Eagle Materials
Jul 27, 2017

Eagle Materials Reports First Quarter EPS up 22% on Record Revenues

DALLAS--(BUSINESS WIRE)-- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2018 ended June 30, 2017. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior year's first quarter):

Company First Quarter Results

First quarter earnings before interest and income taxes increased 22%, reflecting improved sales volumes and net sales prices across nearly all businesses and the financial results of the recently acquired cement plant in Fairborn, Ohio and related assets (the Fairborn Business).

Cement, Concrete and Aggregates

Cement revenues for the first quarter, including joint venture and intersegment revenues, totaled $182.9 million, which was 26% higher than the same quarter last year. The average net sales price for this quarter was $106.95 per ton, 6% higher than the same quarter last year. Total Cement sales volumes for the quarter were over 1.5 million tons, 21% higher than the same quarter a year ago. Like-for-like average net cement sales prices and sales volumes increased 4% and 7%, respectively, versus the first quarter of fiscal 2017 (comparison excludes cement sales from the Fairborn Business since its acquisition date).

Operating earnings from Cement for the first quarter were a record $43.2 million and 37% greater than the same quarter a year ago. The earnings improvement was driven primarily by improved average net cement sales prices and cement sales volumes and earnings from the Fairborn Business. During the quarter, our Nevada cement plant experienced reduced production in connection with the installation of certain pollution control equipment to enable the plant to burn solid-waste fuels. The ability to use solid-waste fuel will lower energy costs in the future. The reduced production negatively affected the absorption of operating costs at the cement plant during the quarter. The project is expected to be completed in the fall.

Concrete and Aggregates reported revenues for the first quarter of $43.5 million, an increase of 26%. First quarter operating earnings were $6.0 million for the first quarter, a 63% improvement from the same quarter a year ago, reflecting improved concrete and aggregates pricing and concrete sales volumes.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard revenues for the first quarter totaled $153.9 million, which were 9% greater than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $159.01 per MSF, 1% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 654 million square feet (MMSF) represents an 11% increase from the same quarter last year. Paperboard sales volumes for the quarter were 79,000 tons, 5% less than the same quarter a year ago, reflecting the timing of third-party purchases. The average Paperboard net sales price this quarter was $549.69 per ton, 10% greater than the same quarter a year ago.

Gypsum Wallboard and Paperboard reported first quarter operating earnings of $48.8 million, down 4% from the same quarter last year. The earnings decline primarily reflects increased operating costs at our papermill due to the timing of our annual maintenance outage and higher recycled fiber costs, partially offset by improved Gypsum Wallboard sales volumes and sales prices.

Oil and Gas Proppants

Oil and Gas Proppants reported first quarter revenues of $18.9 million, a 271% increase from the prior year reflecting improved frac sand sales volumes and net sales prices. The first quarter's operating loss of $2.0 million includes depreciation, depletion and amortization of $7.6 million.

Details of Financial Results

We conduct one of our cement plant operations, Texas Lehigh Cement Company LP, through a 50/50 joint venture (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 3 for a reconciliation of the amounts referred to above.

About Eagle Materials Inc.

Eagle Materials Inc. manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, Concrete and Aggregates, and Oil and Gas Proppants from 40 facilities across the US. Eagle is headquartered in Dallas, Texas.

