August 7, 2013

Eagle Materials Inc. Reports Strong Revenue and Earnings Improvement in the First Quarter

DALLAS--(BUSINESS WIRE)-- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2014 ended June 30, 2013. Notable items for the quarter include (all comparisons, unless noted, are with the prior-year's first quarter):

  • Revenues of $227.0 million, up 47%
  • Record quarterly cement sales volumes of 1.2 million tons
  • Earnings before interest and income taxes of $49.5 million, up 109%
  • Net earnings per diluted share of $0.60, up 94%
  • Began operations at our new frac sand plant in Corpus Christi, Texas

First quarter earnings before interest and income taxes increased 109%, reflecting improved sales volumes and net sales prices across all heritage businesses as compared to the prior year's first quarter and the acquisition of assets, consisting primarily of two cement plants in Oklahoma and Missouri and related aggregates and ready-mix businesses in Kansas City (the Acquired Assets), on November 30, 2012.

Cement, Concrete and Aggregates

Operating earnings from Cement for the first quarter were $19.0 million, a 93% increase from the same quarter a year ago. The earnings increase was driven by increased sales volumes and average net cement sales prices partially offset by a slight increase in operating costs.

Cement revenues for the first quarter, including joint venture and intersegment revenues, totaled $117.7 million, 55% greater than the same quarter last year. The revenue improvement reflects a 46% increase in our first quarter Cement sales volume, including sales volume attributable to the Acquired Assets. The average net sales price for this quarter was $86.15 per ton, 6% greater than the same quarter last year.

Concrete and Aggregates reported operating earnings of $0.2 million for the first quarter, comparable with the same quarter a year ago.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard reported first quarter operating earnings of $35.3 million, up 83% from the same quarter last year. Improved Gypsum Wallboard net sales prices were the primary driver of the quarterly earnings increase. Additional contribution came from improved sales volumes in both wallboard and paperboard.

Gypsum Wallboard and Paperboard revenues for the first quarter totaled $114.9 million, a 28% increase from the same quarter a year ago. The revenue increase reflects higher average Gypsum Wallboard net sales prices and higher Gypsum Wallboard and Paperboard sales volumes. The average Gypsum Wallboard net sales price this quarter was $146.30 per MSF, 23% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 532 million square feet (MMSF) represents a 16% increase from the same quarter last year. The average Paperboard net sales price this quarter was $502.42 per ton, comparable with the same quarter a year ago. Paperboard sales volumes for the quarter were 64,000 tons, 7% higher than the same quarter a year ago.

Details of Financial Results

For information regarding the results of operations for the Acquired Assets for certain periods prior to November 30, 2012, including pro forma financial information that combines the results of operations for Eagle and the Acquired Assets, please see our Form 8-K/A filed on April 26, 2013. The increase in our average shares outstanding at June 30, 2013 is primarily due to the impact of our follow-on equity offering related to the Acquired Assets, which was completed on October 3, 2012.

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 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 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 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, August 8, 2013. 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 and oil; changes in the cost and availability of transportation; unexpected operational difficulties; 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; 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. With respect to our acquisition of the Acquired Assets 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 Acquired Assets 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 or repair and maintenance of the Acquired Assets, 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. These and other factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2013. This report is 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.

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
   
 
 

Eagle Materials Inc.

Attachment 1

 
Eagle Materials Inc.
Statement of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
 
Quarter Ended
June 30,
2013 2012
 
Revenues $ 227,044 $ 154,042
 
Cost of Goods Sold   180,440     131,145  
 
Gross Profit 46,604 22,897
 
Equity in Earnings of Unconsolidated Joint Venture 7,878 6,468
Corporate General and Administrative Expenses (5,594 ) (5,416 )
Other, net   583     (270 )
 

Earnings before Interest and Income Taxes

49,471 23,679
 
Interest Expense, Net  

(4,955

)

 

(3,765

)

 
Earnings before Income Taxes 44,516 19,914
 
Income Tax Expense   (14,415 )   (5,936 )
 
Net Earnings $ 30,101   $ 13,978  
 
 

 

NET EARNINGS PER SHARE
Basic $ 0.61   $ 0.31  
Diluted $ 0.60   $ 0.31  
 
AVERAGE SHARES OUTSTANDING
Basic   48,955,724     44,670,359  
Diluted   49,810,170     45,078,734  
   
 
 

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,
2013 2012
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 95,981 $ 70,220
Gypsum Paperboard 18,951     19,407  
114,932 89,627
 
