Press Releases
Eagle Materials Inc. Reports Second Quarter Results
DALLAS, Oct 22, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2008 ended September 30, 2007. Eagle produces and distributes Gypsum Wallboard, Cement, Recycled Paperboard and Concrete and Aggregates. The following are highlights of our second quarter results:
-- highest quarterly Cement operating earnings in our history
-- record high quarterly sales volume in cement -- Over 1 million tons
sold
-- Repurchased approximately 3.7 million shares of our stock (8%) during
the quarter
-- on October 2, 2007, we issued $200 million in senior notes with an
average interest rate of 6.35% and an average maturity of 10 years
For the quarter ended September 30, 2007, revenues and net earnings were $210.5 million and $34.8 million, respectively. Revenues decreased 18% from the prior year second quarter and net earnings decreased 47% from the same period. Diluted earnings per share for the second quarter of fiscal 2008 were $0.73 compared with $1.32 in the same period a year ago, a 44% decline.
Since June 30, 2007, Eagle has repurchased approximately 4 million shares of its stock, at an average purchase price of $38.31; leaving 1,489,500 shares available under its current repurchase authorization.
Eagle remains well positioned to adapt to changing industry conditions because of our low-cost, diversified mix of construction products and building materials.
Demand for cement in the U.S. remains at high levels requiring approximately 20% of total U.S. cement needs to be met by foreign imports. Cement demand in some U.S. regions has been negatively impacted by the residential slowdown; however, underlying cement demand in all four of our regional markets remains at high levels. Due to this strength in our cement markets, we expect fiscal 2008 to be our 22nd consecutive year of selling out our four cement plants.
The Gypsum Association reported that approximately 23.4 billion square feet of wallboard was shipped by U.S. manufacturers during the first nine months of calendar 2007, a 15% decrease from the prior year, and industry utilization averaged in the low 80% during the quarter. Significant excess housing inventories continue to put downward pressure on new residential construction and the outlook for residential construction remains weak.
GYPSUM WALLBOARD
Gypsum Wallboard revenues for the second quarter totaled $88.6 million, a 36% decrease from the $137.6 million for the same quarter a year ago. Gypsum Wallboard's second quarter operating earnings were $15.2 million, down 74% from the $58.8 million for the same quarter last year. The revenue and earnings decline for the quarter resulted primarily from lower sales prices. The average net sales price for this fiscal year's second quarter was $110 per MSF, 37% below the $176 per MSF for the same quarter last year. Gypsum Wallboard sales volume of 612 million square feet (MMSF) for the quarter declined 7% from the prior year's second quarter.
CEMENT
Operating earnings from Cement increased 4% to $36.3 million for the second quarter this year from $35.0 million for the same quarter last year. Prior year second quarter cement earnings include approximately $5.2 million related to (i) cash distributions received as a result of the industry settlement of the dispute regarding antidumping duties on cement from Mexico and (ii) the receipt of insurance proceeds related to our Mountain Cement operations. Excluding these items, operating earnings from cement would have increased 22% from the prior year's second quarter. Cement revenues, including joint venture and intersegment revenues, for the second quarter totaled $101.1 million, 10% greater than the $91.5 million for the same quarter a year ago. Cement sales volume for the second quarter were a record high for Eagle and totaled 1,008,000 tons, 9% above the 924,000 tons for the same quarter last year. Eagle was able to meet these increased market requirements with additional manufacturing production from our recently expanded Illinois Cement plant and by continuing to supplement our markets with lower margin purchased cement. Eagle's purchased cement sales volumes for the quarter declined to approximately 163,000 tons, or 16% of total sales volume, versus approximately 192,000 tons in the prior year's second quarter. The average net sales price for this fiscal year's second quarter was $96 per ton, 3% greater than the $93 per ton for the same quarter last year.
PAPERBOARD
Eagle's Paperboard operation reported second quarter revenues, including sales to Eagle's Wallboard operations, of $35.1 million which was 6% greater than last year's second quarter. Paperboard operating earnings of $4.1 million for the second quarter this year were down 3% from last year's second quarter due primarily to a larger percentage of sales of low margin containerboard grade paper and higher costs of recycled fiber. For this year's second quarter, Paperboard sales volume was 72,000 tons, up 3% from last year's second quarter; however, the percentage of gypsum paper sales declined to 73% in the second quarter from 80% in the prior year's second quarter. This year's second quarter average net sales price of $476 per ton was 4% above last year's second quarter average net sales price of $458 per ton.
