Press Releases
Eagle Materials Inc. Reports Record Third Quarter Results; Record Third Quarter Diluted EPS (Up 14%) and Record Third Quarter Net Earnings (Up 5%)
DALLAS, Jan 31, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2007 ended December 31, 2006 and issued guidance for the fourth quarter of its fiscal year 2007. Eagle produces and distributes Gypsum Wallboard, Cement, Recycled Paperboard and Concrete and Aggregates. The following are highlights of our third quarter results:
* HIGHEST THIRD QUARTER OPERATING EARNINGS IN OUR HISTORY
* HIGHEST THIRD QUARTER WALLBOARD OPERATING EARNINGS IN OUR HISTORY
* RECORD HIGH THIRD QUARTER SALES VOLUME IN CEMENT - 779 THOUSAND TONS
* HIGHEST QUARTERLY CEMENT AVERAGE NET SALES PRICE IN OUR HISTORY -
INCREASED $11 PER TON FROM LAST YEAR'S THIRD QUARTER
* MODERNIZATION AND STARTUP OF ILLINOIS CEMENT COMPLETE
For the quarter ended December 31, 2006, revenues and net earnings were $214.2 million and $40.9 million, respectively. Revenues increased 1% over the prior year third quarter and net earnings increased 5% over the same period. Diluted earnings per share for the third quarter of fiscal 2007 were $0.83 compared with $0.73 in the same period a year ago, a 14% increase.
The Company expects to report net earnings ranging from $0.55 to $0.65 per diluted share for the fourth quarter of fiscal 2007 ending March 31, 2007.
Eagle remains well positioned to adapt to changing industry conditions because of our low-cost, balanced mix of construction products (Cement/Concrete/Aggregates) and building materials (Gypsum Wallboard/Paperboard) combined with our geographical focus in the Sunbelt regions of the U.S. While total U.S. construction spending remains strong, the severe slowdown in residential construction continues to negatively impact sales prices and volumes in the wallboard industry. The Gypsum Association reported approximately 35.0 billion square feet of wallboard was shipped by U.S. manufacturers during calendar 2006, a 3% decrease over the prior year, while industry shipments for the quarter ended December 31, 2006 were down 16% to approximately 7.6 billion square feet compared to the same period a year ago. For calendar 2007, we expect wallboard industry capacity utilization to continue to decline and average utilization to range between 80% and 85%.
National demand for cement remains at a record high level with imports of approximately 30% required to meet U.S. construction industry demand. Demand in all four of Eagle Materials' cement markets remains at high levels. High cost imports and high levels of U.S. cement demand continue to put upward pressure on cement pricing. Our third quarter pricing was the highest in Eagle's history. While pricing remains strong, poor weather in certain of our markets has delayed previously announced cement price increases.
GYPSUM WALLBOARD
Gypsum Wallboard revenues for the third quarter totaled $114.4 million, a 7% decrease compared to the $122.5 million for the same quarter a year ago primarily due to a 16% decline in wallboard sales volume compared to the prior year's third quarter. Gypsum Wallboard's third quarter operating earnings were $41.6 million, up 7% from the $38.9 million for the same quarter last year. The earnings gain for the quarter resulted primarily from higher sales prices and lower natural gas prices offset by lower sales volumes and increased maintenance expenditures. The average net sales price for this fiscal year's third quarter was $159.73 per MSF, 11% greater than the $143.98 per MSF for the same quarter last year.
CEMENT
Operating earnings from Cement decreased 17% to $16.6 million for the third quarter this year from $20.1 million for the same quarter last year. This quarter's Cement operating earnings were negatively impacted by approximately $8.5 million related to the shutdown required to tie in the new equipment at our Illinois Cement plant. The startup of our modernized Illinois Cement facility occurred in late December 2006, and it is now fully operational. Cement revenues, including joint venture and intersegment revenues, for the third quarter totaled $77.7 million, 17% greater than the $66.5 million for the same quarter a year ago. Cement sales volume for the third quarter totaled 779,000 tons, 5% above the 746,000 tons for the same quarter last year. To meet these strong market requirements, Eagle supplemented approximately 31% of its cement sales volume with lower margin purchased cement. The average net sales price for this fiscal year's third quarter was $93.81 per ton, 13% greater than the $83.24 per ton for the same quarter last year.
