February 6, 2013

Eagle Materials Inc. Reports Continued Growth in Sales Volumes and Earnings in the Third Quarter

DALLAS--(BUSINESS WIRE)-- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2013 which ended December 31, 2012. Notable items for the quarter include (all comparisons, unless noted, are with the prior-year's third quarter):

  • Revenues of $164.7 million, up 33%
  • Segment operating earnings of $39.9 million, up 91%
  • Adjusted earnings per diluted share of $0.43, up 115%
    • Adjusted earnings per share is a non-GAAP financial measure calculated by excluding non-routine items in the manner described in Attachment 5
    • Total after-tax impact of non-routine items, including costs related to the closing of our acquisition of the Lafarge Target Business, was $2.8 million, or $0.06 per diluted share. See Attachment 5.
  • Earnings per diluted share of $0.37, up 429%

Third quarter sales volumes improved across all business lines. In addition, sales prices improved in all business lines other than Paperboard. Gypsum Wallboard experienced the most significant improvement, with an increase in average net sales prices of 27% as compared with the prior year's third quarter.

On November 30, 2012, Eagle completed its previously announced acquisition of Lafarge North America's Sugar Creek, Missouri and Tulsa, Oklahoma cement plants, as well as related assets, which included six distribution terminals, two aggregates quarries, eight ready-mix concrete plants and a fly ash business (the "Lafarge Target Business"). Eagle used cash proceeds from an equity offering completed on October 3, 2012, along with borrowings under its bank credit facility to fund the purchase. The results of operations of the Lafarge Target Business are included in the results disclosed in this press release for the period from November 30 through December 31, 2012. For information regarding the results of operations of the Lafarge Target Business for certain periods prior to November 30, 2012, including pro forma financial information that combines the results of operations of the Company and the Lafarge Target Business, please see our Form 8-K/A filed on January 23, 2013.

Cement, Concrete and Aggregates

Operating earnings from Cement for the third quarter were $16.6 million, a 7% increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $74.9 million, 22% greater than the same quarter last year. Cement sales volumes for the quarter were 818,000 tons, 17% above the same quarter a year ago. The average net sales price this quarter was $82.68 per ton, 3% higher than the same quarter last year.

Concrete and Aggregates reported a $1.3 million operating loss for the third quarter versus the $0.6 million operating loss for the same quarter a year ago, reflecting increased maintenance costs and a litigation settlement of approximately $0.4 million, pre-tax.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard's third quarter operating earnings of $24.8 million were up 362% compared to the same quarter last year. Higher wallboard average net sales prices, higher gypsum wallboard and gypsum paperboard sales volumes and lower recycled paper input costs were the primary driver of the quarterly earnings increase.

Gypsum Wallboard and Paperboard revenues for the third quarter totaled $100.3 million, a 37% increase from the same quarter a year ago. The revenue increase reflects primarily higher wallboard average net sales prices and sales volumes.

The average gypsum wallboard net sales price for the third quarter was $120.55 per MSF, 27% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 519 million square feet (MMSF) represents a 23% increase from the same quarter last year. The average Paperboard net sales price for this quarter was $480.51 per ton, 9% lower than the same quarter a year ago. Paperboard sales volumes for the quarter were 65,000 tons, 14% higher than the same quarter a year ago.

Details of Financial Results

Current quarter Acquisition and Litigation Expense of $2.5 million consists of costs related to our acquisition of the Lafarge Target Business and legal fees related to our lawsuit against the IRS. In the prior year, we received an adverse ruling in an arbitration proceeding involving a contract dispute between one of our subsidiaries and another mining company. The award, along with our legal expenses, was approximately $9.1 million.

Texas Lehigh Cement Company LP, one of our cement plant operations, is conducted 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 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 in 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 from 25 facilities across the US. The company is headquartered in Dallas, Texas.

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 7, 2013. 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; 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 and oil; 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 (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; 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, without limitation, natural gas 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, 2012 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012. These reports are filed with the Securities and Exchange Commission. With respect to our acquisition of the Lafarge Target 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 forward-looking statements include, but are not limited to, the risk that we may not be able to integrate the Lafarge Target Business in an efficient and cost-effective manner with our other assets and operations, the possible inability to realize synergies or other expected benefits of the transaction, the possibility that we may incur significant costs relating to transition or integration activities, the discovery of undisclosed liabilities associated with the business, the need to repay the indebtedness incurred to fund the acquisition and the fact that increased debt may limit our ability to respond to any changes in general economic and business conditions that occur after 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.

(1) Statement of Consolidated Earnings

(2) Revenues and Earnings by Lines of Business (Quarter and Nine Months)

(3) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

(4) Consolidated Balance Sheets

(5) Non-GAAP Financial Measures

 
 

Eagle Materials Inc.

