<SEC-DOCUMENT>0001193125-19-296854.txt : 20200103
<SEC-HEADER>0001193125-19-296854.hdr.sgml : 20200103
<ACCEPTANCE-DATETIME>20191120212032
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ACCESSION NUMBER:		0001193125-19-296854
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20191120

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			EAGLE MATERIALS INC
		CENTRAL INDEX KEY:			0000918646
		STANDARD INDUSTRIAL CLASSIFICATION:	CEMENT, HYDRAULIC [3241]
		IRS NUMBER:				752520779
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		5960 BERKSHIRE LANE
		STREET 2:		SUITE 900
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75225
		BUSINESS PHONE:		214-432-2000

	MAIL ADDRESS:	
		STREET 1:		5960 BERKSHIRE LANE
		STREET 2:		SUITE 900
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75225

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CENTEX CONSTRUCTION PRODUCTS INC
		DATE OF NAME CHANGE:	19940204
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<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>VIA EDGAR </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">November&nbsp;20, 2019 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporate Finance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549-7010 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Attention: Mindy Hooker </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ann McConnell </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="9%" VALIGN="top" ALIGN="left">RE:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Eagle Materials Inc. </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Form <FONT STYLE="white-space:nowrap">10-K</FONT> for year ended March&nbsp;31, 2019 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Filed May&nbsp;23, 2019 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Form <FONT
STYLE="white-space:nowrap">8-K</FONT> filed July&nbsp;30, 2019 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">File <FONT STYLE="white-space:nowrap">No.&nbsp;1-12984</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Division of Corporate Finance: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This letter will serve as
our response to your letter dated November&nbsp;8, 2019 in connection with your review of the Eagle Materials Inc. Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the year ended March&nbsp;31, 2019, and the Form
<FONT STYLE="white-space:nowrap">8-K</FONT> filed July&nbsp;30, 2019. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Year Ended
March&nbsp;31, 2019 </U></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Consolidated Financial Statements </U></B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>(A) Significant Accounting Policies </U></B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Impairment or Disposal of Long-Lived and Intangible Assets, page 73 </U></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><I>1.</I></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><I>We note your disclosures related to the material impairment charge you recorded during the year ended
March&nbsp;31, 2019. Please expand your disclosures to more fully address the following: </I></P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><I>Describe the specific assets or asset groups that you tested for impairment and that were impaired;</I>
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><I>Disclose the carrying values of the assets you tested for impairment and the remaining carrying values of the
assets that were impaired; and</I> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><I>To the extent material, disclose and discuss the risks and uncertainties related to any reasonably possible
asset impairments expected in the next 12 months.</I><I></I><I>&nbsp;Specifically address the nature of the identifiable assets in the oil and gas proppants segment, including the nature of the material capital expenditures related to this segment
incurred during the last two fiscal years.</I><I>&nbsp;</I> </P></TD></TR></TABLE>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporate Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">November 20, 2019 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>Refer to ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">360-10-50-2,</FONT></FONT></FONT> ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">820-10-50-2,</FONT></FONT></FONT> ASC <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">820-10-55-100,</FONT></FONT></FONT> and ASC <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">275-10-50-8.</FONT></FONT></FONT> </I></P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Company Response </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">On page 74 of the 2019
Form <FONT STYLE="white-space:nowrap">10-K,</FONT> we disclosed that impairment indicators were present within our Oil and Gas Proppants segment and then we described the asset groups that were tested for impairment and that were impaired.
Specifically, for purposes of our analysis, we grouped the long-lived assets of the segment into the lowest level where cash flows are generated, which is the level of individual operating or distribution facilities. Each facility is specifically
identified by location in Item 1. of the 2019 Form <FONT STYLE="white-space:nowrap">10-K</FONT> (starting on page 21). This disclosure specifies the number and location of our wet plants, dry plants and distribution facilities as well as the nature
of the activities that occurs at each facility. Also, on page 74, we noted that impairment losses were taken to (i)&nbsp;property, plant and equipment, (ii)&nbsp;goodwill and (iii)&nbsp;intangible and other assets. Additionally, on pages 46 and 74,
we quantified the impairment to Property, Plant and Equipment and other assets. Finally, on pages 72 and 73, we described and quantified the impairment of Goodwill and other Intangible Assets within the segment. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">As reported in our December&nbsp;31, 2018 Form <FONT STYLE="white-space:nowrap">10-Q,</FONT> the carrying value of the segment assets was
$462&nbsp;million, which consisted of three operating facilities, ten distribution facilities, inventory and accounts receivable (each facility as described in Item 1 of our 2019 Form <FONT STYLE="white-space:nowrap">10-K</FONT> beginning on Page
