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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

September 30, 2020

Commission File Number 1-12984

 

EAGLE MATERIALS INC.

(Exact name of registrant as specified in its charter)

 

Delaware (State of Incorporation)

75-2520779 (I.R.S. Employer Identification No.)

5960 Berkshire Lane, Suite 900, Dallas, Texas 75225 (Address of principal executive offices)

(214) 432-2000 (Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value $.01 per share)

 

EXP

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES      NO  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes      No  

As of October 27, 2020, the number of outstanding shares of common stock was:

 

Class

 

Outstanding Shares

Common Stock, $.01 Par Value

 

41,817,942

 

 

 


TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION (unaudited)

 

 

 

 

 

Page

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three and Six Months Ended September 30, 2020 and 2019

 

1

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended September 30, 2020 and 2019

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2020, and March 31, 2020

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2020 and 2019

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended September 30, 2020 and 2019

 

5

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

39

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

39

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

40

 

 

 

 

 

Item 1a.

 

Risk Factors

 

40

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

 

Item 4.

 

Mine Safety Information

 

41

 

 

 

 

 

Item 6.

 

Exhibits

 

42

 

 

 

 

 

SIGNATURES

 

43

 

 

 

 


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

 

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(dollars in thousands, except share and per share data)

 

Revenue

 

$

447,684

 

 

$

400,569

 

 

$

874,673

 

 

$

755,934

 

Cost of Goods Sold

 

 

324,835

 

 

 

291,549

 

 

 

649,527

 

 

 

568,820

 

Gross Profit

 

 

122,849

 

 

 

109,020

 

 

 

225,146

 

 

 

187,114

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

10,577

 

 

 

12,357

 

 

 

18,373

 

 

 

21,789

 

Corporate General and Administrative Expense

 

 

(11,109

)

 

 

(13,458

)

 

 

(28,898

)

 

 

(34,712

)

Gain on Sale of Businesses

 

 

 

 

 

 

 

 

51,973

 

 

 

 

Other Non-Operating Income (Loss)

 

 

(90

)

 

 

585

 

 

 

(399

)

 

 

723

 

Interest Expense, Net

 

 

(12,556

)

 

 

(10,137

)

 

 

(26,597

)

 

 

(18,983

)

Earnings from Continuing Operations before Income Taxes

 

 

109,671

 

 

 

98,367

 

 

 

239,598

 

 

 

155,931

 

Income Taxes

 

 

(19,800

)

 

 

(23,303

)

 

 

(52,636

)

 

 

(37,534

)

Earnings from Continuing Operations

 

 

89,871

 

 

 

75,064

 

 

 

186,962

 

 

 

118,397

 

Earnings (Loss) from Discontinued Operations, net of Income Taxes

 

 

6,163

 

 

 

(3,271

)

 

 

5,278

 

 

 

(5,300

)

Net Earnings

 

$

96,034

 

 

$

71,793

 

 

$

192,240

 

 

$

113,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

2.17

 

 

$

1.81

 

 

$

4.51

 

 

$

2.77

 

Discontinued Operations

 

 

0.15

 

 

 

(0.08

)

 

 

0.13

 

 

 

(0.12

)

Net Earnings

 

$

2.32

 

 

$

1.73

 

 

$

4.64

 

 

$

2.65

 

DILUTED EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

2.16

 

 

$

1.80

 

 

$

4.49

 

 

$

2.75

 

Discontinued Operations

 

 

0.15

 

 

 

(0.08

)

 

 

0.13

 

 

 

(0.12

)

Net Earnings

 

$

2.31

 

 

$

1.72

 

 

$

4.62

 

 

$

2.63

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

41,450,013

 

 

 

41,572,127

 

 

 

41,430,511

 

 

 

42,714,896

 

Diluted

 

 

41,649,319

 

 

 

41,833,775

 

 

 

41,606,401

 

 

 

42,985,715

 

CASH DIVIDENDS PER SHARE

 

$

 

 

$

0.10

 

 

$

0.10

 

 

$

0.20

 

 

See notes to unaudited consolidated financial statements.

