to get back to prior service levels.

I’m wondering if that applies to what you’re seeing as well?.

It does particularly in the Kansas City area..

Okay. And then lastly in wallboard, can you just talk about – the net price was down.

Is that due to higher logistics costs or mix of business? Can you just provide some context there, please?.

Primarily mix. Logistics, again, year-over-year up a couple of bucks I think, but sequentially that was mainly mix..

Okay, great.

But the pricing on an apples-to-apples basis was flattish sequentially on a market-by-market basis?.

That’s correct..

Thank you..

Your next question comes from the line of Glenn Wortman from Sidoti & Company. Please proceed..

Yes, good morning..

Good morning..

The sequential decline in cement pricing, was that just a typical geographic mix shift there?.

That’s correct..

Okay. And then you’ve been doing a good job on paperboard margins, is this just a good level tomorrow going forward or do you see more upside there..

Yes. There is still more upside and in Corpus we actually had a 35% increase this, if you compare this – with your quarterly comparison of Gypsum paperboard sales.

So this plant was designed to trying to make Gypsum linerboard and the more Gypsum linerboard you make the higher profits the later contribution permits machine hours that you get when you’re producing Gypsum liner. So as our Gypsum linerboard sales go up. We make more profit.

So as long as the trend continues to higher volumes and Gypsum both internal and external sales the profit on the paperboard goes up..

Yes, all right. Thanks for taking my questions..

Your final question comes from the line of Kevin Money from Cleveland Research. Please proceed..

Good morning..

Good morning..

Just one question on you quantified the impact for cement shipments from this rail congestion issue, was there any impact in your successful fourth quarter..

I don’t think so. That’s a winter quarter where sales are slow winning why, and if you remember that was all that Polar Vortex, so you really had cold weather being more of an impact there than the rail..

Great. Thanks, guys..

Well, you are welcome..

Okay. Ladies and gentlemen, that concludes our question-and-answer session. I’ll now turn the conference back to Steve for closing remarks..

Thank you, everyone, look forward to the upcoming call at the end of the next quarter..

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation and you may now disconnect. Have a great day..