PAPERBOARD
Eagle's Paperboard operation reported third quarter revenues, including sales to Eagle's Wallboard operations, of $29.9 million which was 5% less than last year's third quarter. Paperboard operating earnings of $5.0 million for the third quarter this year were up 19% from last year's third quarter operating earnings due primarily to lower natural gas costs partially offset by lower sales volumes and sales prices. For this year's third quarter, Paperboard sales volume was 65,000 tons, down 3% from last year's third quarter. This year's third quarter average net sales price of $455.82 per ton was 2% below last year's third quarter average net sales price of $462.95 per ton.
CONCRETE AND AGGREGATES
Revenues from Concrete and Aggregates were $24.7 million for this year's third quarter, 13% greater than the $21.9 million for the third quarter a year ago. Concrete and Aggregates reported a $4.3 million operating profit for this year's third quarter, up 227% from the $1.3 million operating profit for the same quarter last year, due to increased pricing in both of our markets and increased concrete volumes.
Concrete sales volume increased 5% for the third quarter this year to 221,000 cubic yards from 210,000 cubic yards for the same quarter last year. Our Concrete quarterly average net sales price of $73.34 per cubic yard for the third quarter of fiscal 2007 was a record and was 14% higher than the $64.32 per cubic yard for the third quarter a year ago. Our Aggregates operation reported sales volume of 1.2 million tons for the current quarter, 14% less than the 1.4 million tons reported in the third quarter last year. The decline in Aggregates sales volume was primarily related to our Northern California aggregates operation. Our Aggregates quarterly average net sales price was a record high $6.97 during the third quarter and was 18% above last year's third quarter Aggregates average net sales price.
DETAILS OF FINANCIAL RESULTS
We conduct one of our cement plant operations through a 50/50 joint venture, Texas Lehigh Cement Company LP (the "Joint Venture"). We utilize the equity method of accounting for our 50% interest in the Joint Venture. For segment reporting purposes only, we proportionately consolidate our 50% share of the Joint Venture's revenues and operating earnings, which is consistent with the way management organizes the segments within the Company for making operating decisions and assessing performance.
In addition, for segment reporting purposes, we report intersegment revenues as a part of a segment's total revenues. Intersegment revenues are eliminated on the income statement. Refer to Attachment 4 for a reconciliation of the amounts referred to above.
EXP's senior management will conduct a conference call to discuss the financial results, forward looking information and other matters at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, February 1, 2007. The conference call will be webcast simultaneously on the EXP Web site http://www.eaglematerials.com . A replay of the webcast and the presentation will be archived on that site for one year. For more information, contact EXP at 214-432-2000.
Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not historical facts or guarantees of future performance but instead represent only the Company's belief at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors many of which are outside the Company's control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company's actual performance include the following: the cyclical and seasonal nature of the Company's business; public infrastructure expenditures; adverse weather conditions; availability of raw materials; changes in energy costs including, without limitation, natural gas; changes in the cost and availability of transportation; unexpected operational difficulties; inability to timely execute announced capacity expansions; governmental regulation and changes in governmental and public policy; changes in economic conditions specific to any one or more of the Company's markets; competition; announced increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction; general economic conditions; and interest rates. For example, increases in interest rates, decreases in demand for construction materials or increases in the cost of energy (including natural gas) could affect the revenues and operating earnings of our operations. In addition, changes in national or regional economic conditions and levels of infrastructure and construction spending could also adversely affect the Company's result of operations. These and other factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2006 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006. These reports are filed with the Securities and Exchange Commission. All forward-looking statements made herein are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein will increase with the passage of time. The Company undertakes no duty to update any forward-looking statement to reflect future events or changes in the Company's expectations.