CONCRETE AND AGGREGATES
Revenues from Concrete and Aggregates were $24.8 million for this year's second quarter, 11% less than the $28.0 million for the second quarter a year ago. Concrete and Aggregates reported a $4.1 million operating profit for this year's second quarter, down 18% from the $5.0 million operating profit for the same quarter last year, primarily due to lower sales volumes in both Concrete and Aggregates.
Concrete sales volume decreased 11% for the second quarter this year to 220,000 cubic yards from 248,000 cubic yards for the same quarter last year. Our Concrete quarterly average net sales price of $75 per cubic yard for the second quarter of fiscal 2008 was a record high for Eagle and was 7% higher than the $71 per cubic yard for the second quarter a year ago. Our Aggregates operation reported sales volume of 1.2 million tons for the current quarter, 20% less than the 1.5 million tons reported in the second quarter last year. Our Aggregates quarterly average net sales price was $7.02 during the second quarter and was 1% above last year's second 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 sales 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 2:00 p.m. Eastern Time (1:00 p.m. Central Time) on Tuesday, October 23, 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, 2007 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007. 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.
For additional information, contact at 214/432-2000.
Steven R. Rowley
President and Chief Executive Officer
Arthur R. Zunker, Jr.
Senior Vice President and Chief Financial Officer
(1) Summary of Consolidated Earnings
(2) Revenues and Earnings by Lines of Business (Quarter)
(3) Revenues and Earnings by Lines of Business (Six 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 September 30,
2007 2006 Change
Revenues $210,463 $256,468 -18%
Earnings Before Income Taxes $50,361 $99,192 -49%
Net Earnings $34,779 $66,095 -47%
Earnings Per Share:
- Basic $0.74 $1.33 -44%
- Diluted $0.73 $1.32 -44%
Average Shares Outstanding:
- Basic 46,729,756 49,583,882 -6%
- Diluted 47,336,936 50,221,791 -6%
Six Months Ended September 30,
2007 2006 Change
Revenues $431,700 $516,442 -16%
Earnings Before Income Taxes $107,824 $188,948 -43%
Net Earnings $73,481 $125,187 -41%
Earnings Per Share:
- Basic $1.55 $2.51 -38%
- Diluted $1.53 $2.47 -38%
Average Shares Outstanding:
- Basic 47,337,065 49,957,401 -5%
- Diluted 47,962,356 50,684,030 -5%
Eagle Materials Inc.
Attachment 2
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Quarter Ended September 30,
2007 2006 Change
Revenues*
Gypsum Wallboard $88,563 $137,587 -36%
42% 54%
Cement (Wholly Owned) 74,922 70,085 7%
36% 27%
Paperboard 21,868 18,825 16%
10% 7%
Concrete & Aggregates 24,494 27,517 -11%
12% 11%
Other, net 616 2,454 -75%
0% 1%
Total $210,463 $256,468 -18%
100% 100%
Operating Earnings
Gypsum Wallboard $15,246 $58,818 -74%
25% 56%
Cement:
Wholly Owned 27,059 23,967 13%
Joint Venture 9,274 11,001 -16%
36,333 34,968 4%
60% 33%
Paperboard 4,071 4,190 -3%
7% 4%
Concrete & Aggregates 4,102 5,011 -18%
7% 5%
Other, net 616 2,454 -75%
1% 2%
Total Operating Earnings 60,368 105,441 -43%
100% 100%
Corporate General Expenses (5,746) (5,133)
Interest Expense, net (4,261) (1,116)
Earnings Before
Income Taxes $50,361 $99,192 -49%
*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)
Six Months Ended September 30,
2007 2006 Change
Revenues*
Gypsum Wallboard $193,390 $285,274 -32%
45% 55%
Cement (Wholly Owned) 146,372 138,385 6%
34% 27%
Paperboard 42,514 38,316 11%
10% 7%
