10-Q
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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

December 31, 2021

Commission File Number 1-12984

 

https://cdn.kscope.io/68ddb7fb8481cbead4760c03dab1c52c-img28622956_0.jpg 

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 January 24, 2022, the number of outstanding shares of common stock was:

 

Class

 

Outstanding Shares

Common Stock, $.01 Par Value

 

39,505,356

 

 

 


TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION (unaudited)

 

 

 

 

 

Page

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three and Nine Months Ended December 31, 2021 and 2020

 

1

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Earnings for the Three and Nine Months Ended December 31, 2021 and 2020

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2021, and March 31, 2021

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2021 and 2020

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended December 31, 2021 and 2020

 

5

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

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

 

21

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

38

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

38

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

39

 

 

 

 

 

Item 1a.

 

Risk Factors

 

39

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

 

 

 

 

 

Item 4.

 

Mine Safety Information

 

39

 

 

 

 

 

Item 6.

 

Exhibits

 

40

 

 

 

 

 

SIGNATURES

 

41

 

 

 

 


 

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

 

 

 

For the Three Months Ended December 31,

 

 

For the Nine Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

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

 

Revenue

 

$

462,941

 

 

$

404,667

 

 

$

1,448,405

 

 

$

1,279,340

 

Cost of Goods Sold

 

 

324,355

 

 

 

291,288

 

 

 

1,027,967

 

 

 

940,815

 

Gross Profit

 

 

138,586

 

 

 

113,379

 

 

 

420,438

 

 

 

338,525

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

8,555

 

 

 

10,083

 

 

 

24,785

 

 

 

28,456

 

Corporate General and Administrative Expense

 

 

(12,851

)

 

 

(11,327

)

 

 

(32,986

)

 

 

(40,225

)

Premium Paid on Early Retirement of Senior Notes

 

 

 

 

 

 

 

 

(8,407

)

 

 

 

Gain on Sale of Businesses

 

 

 

 

 

 

 

 

 

 

 

51,973

 

Other Non-Operating Income

 

 

3,207

 

 

 

2,297

 

 

 

5,941

 

 

 

1,898

 

Interest Expense, net

 

 

(5,651

)

 

 

(9,360

)

 

 

(24,891

)

 

 

(35,957

)

Earnings from Continuing Operations before Income Taxes

 

 

131,846

 

 

 

105,072

 

 

 

384,880

 

 

 

344,670

 

Income Taxes

 

 

(29,367

)

 

 

(23,879

)

 

 

(84,949

)

 

 

(76,515

)

Earnings from Continuing Operations

 

 

102,479

 

 

 

81,193

 

 

 

299,931

 

 

 

268,155

 

Earnings from Discontinued Operations, net of Income Taxes

 

 

 

 

 

 

 

 

 

 

 

5,278

 

Net Earnings

 

$

102,479

 

 

$

81,193

 

 

$

299,931

 

 

$

273,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

2.56

 

 

$

1.96

 

 

$

7.30

 

 

$

6.47

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

0.13

 

Net Earnings

 

$

2.56

 

 

$

1.96

 

 

$

7.30

 

 

$

6.60

 

DILUTED EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

2.53

 

 

$

1.94

 

 

$

7.23

 

 

$

6.43

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

0.13

 

Net Earnings

 

$

2.53

 

 

$

1.94

 

 

$

7.23

 

 

$

6.56

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,049,456

 

 

 

41,494,149

 

 

 

41,096,702

 

 

 

41,451,801

 

Diluted

 

 

40,458,049

 

 

 

41,834,590

 

 

 

41,493,339

 

 

 

41,682,541

 

CASH DIVIDENDS PER SHARE

 

$

0.25

 

 

$

 

 

$

0.50

 

 

$

0.10

 

 

See notes to unaudited consolidated financial statements.