21). The carrying value of property, plant, and equipment at these facilities comprised approximately $420&nbsp;million of the $462&nbsp;million in segment assets. Because over 90&nbsp;percent of the segment assets consist of property, plant, and
equipment, all of which was analyzed for impairment, we believe that our disclosure of the Identifiable Assets of the Oil and Gas Proppants segment in Footnote (F)&nbsp;Business Segments met the requirements for disclosing the carrying values of the
assets tested for impairment. In Footnote (A) (page 74), we disclosed the total impairment of property, plant, and equipment ($211 million). Footnote (F) includes the Identifiable Assets as of the beginning of the fiscal year, current year capital
expenditures, current year depreciation, depletion and amortization, and Identifiable Assets at the end of the year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">Within the segment,
we concluded that approximately $284&nbsp;million out of the $420&nbsp;million of our property, plant, and equipment was considered impaired. After the impairment charge of $211&nbsp;million, the remaining carrying value of the impaired assets was
approximately $73&nbsp;million, which we did not consider to be material to an understanding of future impairment risk in the segment. The relevant risks to the segment were disclosed in the 2019 Form <FONT STYLE="white-space:nowrap">10-K,</FONT> as
further discussed below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">Our Oil and Gas Proppants segment is subject to volatility given the nature of the energy markets and is
significantly impacted by drilling and completion activity as well as pricing for white sand versus competing regional sand. We disclosed in the 2019 Form <FONT STYLE="white-space:nowrap">10-K</FONT> these risks and uncertainties related to the Oil
and Gas Proppants business in Item 1A. Risk Factors. Specifically, we disclosed that the segment&#146;s business and financial performance depends on the </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporate Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">November 20, 2019 </P>
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level of activity in the oil and natural gas industries (page 28) and that we may be adversely affected by decreases or shifts in demand for frac sand or the development of either effective
alternative proppants or new processes to replace hydraulic fracturing (page 36). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">Further, throughout fiscal 2019, we experienced
volatility in this segment, and during each quarter updated MD&amp;A to discuss the uncertainties related to pricing and demand and other factors impacting this business. In the March&nbsp;31, 2019 Form <FONT STYLE="white-space:nowrap">10-K,</FONT>
on page 45, we disclosed in the Market Conditions and Outlook sections of MD&amp;A that we were engaged in a strategic review of our portfolio of businesses, and that depending on the outcome of this review, further recoverability reviews will be
required which may result in future impairment charges. This business continues to experience volatility in operating results, and the business continues to be under strategic review. In future filings, we will continue to update these disclosures
to reflect changes in market conditions and other factors that may affect the risk of impairment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">In fiscal 2019 and 2018, segment
capital expenditures were $52&nbsp;million and $57&nbsp;million, respectively, as disclosed in Footnote (F), the segment footnote. These capital expenditures were primarily related to the build out of our Utica, IL operating facility, which was
completed in June 2018 as disclosed in the Business section of the 2019 Form <FONT STYLE="white-space:nowrap">10-K</FONT> on page 21. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Form <FONT
STYLE="white-space:nowrap">8-K</FONT> Filed on July&nbsp;30, 2019 </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Exhibit 99.1, page 10 </B></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left"><I>2.</I></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><I>We note your presentation of <FONT STYLE="white-space:nowrap">non-GAAP</FONT> adjustments you use to
calculate the <FONT STYLE="white-space:nowrap">non-GAAP</FONT> financial measure, Adjusted Earnings per Diluted Share. Adding back adjustments, net of tax, is not consistent with the guidance provided in Question 102.11 of the updated Compliance and
Disclosure Interpretations on <FONT STYLE="white-space:nowrap">Non-GAAP</FONT> Financial Measures (April 4, 2018). Please revise your future <FONT STYLE="white-space:nowrap">non-GAAP</FONT> presentations accordingly. </I></P></TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Company Response </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">We confirm that in the
future we will not include adjustments on a net of tax basis in any <FONT STYLE="white-space:nowrap">non-GAAP</FONT> presentations. Instead, we will show income taxes as a separate adjustment and provide a clear explanation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If you have any questions or further comments, please contact me by email at ckesler@eaglematerials.com, or by phone at (214)
<FONT STYLE="white-space:nowrap">432-2013.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Very truly yours, </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">/s/ D. Craig Kesler </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">D. Craig Kesler </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Executive Vice President - </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Finance and Administration and </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Chief Financial Officer </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporate Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">November 20, 2019 </P>
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<TD WIDTH="9%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Michael Haack </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">James Graass </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">William Devlin </P>
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