Concrete & Aggregates 48,286 51,188 -6%
11% 10%
Other, net 1,138 3,279 -65%
0% 1%
Total $431,700 $516,442 -16%
100% 100%
Operating Earnings
Gypsum Wallboard $42,420 $122,793 -65%
34% 61%
Cement:
Wholly Owned 48,477 39,926 21%
Joint Venture 15,450 16,998 -9%
63,927 56,924 12%
51% 28%
Paperboard 10,136 9,457 7%
8% 5%
Concrete & Aggregates 8,151 8,786 -7%
6% 4%
Other, net 1,138 3,279 -65%
1% 2%
Total Operating Earnings 125,772 201,239 -38%
100% 100%
Corporate General Expenses (10,093) (9,412)
Interest Expense, net (7,855) (2,879)
Earnings Before Income
Taxes $107,824 $188,948 -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 Joint Venture Revenues
(unaudited)
Sales Volume
Quarter Ended Six Months Ended
September 30, September 30,
2007 2006 Change 2007 2006 Change
Gypsum Wallboard
(MMSF's) 612 657 -7% 1,254 1,392 -10%
Cement (M Tons):
Wholly Owned 753 715 5% 1,458 1,422 3%
Joint Venture 255 209 22% 513 412 25%
1,008 924 9% 1,971 1,834 7%
Paperboard (M Tons):
Internal 24 27 -11% 50 58 -14%
External 48 43 12% 93 89 4%
72 70 3% 143 147 -3%
Concrete
(M Cubic Yards) 220 248 -11% 430 471 -9%
Aggregates (M Tons) 1,178 1,469 -20% 2,341 2,768 -15%
Average Net Sales Price*
Quarter Ended Six Months Ended
September 30, September 30,
2007 2006 Change 2007 2006 Change
Gypsum Wallboard $110.22 $175.69 -37% $119.43 $171.55 -30%
(MSF)
Cement (Ton) $95.68 $92.68 3% $95.97 $91.86 4%
Paperboard (Ton) $476.26 $457.64 4% $478.75 $448.46 7%
Concrete
(Cubic Yard) $75.44 $70.80 7% $75.32 $69.83 8%
Aggregates (Ton) $7.02 $6.98 1% $7.08 $6.79 4%
*Net of freight and delivery costs billed to customers.
Intersegment and Cement Revenues
Quarter Ended Six Months Ended
September 30, September 30,
2007 2006 2007 2006
Intersegment Revenues:
Cement $2,763 $2,581 $4,831 $4,837
Paperboard 13,256 14,156 27,395 29,383
Concrete and Aggregates 351 442 680 759
$16,370 $17,179 $32,906 $34,979
Cement Revenues:
Wholly Owned $74,922 $70,085 $146,372 $138,385
Joint Venture 23,455 18,868 47,028 37,080
$98,377 $88,953 $193,400 $175,465
Eagle Materials Inc.
Attachment 5
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
September 30, March 31,
2007 2006 2007*
ASSETS
Current Assets -
Cash and Cash Equivalents $20,965 $76,317 $17,215
Accounts and Notes
Receivable, net 76,861 97,563 77,486
Inventories 81,273 67,641 78,908
Total Current Assets 179,099 241,521 173,609
Property, Plant and
Equipment - 1,047,206 919,170 986,821
Less: Accumulated
Depreciation (352,963) (316,488) (333,641)
Property, Plant and
Equipment, net 694,243 602,682 653,180
Notes Receivable 7,992 - 8,270
Investments in Joint Venture 41,312 35,096 43,862
Goodwill and Intangibles 69,900 67,536 70,218
Other Assets 100,434 17,930 22,271
$1,092,980 $964,765 $971,410
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities -
Accounts Payable $65,320 $51,484 $52,359
Federal Income Taxes
Payable 29,937 12,437 -
Accrued Liabilities 71,340 57,669 55,665
Total Current Liabilities 166,597 121,590 108,024
Senior Notes 200,000 200,000 200,000
Bank Credit Facility 120,000 - -
Deferred Income Taxes 186,742 115,288 117,340
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
44,351,625, 49,058,188 and
47,909,103 Shares,
respectively. 444 491 479
Capital in Excess of Par Value - - -
Accumulated Other
Comprehensive Losses (850) (1,404) (850)
Retained Earnings 420,047 528,800 546,417
Total Stockholders' Equity 419,641 527,887 546,046
$1,092,980 $964,765 $971,410
* From audited financial statements.
SOURCE Eagle Materials Inc.
http://www.eaglematerials.com
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