(1) Summary of Consolidated Earnings
(2) Revenues and Earnings by Lines of Business (Quarter)
(3) Revenues and Earnings by Lines of Business (Nine Months)
(4) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(5) Consolidated Balance Sheets
Eagle Materials Inc.
Attachment 1
Eagle Materials Inc.
Summary of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
Quarter Ended December 31,
2006 2005 Change
Revenues $214,179 $211,515 1%
Earnings Before Income Taxes $61,351 $58,866 4%
Net Earnings $40,917 $38,987 5%
Earnings Per Share:
- Basic $0.85 $0.74 15%
- Diluted $0.83 $0.73 14%
Average Shares Outstanding:
- Basic 48,354,882 52,556,763 -8%
- Diluted 49,011,353 53,238,468 -8%
Nine Months Ended December 31,
2006 2005 Change
Revenues $730,621 $638,098 15%
Earnings Before Income Taxes $250,299 $174,777 43%
Net Earnings $166,104 $117,217 42%
Earnings Per Share:
- Basic $3.36 $2.20 53%
- Diluted $3.31 $2.17 53%
Average Shares Outstanding:
- Basic 49,415,067 53,369,853 -7%
- Diluted 50,117,681 54,068,484 -7%
Eagle Materials Inc.
Attachment 2
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Quarter Ended December 31,
2006 2005 Change
Revenues*
Gypsum Wallboard $114,411 $122,450 -7%
54% 58%
Cement (Wholly Owned) 56,408 50,311 12%
26% 24%
Paperboard 18,632 17,156 9%
9% 8%
Concrete & Aggregates 24,245 21,598 12%
11% 10%
Other, net 483 --- 483%
0% 0%
Total $214,179 $211,515 1%
100% 100%
Operating Earnings
Gypsum Wallboard $41,577 $38,856 7%
62% 61%
Cement:
Wholly Owned 9,048 14,005 -35%
Joint Venture 7,596 6,052 26%
16,644 20,057 -17%
24% 31%
Paperboard 4,990 4,195 19%
7% 7%
Concrete & Aggregates 4,320 1,321 227%
6% 2%
Other, net 483 (348) 239%
1% -1%
Total Operating Earnings 68,014 64,081 6%
100% 100%
Corporate General Expenses (5,622) (3,835)
Interest Expense, net (1,041) (1,380)
Earnings Before Income Taxes $61,351 $58,866 4%
*Net of Intersegment and Joint Venture Revenues listed on Attachment 4.
Eagle Materials Inc.
Attachment 3
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Nine Months Ended December 31,
2006 2005 Change
Revenues*
Gypsum Wallboard $399,685 $344,394 16%
55% 54%
Cement (Wholly Owned) 194,793 168,105 16%
27% 26%
Paperboard 56,948 55,153 3%
8% 9%
Concrete & Aggregates 75,433 68,167 11%
10% 11%
Other, net 3,762 2,279 65%
0% 0%
Total $730,621 $638,098 15%
100% 100%
Operating Earnings
Gypsum Wallboard $164,370 $103,782 58%
61% 55%
Cement:
Wholly Owned 48,974 40,266 22%
Joint Venture 24,594 18,461 33%
73,568 58,727 25%
28% 31%
Paperboard 14,447 17,447 -17%
5% 9%
Concrete & Aggregates 13,106 7,999 64%
5% 4%
Other, net 3,762 1,932 95%
1% 1%
Total Operating Earnings 269,253 189,887 42%
100% 100%
Corporate General Expenses (15,034) (10,900)
Interest Expense, net (3,920) (4,210)
Earnings Before Income Taxes $250,299 $174,777 43%
*Net of Intersegment and Joint Venture Revenues listed on Attachment 4.
