UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 18, 2019
Eagle Materials Inc.
(Exact name of registrant as specified in its charter)
Delaware | 1-12984 | 75-2520779 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
3811 Turtle Creek Blvd., Suite 1100, Dallas, Texas | 75219 | |||
(Address of principal executive offices) | (Zip code) |
Registrants telephone number including area code: (214) 432-2000
Not Applicable
(Former name or former address if changed from last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 2.02 | Results of Operations and Financial Condition |
On April 18, 2019, Eagle Materials Inc., a Delaware corporation (Eagle), announced preliminary financial results for the quarter ended March 31, 2019. A copy of Eagles press release announcing these preliminary results is being furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 8.01 | Other Events |
On April 18, 2019, Eagle issued a press release announcing (i) the commencement of a strategic review of Eagles portfolio of businesses; (ii) the preliminary financial results noted in Item 2.02 above; (iii) that its Board of Directors has authorized the repurchase of an additional 10 million shares of common stock raising its current authorization to approximately 10.7 million shares (including approximately 700,000 shares remaining under the existing authorization); and (iv) the succession of Michael R. Nicolais to Chairman of the Board.
A copy of Eagles press release is being furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits |
Exhibit |
Description | |
99.1 | Press Release dated April 18, 2019 issued by Eagle Materials Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EAGLE MATERIALS INC. | ||
By: | /s/ D. Craig Kesler | |
D. Craig Kesler | ||
Executive Vice President Finance and Administration and Chief Financial Officer |
Date: April 18, 2019
Exhibit 99.1
News for Immediate Release
Eagle Materials Announces Strategic Portfolio Review
| Announces Preliminary Fourth Quarter Financial Results |
| Board Authorizes Repurchase of an Additional 10 Million Shares |
| Mike Nicolais to Assume Role of Board Chairman; |
Current Chairman Rick Stewart to Remain as Director
DALLAS April 18, 2019 Eagle Materials Inc. (NYSE: EXP, Eagle or the Company) today announced that its Board of Directors and management team, with the support of independent financial and legal advisors, has commenced a strategic review of its portfolio of businesses: heavy materials, light materials, and oil and gas proppants.
Strategic Portfolio Review
The Company regularly evaluates its strategic, operational, financial and capital allocation policies for opportunities to enhance shareholder value. The Eagle Board has decided to conduct this further review with its advisors following consultation and input from the Companys largest shareholders. As part of the portfolio review, the Company will carefully consider the full range of options focused on enhancing the value creation potential of Eagle, including separating the businesses and evaluating potential transactions, among other strategic and financial alternatives. The Company may also, as appropriate, engage with third parties that could be participants in certain potential transactions.
There can be no assurance that the strategic portfolio review will result in any particular action or that a transaction will be consummated, nor can there be any assurance regarding the timing of any action or transaction. The Company does not intend to publicly discuss or disclose developments with respect to this process unless and until the Board has approved a definitive action, or the process is otherwise concluded.
Goldman Sachs & Co. LLC is serving as financial advisor to Eagle, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel in this review.
Preliminary Fourth Quarter Results and Share Repurchases
Based on preliminary financial results, Eagle expects to report financial results in the following ranges for the fiscal fourth quarter ended March 31, 2019:
Quarter Ended March 31, 2019 | ||
Revenue |
$283 - $285 million | |
GAAP Losses before Income Taxes |
$(173) - $(170) million | |
Adjusted Earnings before Income Taxes (1) |
$47 - $50 million | |
GAAP Net Loss per Share (Diluted) |
$(2.84) - $(2.80) | |
Adjusted Earnings per Share (Diluted) (1) |
$0.85 - $0.89 |
(1) | Adjusted Earnings before Income Taxes and Adjusted Earnings per Share (Diluted) are non-GAAP financial measures and exclude the impact of a $220 million (pre-tax) non-cash impairment charge related to the Companys oil and gas proppants business due to a decline in demand for northern white sand, in part due to some of our customers utilizing local in-basin sand with lower logistics cost. A reconciliation of the Companys non-GAAP financial measures to the corresponding GAAP measure is attached hereto. |
The estimated ranges of fourth quarter financial performance represent the most current information available to management and are not meant to be a comprehensive statement of our financial results for the quarter ended March 31, 2019. These amounts reported herein represent the Companys unaudited, preliminary estimates and are thus subject to change.
