Eagle Materials Inc (EXP) 2009 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Eagle Materials Inc.

financial results for the second quarter of fiscal year 2009 conference call.

During the presentation all participants will be in the listen only mode.

Afterwards we will conduct a question and answer session.

(OPERATOR INSTRUCTIONS) As a reminder this conference is being recorded Monday, October 27, 2008.

It is now my pleasure to turn the conference over to Mr.

Steve Rowley, President and CEO of Eagle Materials Inc..

Please, go ahead, sir.

Thank you, and welcome to Eagle Materials conference call for the second quarter of fiscal year 2009.

Joining me today are Mark Dendle, our Executive Vice President of Finance and Administration and CFO; Art Zunker, our Senior Vice President and Treasurer; and Craig Kesler, our Vice President, Investor Relations.

There will be a slight 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 risk 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.

During our last quarterly conference call, I said that Eagle would swiftly and decisively right size our Wallboard Operations to best manage our marketplace presence under the current business environment.

Our second quarter results reflect this change of direction.

Since late June, we have dramatically pulled back from secondary markets reducing freight costs while increasing [mellnets] and accepting reduced market penetration.

During this quarter, American Gypsum national gas costs peaked in July at nearly $12 per MMBTU; however since then natural gas costs have started to abate and we successfully implemented portions of three price increases.

As a result, our Wallboard operations returned to profitability in August and September.

Sales opportunities in cement continue to be hard to find.

The Midwest and West continue to be our most difficult regional cement markets, as with our Wallboard Operations we are swiftly and decisively adjusting operations at each of our regional cement companies to maximize profitability during the current economic conditions.

Reduced Wallboard sales opportunities combined with many new Wallboard plants that have come on line during the past 12 months has the US Wallboard industry operating at around 60% capacity utilization.

Subsequently, Eagle's second quarter quarterly comparative revenues declined 16%, a combination of lower sales volumes and lower sales prices.

Currently, Wallboard sales volumes continue to wane because of reduced residential construction combined with slowing commercial construction.

The combination of reduced net sales prices, lower sales volumes and higher energy costs reduce our Wallboard and paperboard operating earnings by 82% compared to last years second quarter.

Recent price increases combined with lower natural gas prices have sequentially improved our Wallboard Operations which returned to profitability in August and September.

Another price increase has been put into place to date.

Our Paperboard Operations will negatively impacted by reduced sales of gypsum facing paper were positively impacted by reduced natural gas consumption, reduced fiber consumption, reduced fee grade production, increased trim utilization, and much improved machine efficiency and by lower fiber and chemical costs combined with higher pricing for our liner products.

An 18% decrease in sales volumes was the primary driver of the decline in Eagle's quarterly comparative cement revenues.

The majority of volume decline was in the Midwest and the West where current economic conditions remain very weak with construction activity limited.

Imports of foreign cement into the US continue to recede in favor of supplementing regional supply demand imbalances with US manufactured cement from neighboring regional markets.

Our first quarter cement earnings were down 25% compared to the prior year, excuse me, our second quarter cement earnings were down 25% compared to the prior year primarily due to lower sales volumes, reduced production at Illinois Cement and higher energy costs.

During this years second quarter our electricity cost increased 10% relative to last years second quarter and our coal and petroleum coke cost increased 12% relative to last years second quarter.

These costs are anticipated to increase further next year.

Our concrete and aggregate operating earnings were down 67% from the prior year.

Lower ready mix concrete volumes, increased diesel costs combined with a disproportionately higher share of lower priced road based material sales at our aggregate operations are the primary reasons for our reduced revenues and earnings.

Now I'll turn it over to Mark Dendle.

Thank you, Steve.

Consistent with earnings, our operating cash flow improved significantly from the previous quarter from $1.2 million to $19.6 million.

The principal driver was a doubling of net earnings in Q2 versus Q1 from $8 million to $16 million with inventory and AR kept at the same level as the June quarter.

DSO remained unchanged from Q1 to Q2.

Capital spending in the quarter of $0.6 million net in flow includes $3.4 million of maintenance CapEx spend offset by proceeds of $3.9 million related to the sale of the bulkhead flat railcars in our Wallboard division.

During the September 2008 quarter, we also repaid the $10 million borrowed on the revolving credit facility in the previous quarter and ended the quarter with $17 million of cash on hand.

As of September 30, 2008, our net debt-to-capital ratio improved from 49% in the June quarter to 48% in the September quarter.