 

 

1


 

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

 

 

 

 

For the Three Months Ended December 31,

 

 

For the Nine Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(dollars in thousands)

 

Net Earnings

 

$

102,479

 

 

$

81,193

 

 

$

299,931

 

 

$

273,433

 

Net Actuarial Change in Defined Benefit Plans

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Net Actuarial Loss

 

 

36

 

 

 

34

 

 

 

108

 

 

 

101

 

Tax Expense

 

 

(9

)

 

 

(9

)

 

 

(27

)

 

 

(25

)

Comprehensive Earnings

 

$

102,506

 

 

$

81,218

 

 

$

300,012

 

 

$

273,509

 

 

See notes to unaudited consolidated financial statements.

 

 

2


 

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

 

 

 

December 31,

 

 

March 31,

 

 

 

2021

 

 

2021

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

17,392

 

 

$

263,520

 

Restricted Cash

 

 

 

 

 

5,000

 

Accounts and Notes Receivable, net

 

 

170,661

 

 

 

147,133

 

Inventories

 

 

211,978

 

 

 

235,749

 

Income Tax Receivable

 

 

8,890

 

 

 

2,838

 

Prepaid and Other Assets

 

 

6,426

 

 

 

7,449

 

Total Current Assets

 

 

415,347

 

 

 

661,689

 

Property, Plant, and Equipment, net

 

 

1,626,990

 

 

 

1,659,100

 

Notes Receivable

 

 

8,486

 

 

 

8,419

 

Investment in Joint Venture

 

 

79,434

 

 

 

75,399

 

Operating Lease Right-of-Use Assets

 

 

23,923

 

 

 

25,811

 

Goodwill and Intangible Assets, net

 

 

389,002

 

 

 

392,315

 

Other Assets

 

 

16,939

 

 

 

15,948

 

 

 

$

2,560,121

 

 

$

2,838,681

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts Payable

 

$

99,465

 

 

$

84,171

 

Accrued Liabilities

 

 

87,206

 

 

 

78,840

 

Operating Lease Liabilities

 

 

7,004

 

 

 

6,343

 

Total Current Liabilities

 

 

193,675

 

 

 

169,354

 

Long-term Debt

 

 

837,949

 

 

 

1,008,616

 

Noncurrent Operating Lease Liabilities

 

 

29,960

 

 

 

34,444

 

Other Long-term Liabilities

 

 

37,618

 

 

 

41,291

 

Deferred Income Taxes

 

 

238,671

 

 

 

225,986

 

Total Liabilities

 

 

1,337,873

 

 

 

1,479,691

 

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
39,766,043 and 42,370,878 Shares, respectively

 

 

398

 

 

 

424

 

Capital in Excess of Par Value

 

 

 

 

 

62,497

 

Accumulated Other Comprehensive Losses

 

 

(3,359

)

 

 

(3,440

)

Retained Earnings

 

 

1,225,209

 

 

 

1,299,509

 

Total Stockholders’ Equity

 

 

1,222,248

 

 

 

1,358,990

 

 

 

$

2,560,121

 

 

$

2,838,681

 

 

See notes to the unaudited consolidated financial statements.

 

3


 

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

 

 

 

For the Nine Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

 

(dollars in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Earnings

 

$

299,931

 

 

$

273,433

 

Adjustments to Reconcile Net Earnings to Net Cash Provided
by Operating Activities, Net of Effect of Non-Cash Activity

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

96,478

 

 

 

96,279

 

Write-off of Debt Issuance Costs

 

 

6,101

 

 

 

 

Deferred Income Tax Provision

 

 

12,685

 

 

 

48,392

 

Stock Compensation Expense

 

 

10,637

 

 

 

12,057

 

Gain on Sale of Subsidiaries

 

 

 

 

 

(61,203

)

Equity in Earnings of Unconsolidated Joint Venture

 

 

(24,785

)

 

 

(28,456

)

Distributions from Joint Venture

 

 

20,750

 

 

 

27,500

 