Attachment 1

 
Eagle Materials Inc.
Statement of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
 
    Quarter Ended     Nine Months Ended
December 31, December 31,
  2012         2011     2012         2011  
 
Revenues $ 164,743 $ 123,596 $ 483,444 $ 378,222
 
Cost of Goods Sold   133,482     111,125     396,797     352,661  
 
Gross Profit 31,261 12,471 86,647 25,561
 
Equity in Earnings of Unconsolidated JV 8,852 7,776 24,070 21,160
Other Operating (Expense) Income (223 ) 591 (427 ) 627
Acquisition and Litigation Expense (2,485 ) (9,117 ) (8,859 ) (9,117 )
Corporate General and Administrative Expense   (6,268 )   (4,928 )   (16,942 )   (13,518 )
 
Earnings before Interest and Income Taxes 31,137 6,793 84,489 24,713
 
Interest Expense, Net (3,836 ) (4,210 ) (11,149 ) (13,352 )
Loss on Debt Retirement   -     (2,094 )   -     (2,094 )
 
Earnings before Income Taxes 27,301 489 73,340 9,267
 
Income Tax (Expense) Benefit   (9,321 )   2,408     (23,429 )   462  
 
Net Earnings $ 17,980   $ 2,897   $ 49,911   $ 9,729  
 
EARNINGS PER SHARE
Basic $ 0.37   $ 0.07   $ 1.09   $ 0.22  
Diluted $ 0.37   $ 0.07   $ 1.07   $ 0.22  
 
AVERAGE SHARES OUTSTANDING
Basic   48,331,185     44,212,098     45,920,452     44,197,540  
Diluted   49,249,547     44,395,982     46,574,724     44,423,467  
 
 

Eagle Materials Inc.

Attachment 2

 
Eagle Materials Inc.
Revenues and Segment Operating Earnings by Lines of Business
(dollars in thousands)
(unaudited)
 
    Quarter Ended     Nine Months Ended
December 31, December 31,
  2012         2011     2012         2011  
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 80,737 $ 54,063 $ 228,284 $ 156,386
Gypsum Paperboard   19,551     19,407     58,173     59,686  
100,288 73,470 286,457 216,072
 
Cement (Wholly Owned) 50,400 40,074 156,255 126,677
 
Concrete and Aggregates   14,055     10,052     40,732     35,473  
 
Total $ 164,743   $ 123,596   $ 483,444   $ 378,222  

 

Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 16,870 $ 228 $ 47,356 $ (4,074 )
Gypsum Paperboard   7,963     5,146     20,934     12,214  
24,833 5,374 68,290 8,140
 
Cement:
Wholly Owned 7,763 7,717 19,853 18,232
Joint Venture   8,852     7,776     24,070     21,160  
16,615 15,493 43,923 39,392
 
Concrete and Aggregates (1,335 ) (620 ) (1,496 ) (811 )
 
Other Operating (Expense) Income   (223 )   591     (427 )   627  
 
Sub-total 39,890 20,838 110,290 47,348
Acquisition and Litigation Expense (2,485 ) (9,117 ) (8,859 ) (9,117 )
Corporate General and Administrative Expense   (6,268 )   (4,928 )   (16,942 )   (13,518 )
 
Earnings Before Interest and Income Taxes $ 31,137   $ 6,793   $ 84,489   $ 24,713  

 

* 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 Joint Venture Revenues
(unaudited)
 
    Sales Volume
Quarter Ended     Nine Months Ended
December 31, December 31,
2012     2011     Change 2012     2011     Change
 
Gypsum Wallboard (MMSF's) 519 421 +23 % 1,476 1,236 +19 %
 
Cement (M Tons):
Wholly Owned 592 497 +19 % 1,852 1,534 +21 %
Joint Venture 226 203 +11 % 678 657 +3 %
818 700 +17 % 2,530 2,191 +15 %
Paperboard (M Tons):
Internal 23 19 +21 % 66 54 +22 %
External 42 38 +11 % 121 120 +1 %
65 57 +14 % 187 174 +7 %
 
Concrete (M Cubic Yards) 143 112 +28 % 421 391 +8 %
 
Aggregates (M Tons) 639 463 +38 % 2,101 1,846 +14 %
 
 
    Average Net Sales Price*
Quarter Ended     Nine Months Ended
December 31, December 31,
2012     2011     Change 2012     2011     Change
 
Gypsum Wallboard (MSF) $ 120.55 $ 94.86 +27 % $ 119.60 $ 92.35 +30 %
Cement (Ton) $ 82.68 $ 80.02 +3 % $ 82.17 $ 80.77 +2 %
Paperboard (Ton) $ 480.51 $ 527.42 -9 % $ 498.16 $ 519.20 -4 %
Concrete (Cubic Yard) $ 71.55 $ 67.11 +7 % $ 67.94 $ 63.98 +6 %
Aggregates (Ton) $ 6.13 $ 5.99 +2 % $ 6.04 $ 5.95 +2 %
 

*Net of freight and delivery costs billed to customers.