 

1


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (unaudited)

 

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(dollars in thousands)

 

Net Earnings

 

$

96,034

 

 

$

71,793

 

 

$

192,240

 

 

$

113,097

 

Net Actuarial Change in Defined Benefit Plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss

 

 

34

 

 

 

43

 

 

 

67

 

 

 

88

 

Tax expense

 

 

(8

)

 

 

(10

)

 

 

(16

)

 

 

(20

)

Comprehensive Earnings

 

$

96,060

 

 

$

71,826

 

 

$

192,291

 

 

$

113,165

 

 

See notes to unaudited consolidated financial statements.

 

2


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

September 30,

 

 

March 31,

 

 

 

2020

 

 

2020

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets -

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

200,858

 

 

$

118,648

 

Restricted Cash

 

 

5,000

 

 

 

 

Accounts and Notes Receivable, net

 

 

177,138

 

 

 

145,808

 

Inventories

 

 

227,106

 

 

 

272,121

 

Income Tax Receivable

 

 

28,671

 

 

 

128,413

 

Prepaid and Other Assets

 

 

9,634

 

 

 

6,135

 

Current Assets of Discontinued Operations

 

 

 

 

 

7,092

 

Total Current Assets

 

 

648,407

 

 

 

678,217

 

Property, Plant, and Equipment, net

 

 

1,706,200

 

 

 

1,756,417

 

Notes Receivable

 

 

8,287

 

 

 

9,139

 

Investment in Joint Venture

 

 

74,331

 

 

 

73,958

 

Operating Lease Right-of-Use Assets

 

 

28,139

 

 

 

29,483

 

Goodwill and Intangible Assets, net

 

 

394,524

 

 

 

396,463

 

Other Assets

 

 

11,395

 

 

 

10,604

 

Assets of Discontinued Operations

 

 

 

 

 

6,739

 

 

 

$

2,871,283

 

 

$

2,961,020

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities -

 

 

 

 

 

 

 

 

Accounts Payable

 

$

80,130

 

 

$

84,183

 

Accrued Liabilities

 

 

76,145

 

 

 

70,442

 

Operating Lease Liabilities

 

 

6,810

 

 

 

6,585

 

Current Liabilities of Discontinued Operations

 

 

 

 

 

8,487

 

Total Current Liabilities

 

 

163,085

 

 

 

169,697

 

Long-term Debt

 

 

1,252,716

 

 

 

1,567,315

 

Noncurrent Operating Lease Liabilities

 

 

37,419

 

 

 

40,239

 

Other Long-term Liabilities

 

 

41,586

 

 

 

33,832

 

Deferred Income Taxes

 

 

208,446

 

 

 

166,667

 

Liabilities of Discontinued Operations

 

 

 

 

 

15,427

 

Total Liabilities

 

 

1,703,252

 

 

 

1,993,177

 

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 41,816,942 and 41,649,041 Shares, respectively

 

 

418

 

 

 

416

 

Capital in Excess of Par Value

 

 

18,584

 

 

 

10,943

 

Accumulated Other Comprehensive Losses

 

 

(3,276

)

 

 

(3,581

)

Retained Earnings

 

 

1,152,305

 

 

 

960,065

 

Total Stockholders’ Equity

 

 

1,168,031

 

 

 

967,843

 

 

 

$

2,871,283

 

 

$

2,961,020

 

 

See notes to the unaudited consolidated financial statements.