There was no capitalized interest in the September 2008 quarter.

Thank you for attending today's call.

We'll now move to the question and answer session.

(OPERATOR INSTRUCTIONS) And our first question comes from the line of Garik Shmois of Longbow.

Please proceed with your question.

Hi, it's Garik Shmois, thank you.

Just first off, Steve, on the Wallboard price increase that you mentioned it was announced for today, was this the first price increase for October?

That's correct.

Okay.

And as far as your energy costs in cement go, you mentioned that you're expecting an increase next year, particularly for coke.

How much would your costs go up?

That will vary.

We are still, haven't finished negotiating all of our fuel contracts for next year but it's going to go up at least another 10%, combination of power costs going up as well as the cost both of the coal and petroleum coke as well as the rail cost to deliver them to our plant.

And that estimated as the cost of energy or the total cost for production?

The cost of energy.

Okay.

And is that, sorry to be picky here, is that fiscal '10 or calendar '09?

Fiscal.

Okay, and just lastly, on cement, just with freight rates coming down here, can you just talk about the potential risk of imports reentering the US market?

Currently, we haven't seen that happen and I don't know that we've seen prices drop off that much but you never know, but as far as what I'm seeing presently in the marketplace, I still see imports being less and less every month and I see more and more cement being waterfalled from region to region.

Okay.

Thank you very much.

And our next question comes from the line of Kathryn Thompson of Avondale Partners.

Hi, thanks.

First, in terms of pricing, just first with Wallboard and then cement, where did pricing end up for the quarter?

And how should we think about that for the next couple of quarters?

Pricing for Wallboard is a little bit above for us a little bit above $103 per thousand and currently there is still a lot of upward momentum, a combination of things, the industry I still do not believe is holding their heads above cash costs so I think there's some momentum for further price increase just to get the industry even as well as there's always some fixed job quotes that just takes awhile for those jobs to finish and those lower costs to come off and the higher job quotes to take their place.

Okay, and kind of the same end, I wanted to check on the status of your $5 cement price that you had taken in Texas in the quarter, did that flow through and then how was pricing at the end of the quarter for cement?

Pricing at the end of the quarter was essentially the same as the quarterly average and we have not seen a price increase in Texas.

Okay.

So you're saying that that didn't necessarily stick or it did and you haven't seen an increase since then?

We have not seen an increase.

We had, Ike hit a little bit ago and inventory swelled so it would have been difficult to see a price increase.

Okay.

Do you anticipate idling any cement facilities in '08 or '09, actually, calendar '08 or '09?

Yes, we are operating Illinois Cement at a reduced capacity level.

We may look at taking extended maintenance outages next year if the market continues to wane, but currently, the only operation that we have not at full manufacturing capacity is Illinois Cement.

Okay.

Then also, just moving on to aggregates, obviously mix had a fairly significant impact on pricing.

How much of the shift was mix versus slippage and overall pricing?

I think it essentially was all mix.

We really didn't see much decline in pricing.

Road base is always an issue and road base usually goes for lower prices and it has much more variability than your construction aggregates so I can say that road base probably might have been a little slippage in road based price in both Markets but the other prices were solid.

Okay, and because of the big differential in that segment , is that a similar trend we should see in the coming

I don't believe so.

We had a couple of large jobs that went last quarter.

They are completing this quarter so I don't think we'll see as big a change in the next quarter.

Okay.

And then also just to kind of final two questions.

Do you have any maintenance expenses in the quarter?

And also finally just any comments on Hart-Scott-Rodino filing?

Not any unusual maintenance costs.

It's pretty normal maintenance for us this quarter in all business lines and then I think we said as much as needed to be said on Hart-Scott filing in our 8-K.

Okay.

I'll hop back in the queue.

Thank you very much.

And our next question comes from the line of Todd Vencil of Davenport.

Please proceed with your question.

Hi, guys, good afternoon.

Good afternoon.

Steve, following around on your comment about the couple of large aggregates jobs, can you tell us what market those were in?

Those were in Northern California.

And were those new construction or were they repair?

They were new construction.

Okay.

And just to clarify and I apologize for this, I think you probably answered the question but I just want to make sure.

Except for road based on a same product, same market basis you're saying you aren't really seeing any slippage in price for any products?

That's correct.

Okay.

Prices going up anywhere?

No.

Okay.

Switching over to Wallboard for a second, on the price increase that you said you put in today, what's the amount on that?