Cement (Wholly Owned) 87,304 51,750
 
Concrete and Aggregates 24,808     12,665  
 
Total $ 227,044   $ 154,042  

 

Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 29,636 $ 14,022
Gypsum Paperboard 5,679     5,276  
35,315 19,298
 
Cement:
Wholly Owned 11,132 3,398
Joint Venture 7,878     6,468  
19,010 9,866
 
Concrete and Aggregates 157 201
 
Other, net 583     (270 )
 
Sub-total $ 55,065 $ 29,095
Corporate General and Administrative Expense (5,594 )   (5,416 )
 

Earnings before Interest and Income Taxes

$ 49,471   $ 23,679  

 

 

* 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,
2013 2012 Change
 
Gypsum Wallboard (MMSF's) 532 457 +16 %
 
Paperboard (M Tons):
Internal 26 20 +30 %
External 38 40 -5 %
64 60 +7 %
 
Cement (M Tons):
Wholly Owned 979 621 +58 %
Joint Venture 262 227 +15 %
1,241 848 +46 %
 
Concrete (M Cubic Yards) 227 137 +66 %
 
Aggregates (M Tons) 909 652 +39 %
     
Average Net Sales Price *
Quarter Ended
June 30,
2013 2012 Change
 
Gypsum Wallboard (MSF) $ 146.30 $ 118.70 +23 %
Paperboard (Ton) $ 502.42 $ 502.89 0 %
Cement (Ton) $ 86.15 $ 81.06 +6 %
Concrete (Cubic Yard) $ 78.97 $ 65.29 +21 %
Aggregates (Ton) $ 7.84 $ 5.98 +31 %

*Net of freight and delivery costs billed to customers.

   
Intersegment and Cement
Revenues
($ in thousands)
Quarter Ended
June 30,
2013 2012
Intersegment Revenues:
Cement $ 1,992 $ 567
Paperboard 13,212 10,922
Concrete and Aggregates   398   212
$ 15,602 $ 11,701
 
Cement Revenues:
Wholly Owned $ 87,304 $ 51,750
Joint Venture   28,404   23,707
$ 115,708 $ 75,457
     
 

 

Eagle Materials Inc.

Attachment 4

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

(unaudited)

 

June 30,

March 31,

2013

2012

2013*

ASSETS

Current Assets —
Cash and Cash Equivalents $ 6,744 $ 3,707 $ 3,897
Accounts and Notes Receivable, net 117,668 73,304 87,543
Inventories 164,197 114,441 156,380
Federal Income Tax Receivable - - 2,443
Prepaid and Other Assets   9,606     3,366   11,008  
Total Current Assets   298,215     194,818   261,271  
Property, Plant and Equipment — 1,620,208 1,145,195 1,599,992
Less: Accumulated Depreciation   (630,317 )   (572,351 )   (614,268 )
Property, Plant and Equipment, net 989,891 572,844 985,724
Investments in Joint Venture 41,074 39,407 42,946
Notes Receivable 3,843 3,360 3,893
Goodwill and Intangibles 161,916 150,743 162,400
Other Assets   20,278     19,224     19,999  
$ 1,515,217   $ 980,396   $ 1,476,233  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities —
Accounts Payable $ 54,983 $ 34,517 $ 58,880
Accrued Liabilities 36,320 30,275 41,349
Federal Income Tax Payable 10,904 8,192 -
Current Portion of Long-term Debt   -     4,677     -  
Total Current Liabilities   102,207     77,661     100,229  
Long-term Liabilities 52,079 39,774 51,547
Bank Credit Facility 305,000 57,000 297,000
Senior Notes 192,259 192,259 192,259
Deferred Income Taxes 138,220 129,760 139,028
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 49,552,819; 45,362,170 and
49,503,496 Shares, respectively. 496 454 495
 
Capital in Excess of Par Value 228,034 39,564 224,053
Accumulated Other Comprehensive Losses (6,887 ) (5,400 ) (7,042 )
Retained Earnings   503,809     449,324     478,664  
Total Stockholders' Equity   725,452     483,942     696,170  
$ 1,515,217   $ 980,396   $ 1,476,233  

*From audited financial statements.

Eagle Materials Inc.
Steven R. Rowley, 214-432-2000
President & CEO
or
D. Craig Kesler, 214-432-2000
Executive Vice President & CFO
or
Robert S. Stewart, 214-432-2000
Executive Vice President

Source: Eagle Materials Inc.

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