Eagle's senior management will conduct a conference call to discuss the financial results, forward-looking information and other matters at 8:30 a.m. Eastern Time (7:30 a.m. Central Time) on July 27, 2017. The conference call will be webcast simultaneously on the Eagle 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 Eagle 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; the fact that our products are commodities and that prices for our products are subject to material fluctuation due to market conditions and other factors beyond our control; availability of raw materials; changes in energy costs including, without limitation, natural gas, coal and oil; changes in the cost and availability of transportation; unexpected operational difficulties, including unexpected maintenance costs, equipment downtime and interruption of production; material nonpayment or non-performance by any of our key customers; fluctuations in activity in the oil and gas industry, including the level of fracturing activities and the demand for frac sand; inability to timely execute announced capacity expansions; difficulties and delays in the development of new business lines; governmental regulation and changes in governmental and public policy (including, without limitation, climate change regulation); possible outcomes of pending or future litigation or arbitration proceedings; changes in economic conditions specific to any one or more of the Company's markets; competition; a cyber-attack or data security breach; announced increases in capacity in the gypsum wallboard, cement and frac sand industries; changes in the demand for residential housing construction or commercial construction; risks related to pursuit of acquisitions, joint ventures and other transactions; 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, without limitation, natural gas, coal and oil) 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, 2017. This report is filed with the Securities and Exchange Commission. With respect to our completed acquisition of the Fairborn Business as described in this press release, factors, risks and uncertainties that may cause actual events and developments to vary materially from those anticipated in such forward-looking statements include, but are not limited to, failure to realize any expected synergies from or other benefits of the transaction, possible negative effects of consummation of the transaction, significant transaction or ownership transition costs, unknown liabilities or other adverse developments affecting the Fairborn Business, including the results of operations of the Fairborn Business prior and after the closing, the effect on the Fairborn Business of the same or similar factors discussed above to which our business is subject, including changes in market conditions in the construction industry and general economic and business conditions that may affect us following the acquisition. 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.

 
Attachment 1 Statement of Consolidated Earnings
Attachment 2 Revenues and Earnings by Lines of Business (Quarter)
Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
Attachment 4 Consolidated Balance Sheets
Attachment 5 Depreciation, Depletion and Amortization by Lines of Business
 
 
 

Eagle Materials Inc.

Attachment 1

 

Eagle Materials Inc.

Statement of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
 
    Quarter Ended
June 30,
  2017         2016  
 
Revenues $ 366,121 $ 297,504
 
Cost of Goods Sold   280,062     225,549  
 
Gross Profit 86,059 71,955
 
Equity in Earnings of Unconsolidated Joint Venture 9,876 7,980
Corporate General and Administrative Expenses (9,679 ) (9,833 )
Other, net   757     1,075  
 
Earnings before Interest and Income Taxes 87,013 71,177
Interest Expense, net  

(7,483

)

 

(3,901

)

 
Earnings before Income Taxes 79,530 67,276
 
Income Tax Expense   (24,648 )   (21,932 )
 
Net Earnings $ 54,882   $ 45,344  
 
 

 

NET EARNINGS PER SHARE
Basic $ 1.14   $ 0.94  
Diluted $ 1.13   $ 0.93  
 
AVERAGE SHARES OUTSTANDING
Basic   48,121,890     48,014,195  
Diluted   48,655,553     48,522,207  
 
 

Eagle Materials Inc.

Attachment 2

 

Eagle Materials Inc.

Revenues and Segment Operating Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 
    Quarter Ended
June 30,
  2017         2016  
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 126,813 $ 113,262
Gypsum Paperboard   27,056     28,309  
153,869 141,571
 
Cement (Wholly Owned) 149,836 116,369
 
Oil and Gas Proppants 18,910 5,096
 
Concrete and Aggregates   43,506     34,468  
 
Total $ 366,121   $ 297,504  

 

Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 43,821 $ 39,336
Gypsum Paperboard   4,938     11,227  
48,759 50,563
 
Cement:
Wholly Owned 33,305 23,620
Joint Venture   9,876     7,980  
43,181 31,600
 
Oil and Gas Proppants (2,026 ) (5,912 )
 
Concrete and Aggregates 6,021 3,684
 
Other, net   757     1,075  
 
Sub-total $ 96,692 $ 81,010
 

Corporate General and Administrative Expense

  (9,679 )   (9,833 )
 

Earnings before Interest and Income Taxes

$ 87,013   $ 71,177  
 

* Net of Intersegment and Joint Venture Revenues listed on Attachment 3.

 
 

Eagle Materials Inc.