The announced price was between 10 to 12%.

Okay.

And is everybody more or less following along on that?

That's correct.

Okay.

In the industry as we sort of get toward the winter months and I guess the construction downturn seems to be deepening a little bit, are you hearing about any competitors who may be thinking about bringing capacity in the Wallboard business off line?

It's hard for me to speak about our competitors.

To date what we've seen as opposed to plants closing, we've seen plants run fewer and fewer shifts, including some plants only running one shift.

That tends to give you a much higher cost position but with the cost of freight to the market, some people believe that that maximizes their profitability to the marketplace so they just ship a small amount very close to the plant as opposed to trying to shut a plant down and shift from the next closest plant a greater distance.

Okay, no recent announcements of outright closures that are public?

Not to my knowledge.

Okay.

What about on the cement side?

We've heard about a couple of closures, one up in the Illinois area.

Any comments on further, you made comments about yourself obviously.

Any comments on what anybody else may be doing?

I know that a lot of other people are taking long maintenance outages.

I know there are two or three other cement plants that actually have been closed like one in Maryland, I think there's another one in Illinois now, and there might be another one in California that has closed.

Okay.

Thanks for that.

On cement also, you mentioned the fact that you hadn't really seen freight come down that much to drive cost of imports to a sort of critical level where they would start to be attracted to the marketing and what is the cost of imports into your market now?

You guys are importing to Houston, right?

That's correct.

It's still over $80 a ton.

How much of that is freight?

More than half.

Okay.

And finally, on the sort of $25 a yard concrete price increase that was announced by a lot of the competitors, for October 1, nationwide, are you guys seeing signs yet that that may or may not hold?

I think a portion of it is holding but I'm not sure how much but I know from the people I've talked to that a portion of that is holding.

Any color on what portion that might be?

No.

Okay.

Thanks a lot.

And our next question comes from the line of Glen Wortman of Sidoti & Company.

Please proceed with your question.

Good afternoon, everyone.

I apologize if you already commented on this but are you seeing downward pricing pressure in any of your cement markets?

You see a little bit from time to time but as you can see, sequentially, our prices are flat and it's really been more volume and so it's really been a question of a reduced imports, reduced purchase product and even reduced in some cases like Illinois, reduced manufactured sales so it's really been less of a pricing issue, more of a volume issue.

Okay, thank you.

And then in Wallboard I guess you've already touched on this a little bit but are you worried that you might, if not give back any price increases at least might be more difficult to change further price increase just further price increases due to the fall in national gas prices?

It's a little too early to comment on this price increase that really just went into effect today but typically in the winter, even though the spot price is fairly low right now, if you look forward, the price is still a little higher in the winter so even if you were trying to hedge you would not be able to hedge to where that would make any sense, so I think you just have to watch it on a monthly basis.

I was actually just looking at it just from your point of view with the Wallboard pricing because maybe used a little justification for the higher Wallboard price if natural gas is coming down, you still have supply/demand deteriorating.

Do you think there might be any impact on further potential Wallboard price increases?

And the answer to that is even though the spot price may be a little lower today, the future prices are not as low as the spot price.

Okay, I apologize.

Okay, and also just with respect to Illinois, we seen reports of about 1.3 million tons from your competitors, just to give us a sense of the relative impact, how big is the Illinois market?

Yes, we really service kind of the upper two-thirds of Illinois and the lower third or lower half of Wisconsin.

That in a normal market, that's a 6 million, 6.5 million ton market.

Our current market is down about 15 to 20% from that level.

Okay.

Thank you very much.

Yes.

And our next question comes from the line of Jack Kasprzak of BB&T Capital.

Please proceed with your question.

Thanks, good afternoon.

There was a comment in the opening remarks about the railcar sale gaining 3.9 million, hoping to offset maintenance CapEx.

In the press release it references $2.6 million gain, so I just wanted to clarify is the 2.6 after-tax?

Mark?

It's the -- the gain is net of the basis we had in the assets so we received the full amount in proceeds of $3.9 million but the net gain was 2.6.

Okay.

And could you review your debt covenants for us?

Sure.

The covenants that we have are primarily a leverage ratio of 3.5 to 1.

Net debt to EBITDA?

That's correct.

Gross.

Gross debt.

Okay.

And the PCA recently lowered their outlook for cement consumption for '09 calling for '09 to be basically as bad as '08 I guess down around 15%.

Do you guys think that your markets could do better or worse than the nationwide average?

