Ed Sullivan

Chief Economist, Group VP

PCA

1

PCA Outlook: 2015-2019

Overview

Putting Things Into Context: Economic Outlook

• Job creation exceeds 3.0 million net new jobs 2015-2017. – Stronger household formation

• Strong job growth in context of sub-6% unemployment suggests pressure on wages.

• Consumer confidence/sentiment has improved significantly and will continue.

• Low oil prices add 20-30 basis points to economic growth. – Regional disruptions among energy producing states.

Putting Things Into Context: Economic Outlook

• Inflation remains low, interest rates expected to only gradually increase, slower increases in home prices and stronger increases in rents. – New home affordability remains favorable in absolute terms and against rents.

• Lending risks subside and lending standards ease.

• Economic recovery moving into higher growth phase in the years ahead. – In excess of 3% growth on a sustained basis.

– Healing of excesses, and huge pent-up demand.

Portland Cement Consumption Thousand Metric Tons

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

2014 = 8.2% 2015 = 8.0%

Current Forecast Spring Forecast

Composition of Changes in Cement Consumption Share of Total Growth

Res 56%

Non Res 29%

Public 15%

Res 13%

Non Res 64%

Public 23%

2014:

+6.5 MMT 2015:

+6.9 MMT

Composition of Changes in Cement Consumption Annual Percent Change, Real Put-In-Place Construction & Cement Intensity

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

2007 2009 2011 2013 2015 2017

Construction

7

Intensity

Construction Sector Outlook

• Days supply is low and starts

activity is targeted to roughly 5 monthly supply throughout the forecast.

• New home prices rise at rates

above inflation rate. • Constraint to construction -

such a labor shortages & property availability - are assumed to be temporary and fixed by the market.

• Starts mix remains trending toward multifamily.

0

500

1,000

1,500

2,000

2,500

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

Housing Starts Thousands of Units

Putting Things Into Context: Housing Outlook

Update: Job Creation Relationship to Changes in Cement Consumption

Past 12 Months, Thousand Net New Jobs, Thousand Tons

0200400600800

1,0001,2001,4001,6001,8002,000

c Net Job Creation

10

c Change in Cement

Consumption

State Deficit Outlook Net Balance (Revenues Less Expenditures)

-300,000,000

-250,000,000

-200,000,000

-150,000,000

-100,000,000

-50,000,000

0

50,000,000

100,000,000

150,000,000

2007 2009 2011 2013 2015 2017 2019

$000

Portland Cement Consumption Thousand Metric Tons

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

2014 = 8.2% 2015 = 8.0%

Current Forecast Spring Forecast

Oil Price Adjustments

West Texas Intermediate Oil Prices Per Barrel

$66.02

$99.57

$79.40

$94.12 $93.10

$55.00

$76.20

$86.60

$97.00

$107.40

0

20

40

60

80

100

120

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Energy Industry Wages as Share to Total State Wages

ME

RI

MA

VTNH

AL GA

SC

TN

FL

MS

LA

TX

OKNM

KS

MN

IA

MO

AR

WY

CO

ND

SD

NE

WA

ID

MT

OR

NVUT

AZ

CA

WI

ILIN

MI

OH

KY

WV

VA

NC

MD

DE

PA

NY

CT

NJ

9%+ 8% to 5% 4-1% No Impact

Asphalt Prices & West Texas Intermediate Prices$ Per Barrel, Asphalt PPI

20

70

120

170

220

270

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

44% Decrease

In WTI

1.5% Increase

New Record

High For

Asphalt

Summary

Ed Sullivan

Chief Economist, Group VP

PCA

18

PCA Outlook: 2015-2019