Changes in Operating Assets and Liabilities

 

 

 

 

 

 

Accounts and Notes Receivable

 

 

(23,595

)

 

 

6,859

 

Inventories

 

 

23,771

 

 

 

37,084

 

Accounts Payable and Accrued Liabilities

 

 

13,629

 

 

 

5,572

 

Other Assets

 

 

(672

)

 

 

(2,013

)

Income Taxes Payable (Receivable)

 

 

(6,052

)

 

 

126,513

 

Net Cash Provided by Operating Activities

 

 

428,878

 

 

 

542,017

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Additions to Property, Plant, and Equipment

 

 

(55,188

)

 

 

(45,541

)

Proceeds from Sale of Businesses

 

 

 

 

 

91,022

 

Net Cash Provided by (Used in) Investing Activities

 

 

(55,188

)

 

 

45,481

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Increase (Decrease) in Credit Facility

 

 

100,000

 

 

 

(560,000

)

Proceeds from 2.500% Senior Unsecured Notes

 

 

743,692

 

 

 

 

Repayment of 4.500% Senior Unsecured Notes

 

 

(350,000

)

 

 

 

Repayment of Term Loan

 

 

(665,000

)

 

 

 

Dividends Paid to Stockholders

 

 

(20,538

)

 

 

(4,163

)

Purchase and Retirement of Common Stock

 

 

(435,975

)

 

 

 

Proceeds from Stock Option Exercises

 

 

20,754

 

 

 

8,649

 

Premium Paid on Early Retirement of Senior Notes

 

 

(8,407

)

 

 

 

Payment of Debt Issuance Costs

 

 

(7,985

)

 

 

(1,718

)

Shares Redeemed to Settle Employee Taxes on Stock Compensation

 

 

(1,359

)

 

 

(1,130

)

Net Cash Used in Financing Activities

 

 

(624,818

)

 

 

(558,362

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

 

(251,128

)

 

 

29,136

 

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

 

 

268,520

 

 

 

118,648

 

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

 

$

17,392

 

 

$

147,784

 

 

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, 2020

 

$

416

 

 

$

10,943

 

 

$

960,065

 

 

$

(3,581

)

 

$

967,843

 

Net Earnings

 

 

 

 

 

 

 

 

96,206

 

 

 

 

 

 

96,206

 

Stock Compensation Expense

 

 

2

 

 

 

4,758

 

 

 

 

 

 

 

 

 

4,760

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(1,130

)

 

 

 

 

 

 

 

 

(1,130

)

Sale of Business with Unfunded Pension Liability

 

 

 

 

 

 

 

 

 

 

 

254

 

 

 

254

 

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

25

 

Balance at June 30, 2020

 

$

418

 

 

$

14,571

 

 

$

1,056,271

 

 

$

(3,302

)

 

$

1,067,958

 

Net Earnings

 

 

 

 

 

 

 

 

96,034

 

 

 

 

 

 

96,034

 

Stock Compensation Expense

 

 

 

 

 

3,515

 

 

 

 

 

 

 

 

 

3,515

 

Stock Option Exercise

 

 

 

 

 

498

 

 

 

 

 

 

 

 

 

498

 

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

26

 

Balance at September 30, 2020

 

$

418

 

 

$

18,584

 

 

$

1,152,305

 

 

$

(3,276

)

 

$

1,168,031

 

Net Earnings

 

 

 

 

 

 

 

 

81,193

 

 

 

 

 

 

81,193

 

Stock Compensation Expense

 

 

 

 

 

3,782

 

 

 

 

 

 

 

 

 

3,782

 

Stock Option Exercises and Restricted Share Vesting

 

 

1

 

 

 

8,150

 

 

 

 

 

 

 

 

 

8,151

 

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

25

 

Balance at December 31, 2020

 

$

419

 

 

$

30,516

 

 

$

1,233,498

 

 

$

(3,251

)

 

$

1,261,182