Eagle Materials Inc.
Attachment 4
Eagle Materials Inc.
Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(unaudited)
Sales Volume
Quarter Ended Nine Months Ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Gypsum Wallboard
(MMSF's) 590 699 -16% 1,982 2,108 -6%
Cement (M Tons):
Wholly Owned 572 556 3% 1,994 1,908 5%
Joint Venture 207 190 9% 619 623 -1%
779 746 5% 2,613 2,531 3%
Paperboard (M Tons):
Internal 22 28 -22% 80 86 -7%
External 43 39 10% 132 123 7%
65 67 -3% 212 209 2%
Concrete (M Cubic Yards) 221 210 5% 692 683 1%
Aggregates (M Tons) 1,201 1,396 -14% 3,969 4,584 -14%
Average Net Sales Price*
Quarter Ended Nine Months Ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Gypsum Wallboard (MSF) $159.73 $143.98 11% $168.03 $131.85 28%
Cement (Ton) $93.81 $83.24 13% $92.45 $81.34 14%
Paperboard (Ton) $455.82 $462.95 -2% $450.70 $463.93 -3%
Concrete (Cubic Yard) $73.34 $64.32 14% $70.95 $61.32 16%
Aggregates (Ton) $6.97 $5.91 18% $6.84 $5.83 17%
*Net of freight and delivery costs billed to customers.
Intersegment and Cement Revenues
Quarter Ended Nine Months Ended
December 31, December 31,
2006 2005 2006 2005
Intersegment Revenues:
Cement $2,654 $1,345 $ 7,491 $4,622
Paperboard 11,281 14,322 40,664 43,722
Concrete and Aggregates 467 306 1,226 1,164
$14,402 $15,973 $49,381 $ 49,508
Cement Revenues:
Wholly Owned $56,408 $ 50,311 $194,793 $ 168,105
Joint Venture 18,676 14,893 55,756 47,719
$75,084 $ 65,204 $250,549 $ 215,824
Eagle Materials Inc.
Attachment 5
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
December 31, March 31,
2006 2005 2006*
ASSETS
Current Assets -
Cash and Cash Equivalents $61,797 $60,174 $54,766
Accounts and Notes
Receivable, net 69,363 80,231 94,061
Inventories 66,663 67,111 67,799
Total Current Assets 197,823 207,516 216,626
Property, Plant and Equipment - 954,411 837,423 856,227
Less: Accumulated Depreciation (325,436) (290,902) (298,665)
Property, Plant and
Equipment, net 628,975 546,521 557,562
Investment in Joint Venture 42,692 25,642 27,847
Notes Receivable 8,565 --- ---
Goodwill 67,377 68,013 67,854
Other Assets 18,503 15,992 19,027
$963,935 $863,684 $888,916
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities -
Accounts Payable $51,846 $58,377 $51,562
Accrued Liabilities 59,365 56,396 53,137
Total Current Liabilities 111,211 114,773 104,699
Long-term Debt 200,000 200,000 200,000
Deferred Income Taxes 115,442 115,828 119,479
Stockholders' Equity -
Preferred Stock, Par Value
$0.01; Authorized 5,000,000
Shares None Issued --- --- ---
Common Stock, Par Value $0.01;
Authorized 100,000,000 Shares;
Issued and Outstanding
48,316,090, 50,396,010 and
50,318,797 Shares, respectively. 483 504 503
Accumulated Other Comprehensive
Losses (1,404) (1,842) (1,404)
Retained Earnings 538,203 434,421 465,639
Total Stockholders' Equity 537,282 433,083 464,738
$963,935 $863,684 $888,916
*From audited financial statements.
SOURCE Eagle Materials Inc.
Steven R. Rowley, President & CEO, or Arthur R. Zunker, Jr., Senior Vice President & CFO, both of Eagle Materials Inc., +1-214-432-2000
http://www.eaglematerials.com
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