   
 
Intersegment and Cement Revenues
Quarter Ended     Nine Months Ended
December 31, December 31,
2012     2011 2012     2011
Intersegment Revenues:
Cement $ 535 $ 803 $ 1,614 $ 3,044
Paperboard 11,780 10,594 35,217 30,728
Concrete and Aggregates   146   198   603   559
$ 12,461 $ 11,595 $ 37,434 $ 34,331
 
Cement Revenues:
Wholly Owned $ 50,400 $ 40,074 $ 156,255 $ 126,677
Joint Venture   24,000   20,633   71,623   64,487
$ 74,400 $ 60,707 $ 227,878 $ 191,164
 
 

Eagle Materials Inc.

Attachment 4

 
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
 
 
   

December 31,

   

March 31,

2012

   

2011

2012*

ASSETS

Current Assets —
Cash and Cash Equivalents $ 9,247 $ 3,679 $ 6,481
Accounts and Notes Receivable, net 86,588 54,491 56,197
Inventories 134,473 113,613 123,606
Federal Income Tax Receivable - 9,109 1,133
Prepaid and Other Assets   13,015     3,045     4,424  
Total Current Assets   243,323     183,937     191,841  
Property, Plant and Equipment — 1,581,468 1,138,261 1,140,744
Less: Accumulated Depreciation   (598,396 )   (548,284 )   (560,236 )
Property, Plant and Equipment, net 983,072 589,977 580,508
Investments in Joint Venture 41,760 37,571 38,939
Notes Receivable 3,273 3,448 3,436
Goodwill and Intangibles 163,802 151,061 150,902
Other Assets   21,590     19,155     19,519  
$ 1,456,820   $ 985,149   $ 985,145  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities —
Accounts Payable $ 47,460 $ 33,344 $ 38,747
Accrued Liabilities 57,460 42,456 33,619
Federal Income Tax Payable 5,532 3,392 -
Current Portion of Long-term Debt   -     4,677     4,677  
Total Current Liabilities   110,452     83,869     77,043  
Long-term Liabilities 41,104 35,268 39,467
Bank Credit Facility 291,000 84,000 70,000
Senior Notes 192,259 192,259 192,259
Deferred Income Taxes 134,458 127,562 133,865
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 49,351,952; 44,944,310 and
45,269,493 Shares, respectively. 494 449 453
 
Capital in Excess of Par Value 216,440 29,235 37,692
Accumulated Other Comprehensive Losses (5,168 ) (2,893 ) (5,516 )
Retained Earnings   475,781     435,400     439,882  
Total Stockholders' Equity   687,547     462,191     472,511  
$ 1,456,820   $ 985,149   $ 985,145  
*From audited financial statements.
 
 

Eagle Materials Inc.
Attachment 5

Eagle Materials Inc.
Non-GAAP Financial Measures
(unaudited)
(Dollars, other than earnings per share amounts, and number of shares in millions)

Adjusted earnings per diluted share (Adjusted EPS) is a non-GAAP financial measure and represents earnings per diluted share excluding the impacts from non-routine items, including costs related with closing the Lafarge acquisition, litigation costs related to our lawsuit against the IRS, loss on debt retirements, discrete tax benefits and losses on arbitration or litigation rulings (Non-routine Items). Management uses measures of earnings excluding the impact of Non-routine Items as a basis for comparing operating results of the Company from period to period and for purposes of its budgeting and planning processes. Although management believes that Adjusted EPS is useful in evaluating the Company's business, this information should be considered as supplemental in nature and is not meant to be considered in isolation, or as a substitute for earnings per diluted share and the related financial information prepared in accordance with GAAP. In addition, our presentation of Adjusted EPS may not be the same as similarly titled measures reported by other companies, limiting its usefulness as a comparative measure.

The following shows the calculation of Adjusted EPS and reconciles Adjusted EPS to earnings per diluted share in accordance with GAAP for the three months ended December 31, 2012 and 2011. The amounts presented below are presented after-tax and were determined using our effective tax rate, before discrete items, for the three months ended December 31, 2012 and 2011 of 34% and 22%, respectively:

   
Three Months Ended
December 31,
  2012         2011  
 
After tax impact of costs associated with closing the Lafarge acquisition and initial purchase accounting $ (1.9 ) $ -
After tax impact of costs associated with our lawsuit against the IRS (0.6 ) -
After tax impact of loss on debt retirement - (1.6 )
After tax impact of tax and related interest benefits - 2.8
After tax impact of loss on arbitration and litigation   (0.3 )   (7.0 )
Total Non-routine Items impact, net $ (2.8 ) $ (5.8 )
Diluted average shares outstanding for the three months ended December 31, 2012 49.2 44.4
Diluted earnings per share impact from Non-routine Items $ (0.06 ) $ (0.13 )
 
 
Three Months Ended
December 31,
  2012     2011  
Earnings per diluted share in accordance with generally accepted accounting principles $ 0.37 $ 0.07
Add back: Earnings per diluted share impact from Non-routine Items   0.06     0.13  
Adjusted EPS $ 0.43 $ 0.20

Eagle Materials Inc.
Steven R. Rowley, 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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