I mean, how would you have thought about that historically I guess is the way to ask it?

You have to look market by market.

California, Nevada markets are down.

Can they go down much more?

I don't believe so, so those markets I don't think we would see a lot of change from where we are today.

Midwest the same thing, even though the markets are down, do not anticipate a tremendous change there.

Where the markets that have been good for us have been in Texas and in the Mountain region.

Those are also benefited fit by some oil and gas which had been pretty strong sales into those market as well, so it's in this condition, it's hard to look too much forward than another month or so.

I can tell you October has been a good month for Eagle but to tell you what next May or June would be, there just isn't any visibility.

Sure.

October a good month for cement or the whole Company?

The whole Company.

Yes, okay.

Okay, great.

Thanks a lot.

That does it for me.

And our next question comes from the line of [Amy Norris] of Tilt.

Please proceed with your question.

Hi, this is Amy Norris from (inaudible).

Can you talk about the dividend policy and what would happen if, let's say what if the covenants are out earnings fall to say maybe a $1 or something like that, do we still see the $0.80 dividend or what's the policy on that?

We currently have a dividend policy of $0.20 a quarter and that really is a matter for the Board and that's something that the Board reviews each quarter.

And what about it's not in any of the covenants of the debt?

It is not in any covenant.

Okay, thank you.

And our next question comes from the line of Mike Betts of JPMorgan.

Please proceed with your question.

Yes, hi, good morning.

I had three questions if I could.

Going back to Jack's question on the railcar disposal gain, I think the 2.6 correct me if I'm not, is a pre-tax number.

What was your contribution to earnings after-tax from that in Q2?

Mike, this is Craig Kesler.

After-tax it was more between $0.035 to $0.04.

Okay, thank you for that.

My second question probably just a point of clarification here, your comments, Steve, about what you're doing with cement which is going to be a repetition to what you've done successfully with Wallboard in terms of reducing volumes and cutting off maybe some of the less profitable customers et cetera.

Did that already happen in Q2 or is that what you're planning to do in Q3?

To a certain extent in Q2 was places where the economy is difficult and, but it's something that really every week and every month we look at what the opportunities are and we make the appropriate decision.

Okay, and my final question just on the Houston freight, I mean I'm a bit surprised but I'm sure it's my lack of understanding that the freight cost is still so high.

We all kind of watched the freight indices.

Is that because your freight is under contract and if so, when are those contracts up for renegotiation?

That's correct.

It is under contract, a certain piece of it is under contract and a certain piece of it, I think, still has a while ago whether it's six to nine months to go but not all of the freight is under contract but as we reduced the amount of sales out of Houston cement, then obviously a greater percentage becomes under contract.

Okay, and the final question I've just noticed, on D-fill, with that coming down, were you a significant user of transport surcharges as diesel went up, you also automatically got a hike for that and there for that will unwound?

Was that significant in either your Wallboard or cement business?

Yes, it is.

It's really significant in Wallboard and it's also significant in concrete in aggregate.

Okay, thank you very much.

Yes.

And our next question comes from the line of Todd Vencil of Davenport.

Please proceed with your question.

Hi, guys, thanks.

Just had one follow-up.

On the sort of expansion plans on cement that you guys have on the Boards, I know those have been sort of delayed.

Is there any official word from you guys on where you they stand or what your plans are?

They just remain delayed under this current environment.

Current environment of regulatory things standing in your way or current environment of -- got it.

Okay, thanks a lot.

And our next question comes from the line of Alan Mitrani of Sylvan Lake.

Please proceed with your question.

Hi, thank you.

Alan Mitrani, Sylvan Lake Asset Management.

Can you tell us what your plans are for CapEx for this fiscal year?

I guess the first half you spent close to on a gross basis around $10 million, is that correct?

Approximately, yes.

Okay.

We're going to minimize it.

Okay.

And I guess most of your CapEx the last few years has really been for growth anyway, right?

So you can really cut it to the bone I would assume?

That's correct.

Okay and the previous question as it relates to covenants like you said the one is really 3.5 to 1.

You have $400 million of debt which basically means you can't a trails basis get below $114 million of EBITDA and given where you are, and given what we see, it's possible that that could happen.

Could you tell us what levers you have to pull to make sure that doesn't happen?

Well, we continue to put flexibility on the balance sheet and that's why we are minimizing capital investments and maximizing the cash on the balance sheet.

Okay.