 

3


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

For the Six Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

 

(dollars in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net Earnings

 

$

192,240

 

 

$

113,097

 

Adjustments to Reconcile Net Earnings to Net Cash Provided

by Operating Activities, Net of Effect of Non-Cash Activity -

 

 

 

 

 

 

 

 

Depreciation, Depletion and Amortization

 

 

64,199

 

 

 

56,333

 

Deferred Income Tax Provision

 

 

41,779

 

 

 

7,520

 

Stock Compensation Expense

 

 

8,275

 

 

 

12,137

 

Gain on Sale of Subsidiaries

 

 

(61,203

)

 

 

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

(18,373

)

 

 

(21,789

)

Distributions from Joint Venture

 

 

18,000

 

 

 

15,000

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

Accounts and Notes Receivable

 

 

(27,746

)

 

 

(51,242

)

Inventories

 

 

38,645

 

 

 

35,562

 

Accounts Payable and Accrued Liabilities

 

 

5,998

 

 

 

423

 

Other Assets

 

 

(3,179

)

 

 

9,244

 

Income Taxes Payable (Receivable)

 

 

99,742

 

 

 

8,411

 

Net Cash Provided by Operating Activities

 

 

358,377

 

 

 

184,696

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to Property, Plant, and Equipment

 

 

(40,676

)

 

 

(60,007

)

Acquisition Spending

 

 

 

 

 

(30,872

)

Proceeds from Sale of Businesses

 

 

91,022

 

 

 

 

Net Cash Provided by (Used in) Investing Activities

 

 

50,346

 

 

 

(90,879

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Increase (Decrease) in Credit Facility

 

 

(315,000

)

 

 

275,000

 

Dividends Paid to Stockholders

 

 

(4,163

)

 

 

(8,815

)

Purchase and Retirement of Common Stock

 

 

 

 

 

(313,887

)

Proceeds from Stock Option Exercises

 

 

498

 

 

 

1,767

 

Payment of Debt Issuance Costs

 

 

(1,718

)

 

 

 

Shares Redeemed to Settle Employee Taxes on Stock Compensation

 

 

(1,130

)

 

 

(2,799

)

Net Cash Used in Financing Activities

 

 

(321,513

)

 

 

(48,734

)

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

 

87,210

 

 

 

45,083

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

118,648

 

 

 

8,601

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

 

$

205,858

 

 

$

53,684

 

 

See notes to the unaudited consolidated financial statements.

 

4


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

 

 

Common

Stock

 

 

Capital in

Excess of

Par Value

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2019

 

$

451

 

 

$

 

 

$

1,212,352

 

 

$

(3,316

)

 

$

1,209,487

 

Net Earnings

 

 

 

 

 

 

 

 

41,304

 

 

 

 

 

 

41,304

 

Stock Option Exercises and Restricted Share Vesting

 

 

 

 

 

396

 

 

 

 

 

 

 

 

 

396

 

Purchase and Retirement of Common Stock

 

 

(23

)

 

 

(7,748

)

 

 

(190,584

)

 

 

 

 

 

(198,355

)

Dividends to Stockholders

 

 

 

 

 

 

 

 

(4,316

)

 

 

 

 

 

(4,316

)

Stock Compensation Expense

 

 

1

 

 

 

8,218

 

 

 

 

 

 

 

 

 

8,219

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(866

)

 

 

 

 

 

 

 

 

(866

)

Cumulative Effect of Change in Accounting for Leases

 

 

 

 

 

 

 

 

(636

)

 

 

 

 

 

(636

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

33

 

Balance at June 30, 2019

 

$

429

 

 

$

 

 

$

1,058,120

 

 

$

(3,283

)

 

$

1,055,266

 

Net Earnings

 

 

 

 

 

 

 

 

71,793

 

 

 

 

 

 

71,793

 

Stock Option Exercises and Restricted Share Vesting

 

 

 

 

 

1,371

 

 

 

 

 

 

 

 

 

1,371

 

Purchase and Retirement of Common Stock

 

 

(13

)

 

 

(366

)

 

 

(115,153

)

 

 

 

 

 

(115,532

)

Dividends to Stockholders

 

 

 

 

 

 

 

 

(4,163

)

 

 

 

 

 

(4,163

)

Stock Compensation Expense

 

 

 

 

 

3,918

 

 

 

 

 

 

 

 

 

3,918

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(1,933

)

 

 

 

 

 

 

 

 

(1,933

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

35

 

Balance at September 30, 2019

 

$

416

 

 

$

2,990

 

 

$

1,010,597

 

 

$

(3,248