Attachment 3

 
Eagle Materials Inc.
Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(unaudited)
 
    Sales Volume
Quarter Ended
June 30,
2017     2016     Change
 
Gypsum Wallboard (MMSF's) 654 587 +11 %
 
Cement (M Tons):
Wholly Owned 1,268 1,033 +23 %
Joint Venture 243 218 +11 %
1,511 1,251 +21 %
 
Paperboard (M Tons):
Internal 31 29 +7 %
External 48 54 -11 %
79 83 -5 %
 
Concrete (M Cubic Yards) 357 287 +24 %
 
Aggregates (M Tons) 895 944 -5 %
 
Frac Sand (M Tons) 315 74 +326 %
 
    Average Net Sales Price *
Quarter Ended
June 30,
2017     2016     Change
 
Gypsum Wallboard (MSF) $ 159.01 $ 157.69 +1 %
Cement (Ton) $ 106.95 $ 100.63 +6 %
Paperboard (Ton) $ 549.69 $ 498.92 +10 %
Concrete (Cubic Yard) $ 98.96 $ 92.73 +7 %
Aggregates (Ton) $ 9.22 $ 8.30 +11 %
 

* Net of freight and delivery costs billed to customers.

 
    Intersegment and Cement Revenues

($ in thousands)

Quarter Ended
June 30,
2017     2016
Intersegment Revenues:
Cement $ 4,929 $ 3,535
Paperboard 17,357 14,506
Concrete and Aggregates   413   283
$ 22,699 $ 18,324
 
Cement Revenues:
Wholly Owned $ 149,836 $ 116,369
Joint Venture   28,170   24,888
$ 178,006 $ 141,257
 
 

Eagle Materials Inc.

Attachment 4

 
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
 
    June 30,     March 31,
2017     2016 2017*

ASSETS

Current Assets -
Cash and Cash Equivalents $ 12,233 $ 9,180 $ 6,561
Accounts and Notes Receivable, net 175,002 142,298 136,313
Inventories 244,886 240,999 252,846
Prepaid and Other Assets   8,181     8,020     4,904  
Total Current Assets   440,302     400,497     400,624  
Property, Plant and Equipment - 2,454,800 2,083,592 2,439,438
Less: Accumulated Depreciation   (919,732 )   (837,242 )   (892,601 )
Property, Plant and Equipment, net 1,535,068 1,246,350 1,546,837
Investments in Joint Venture 53,750 48,700 48,620
Notes Receivable 653 2,652 815
Goodwill and Intangibles 234,707 163,298 235,505
Other Assets   15,110     27,588     14,723  
$ 2,279,590   $ 1,889,085   $ 2,247,124  

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities -
Accounts Payable $ 78,763 $ 61,322 $ 92,193
Accrued Liabilities 53,288 40,509 55,379
Federal Income Tax Payable 26,462 9,919 733
Current Portion of Senior Notes   81,214     8,000     81,214  
Total Current Liabilities   239,727     119,750     229,519  
Long-term Liabilities 42,026 58,642 42,878
Bank Credit Facility 200,000 373,000 225,000
Private Placement Senior Unsecured Notes 36,500 117,714 36,500
4.500% Senior Unsecured Notes due 2026 343,921 - 343,753
Deferred Income Taxes 162,329 163,536 166,024
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 48,547,960; 48,391,969 and 48,453,268 Shares, respectively

485 484 485
Capital in Excess of Par Value 151,141 144,076 149,014
Accumulated Other Comprehensive Losses (7,199 ) (11,097 ) (7,396 )
Retained Earnings   1,110,660     922,980     1,061,347  
Total Stockholders' Equity   1,255,087     1,056,443     1,203,450  
$ 2,279,590   $ 1,889,085   $ 2,247,124  
 

*From audited financial statements.

 
 

Eagle Materials Inc.

Attachment 5

 
Eagle Materials Inc.

Depreciation, Depletion and Amortization by Lines of Business

(dollars in thousands)
(unaudited)
 
 
The following presents depreciation, depletion and amortization by segment for the quarters ended June 30, 2017 and 2016:
 
    Depreciation, Depletion and
Amortization

($ in thousands)

Quarter Ended
June 30,
2017     2016
 
Cement $ 12,479 $ 8,611
Gypsum Wallboard 4,442 4,762
Paperboard 2,137 2,100
Oil and Gas Proppants 7,606 5,184
Concrete and Aggregates 1,914 1,749
Other   369   457
$ 28,947 $ 22,863

Eagle Materials Inc.
David B. Powers, 214-432-2000
President and Chief Executive Officer
or
D. Craig Kesler, 214-432-2000
Executive Vice President and Chief Financial Officer
or
Robert S. Stewart, 214-432-2000
Executive Vice President, Strategy, Corporate Development and Communications

Source: Eagle Materials Inc.

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