And on the dividend policy which I know is a Board issue but clearly I'm sure they ask for managements input, do you think it makes sense to keep paying a dividend this size when your stock is trading where it is?

I would think that almost all companies in the US is taking a hard look at their dividend policy.

Right.

Okay, and then you're always good about telling us what you see.

I realize everybody's crystal ball is a little cloudy but we all look at the housing starts and housing permits and it seems like given the financing situation, things are getting worse, not better.

How bad can this get in your opinion?

Or maybe just give us the sense of Wallboard and cement and I think all of us are a little surprised that cement hasn't come down further given what we see financing issues are happening for a lot of commercial projects.

Can you just give us your sense why you think that is that cement hasn't come down further and maybe we're just waiting to see until it does?

Well, it's really a function of the demand drivers for Wallboard versus cement, so there still is some cement that is being consumed for larger, whether they're public works or whether they're privately-funded roads, you still have some amount of construction that just hasn't dropped off the cliff like homebuilding, so I think that's the reason why you're seeing demand a little stronger although you have seen demand come down pretty rapidly in the last few months for cement as well.

Okay, and then I guess I'll ask one more question.

You guys are public.

You have access to capital.

Your debt is all fixed.

I have to imagine there's some smaller competitors or others that are not sitting in good a situation as you are on a relative basis.

Can you talk about the potential for acquisitions and I guess you don't have much currency to do it but your thoughts about consolidation in all of the sectors that you compete in?

Yes, we're always looking for opportunities.

We remain open to that but it's really a function of what makes sense for the Company long term and what makes sense for the Company as far as the capacity of the balance sheet to do something.

Okay, and also, I saw this is the first time that aggregate prices have come down in a long time.

Can you just give us your sense of what you're seeing in aggregates for the California market and maybe in the Texas market too or other markets that you look at?

Yes, the pricing was really just a function of that disproportionate amount of road base, we had a couple of very large road base jobs going in Northern California so that's really the impact of pricing.

Just volumes are very slim in Northern California.

Volumes are okay, but still difficult in Central Texas.

Okay.

Thank you.

(OPERATOR INSTRUCTIONS) Our next question is a returning question from the line of Kathryn Thompson.

Please proceed with your question.

Thanks.

Just wanted to get your thoughts on the status of state budgets where you have exposure?

Yes, that would be in the state that, I really do not know, obviously California had some issues but I don't know that we're going to see a tremendous decline in the amount of work that's going on in California.

I know some of the projects that are moving forward in California are on a voucher basis so if the contractor has a balance sheet that will allow him to accept vouchers I think those jobs go forward so you just have to look and understand what's going on in each market, but clearly, the declining economy is impacting the revenues in all of the states that we do business.

But have you seen an impact to your current revenues and particularly bids out as a result of this?

Not currently.

Not currently.

And when would you start seeing impact, I mean what type of visibility do you have?

Is it six months, 12 months?

As far as jobs that are being bid, we still participate in the bid letting.

As far as when they actually move forward, we just kind of wait until they happen, and as of present the work that we had on the books keeps moving forward.

Okay.

But still no general, I mean even directionally as far as it moving, you bid for a job today, it could get started a year from now, two years from now or does it vary from project to project?

It varies on each project.

But you still have some sense as to backlog at least over a specific time period?

Yes, that is hard for cement companies because a lot of this goes through third parties.

Some of it you're involved in up front but the majority of it really goes through a third party, so you have a sense for a piece of it, the ones that you're involved in but the majority of it goes directly through a third party so you'd have a ready mix company supplying the contractor and you're supplying that ready mix company.

Okay, thank you very much.

Yes.

And our next question comes from the line of John Emerich of Iron Works Capital.

Please proceed with your question.

Thank you.

A couple unrelated questions if I could ask them separately.

First, what is the right tax rate to use for the Company on an annualized basis?

30%.

And are you a cash tax payer around those same rates?

That's correct.

Okay.

And then last question, could you just clarify what you meant by putting flexibility on the balance sheet to avoid triggering the debt covenant of 3.5 times?

Yes, that's why we're kind of keeping cash and we're not spending a lot of cash and we're trying to build the cash balance on our balance sheet.

Okay.

Thanks.

And our next question comes from the line of Justin Boisseau of Gates Capital Management.

Please proceed with your question.

Hi, thanks.

It looks like the inventory dollars were up a bit year-over-year and maybe a bit up in days as well.

Could you talk a little bit about what's going on there in inventory?