The Company today also announced that its Board has authorized the repurchase of an additional 10 million outstanding shares of common stock. This increase is in addition to the remaining authorized shares under the existing share repurchase authorization. The total new authorization plus remaining authorization is approximately 10.7 million shares, and represents nearly 25% of Company shares outstanding. Share repurchases may be made from time to time in the open market or in privately negotiated transactions, which may include any or all of self-tender offers, entering into accelerated share repurchase programs with financial institutions, open market purchases and block trades, including plans intended to comply with the safe-harbor provided by Rule 10b5-1. Funding for such share repurchases will come from internally generated cash flow or with funds from existing or new credit facilities. This repurchase will be in addition to the nearly $300 million Eagle has returned to shareholders during fiscal 2019 through a combination of share repurchases and dividends.
Board Chairman Succession
The Company today also announced the planned succession of Mike Nicolais, currently Vice-Chairman of the Eagle Materials Board, to Chairman of the Board. He succeeds Rick Stewart who will continue to serve as a director. Mr. Nicolais currently serves as Vice Chairman at Highlander Partners, a Dallas-based private equity firm. From 2001 - 2003, he served as a partner in the private investment firm of Olivhan Investments, followed by being named managing director at Stephens, Inc. Previously, Mr. Nicolais spent 14 years in the Investment Banking division of Donaldson, Lufkin & Jenrette Securities, and was Managing Director and Co-Head of the firms Dallas office.
Commenting upon the strategic review, Mike Nicolais, newly appointed Chairman of Eagle, said Todays announcement is a reflection of our continuous evaluation of strategic and financial options and our deep commitment to driving value for our shareholders. While we are confident that the continued execution of our strategy, combined with our competitive market positions, production capabilities, long-standing commitment to cost discipline and exceptional employees will maximize the value of each individual business, this portfolio review will help ensure Eagles inherent value is appropriately reflected in the marketplace and that we are best positioned to enhance shareholder value. At the same time, the substantially increased share repurchase authorization demonstrates our continued confidence in the long-term value and cash flow potential of our business.
Forward Looking Statements
This press release includes certain 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, including statements about expected results, the strategic portfolio review process, potential transactions and other matters that are not historical facts. 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 Companys 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 Companys control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. 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 Companys expectations. Please refer to the publicly filed documents of the Company, including the most recent Forms 10-K and 10-Q, for additional information about the Company and about the risks and uncertainties related to the Companys business which may affect the statements made in this press release.
About Eagle Materials Inc.
Eagle Materials Inc. manufactures and distributes Portland Cement, Gypsum Wallboard and Recycled Gypsum Paperboard, and Concrete, Sand and Aggregates from more than 75 facilities across the US. Eagles corporate headquarters is in Dallas, Texas.
Contacts
Investor Contact
For additional information, contact at 214-432-2000.
Robert S. Stewart
Executive Vice President, Strategy, Corporate Development and Communications
Or
Media Contact
Joele Frank, Wilkinson Brimmer Katcher
Jim Golden / Clayton Erwin / Sophie Throsby
(212) 355 4449
Eagle Materials Inc.
Non-GAAP Financial Measures
(unaudited)
Dollars, other than earnings per share amounts, and number of shares in millions
Adjusted Earnings before Income Taxes and Adjusted Earnings per Share (Adjusted EPS (Diluted)) are non-GAAP financial measures and represent earnings before income taxes and earnings per diluted share excluding the impacts from non-routine items, including impairment charges (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 Earnings before Income Taxes and Adjusted EPS are useful in evaluating the Companys 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 before income taxes and earnings per diluted share and the related financial information prepared in accordance with GAAP. In addition, our presentation of Adjusted Earnings before Income Taxes and 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 Earnings before Income Taxes and Adjusted EPS (Diluted) and reconciles Adjusted Earnings before Income Taxes and Adjusted EPS (Diluted) to Losses before Income Taxes and Net Loss per Share (Diluted) in accordance with GAAP for the three-months ended March 31, 2019. The amounts presented below were determined using a tax rate for the three-months ended March 31, 2019 of 24%.
Quarter Ended March 31, 2019 |
||||
Pre-tax impact of impairment charge |
$ | 220 | ||
After-tax impact of impairment charge |
$ | 168 | ||
Diluted average shares outstanding |
45.5 | |||
Diluted earnings per share impact from Impairment Charge |
$ | 3.69 | ||
Quarter Ended March 31, 2019 |
||||
GAAP Losses before Income Taxes |
$(173) - $(170) million | |||
Add back: Pre-tax impact from Impairment Charge |
$220 million | |||
|
|
|||
Adjusted Earnings before Income Taxes |
$47 - $50 million | |||
Quarter Ended March 31, 2019 |
||||
GAAP Net Loss per Share (Diluted) |
$( 2.84) - $(2.80) | |||
Add back: Earnings per diluted share impact from Impairment Charge |
$3.69 | |||
|
|
|||
Adjusted EPS (Diluted) |
$ 0.85 - 0.89 |