It's just a function of we had a real slowdown at Illinois Cement that took us awhile before we realized what was going on with the customers and we ended up with a little extra inventory relative to last year and then with sales slow, although we are producing it at a rate that we're selling, we just ended up with a little extra cement inventory.

Okay, and I think you'd previously said you thought or the Company thought about the imports required to meet US demand in cement this year should be about 10%.

Is there any update on that?

Do you still expect there to be some imports for the full year?

Yes, there are some natural imports that will come in from Canada and Mexico.

I believe Canada is the largest importer into the US right now and a lot of that cement and those cement plants were built to supply markets across the Great Lakes so I would anticipate that we're going to see cement continue to come in, that it's more of a natural market that come from either just across-the-boarder in Canada or just across-the-boarder in Mexico.

Got it.

What about your expectations?

Do you have any, of what your net debt might look like at the end of the year?

I think it's about 383 now.

Do you expect it to be higher, lower or about the same at the end of the year?

We expect it to be slightly lower.

Terrific.

Thanks so much.

And our next question comes from the line of Trey Grooms of Stephens, Inc.

Please proceed with your question.

Good afternoon.

On net gas pulling back, you guys had mentioned that that will be something that you'll benefit from going forward.

Are you guys, I know over the last few years you haven't been very active in hedging and now that we've got pricing, net gas prices down, are you guys taking advantage of that by hedging to any degree and if so, can you give us an idea of kind of what percent of your net gas needs are being met by hedging at this point?

We are about 40% hedged going forward for the next 12 months.

And can you give us kind of an idea of roughly about the cost of that hedge, where it's set?

In the $7 range.

Okay.

And then on, sticking with cost for just a second, you mentioned that coal costs you expect them to be up next year.

Can you give us or remind us when your coal contracts reprice on cement?

Yes, it varies from plant to plant.

We have one operation that still has another year, year and a half left on its pricing, another one that is just pricing up right now, and then the other plant uses all petroleum coke and we're not seeing as dramatic a price increase in the petroleum coke market as the coal market, and the other one, the coal mine is very close to our plant and it's not on rail so it's shipped direct by truck so there's not, it's not as volatile with that price as well.

On the one that's pricing right now, can you give us an idea of what level of increase you're seeing?

Yes, that's close to 50% increase.

Okay.

And then looking at Wallboard, whenever you're kind of looking out into '09, what do you see, where do you see utilization rates going before we start to see any kind of improvement?

How far do you think we can go?

How low do you think the utilization rate should go in Wallboard?

I think utilization rates can go as low as they want.

I don't think you're going to see any difference.

I think we saw pricing bottom regardless of where utilization was earlier this year, so even if utilization continues to go down with the industry, as I perceive it to be just below or below cash costs, I don't think further deterioration in capacity utilization would have an impact on pricing, so it's really a question of can you still cover your costs in the current environment and in fact, if you're actually losing cash costs and you have lower volumes that's probably a good thing.

Well, I guess what I'm trying to get at is where do you see the industry, the demand or consumption in the industry kind of shaking out into '09 roughly?

I believe the demand will be off another 10% from this year.

This year it's going to be in about the 25 billion foot level.

Okay.

And then just one last question.

With all of the, everything we've just talked about with costs coming down, diesel coming down, your outlook for another 10% off in volume in Wallboard, under those scenarios, assuming that the Wallboard pricing that we seen you guys get traction on recently holds, are we in a position now and Wallboard to where we can stay in the black even in the assumption of another 10% down in volume?

I like our position.

Okay, perfect.

Thank you, guys.

And our next question comes from the line of John Emerich of Iron Works.

Please proceed with your question.

Thanks.

Just a quick follow-up.

What were cash flow from operations and depreciation in the quarter?

Mark?

Sorry, cash flow from operations?

Yes, sir.

The depreciation was about $12 million and one moment.

And the cash flow from operating activities in total was $19.6 million for the quarter.

And lastly, your bank facility is LIBOR based and I'm just interested given the wild swings that have been taking on there.

Did it reset this, the beginning of this month and what level did it reset to?

I'm trying to figure out what interest expense it is going to look like going forward?

On the revolver we really don't have anything on the revolver currently.

And that's the one that's LIBOR based?

That's correct.

Okay, thank you.

And moderators, there are no further questions from the line at this point in time.

I'll now turn the conference back over to you.

Thank you and look forward to seeing you again in another three months.