UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended
Commission File Number
(Exact name of registrant as specified in its charter)
(
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 July 24, 2023, the number of outstanding shares of common stock was:
Class |
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Outstanding Shares |
Common Stock, $.01 Par Value |
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION (unaudited)
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Page |
Item 1. |
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Consolidated Financial Statements |
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Consolidated Statements of Earnings for the Three Months Ended June 30, 2023 and 2022 |
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1 |
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Consolidated Statements of Comprehensive Earnings for the Three Months Ended June 30, 2023 and 2022 |
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2 |
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Consolidated Balance Sheets as of June 30, 2023, and March 31, 2023 |
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3 |
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Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2023 and 2022 |
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4 |
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Consolidated Statements of Stockholders' Equity for the Three Months Ended June 30, 2023 and 2022 |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
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Item 3. |
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33 |
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Item 4. |
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33 |
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Item 1. |
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34 |
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Item 1a. |
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34 |
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Item 2. |
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34 |
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Item 4. |
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34 |
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Item 5. |
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34 |
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Item 6. |
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35 |
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36 |
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EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
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For the Three Months Ended June 30, |
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2023 |
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2022 |
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(dollars in thousands, except share and per share data) |
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Revenue |
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$ |
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$ |
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Cost of Goods Sold |
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Gross Profit |
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Equity in Earnings of Unconsolidated Joint Venture |
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Corporate General and Administrative Expense |
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Other Non-Operating Income (Expense) |
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Interest Expense, net |
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Earnings before Income Taxes |
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Income Taxes |
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Net Earnings |
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$ |
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$ |
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EARNINGS PER SHARE |
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Basic |
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$ |
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$ |
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Diluted |
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AVERAGE SHARES OUTSTANDING |
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Basic |
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Diluted |
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CASH DIVIDENDS PER SHARE |
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$ |
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$ |
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See Notes to Unaudited Consolidated Financial Statements.
1
EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (unaudited)
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For the Three Months Ended June 30, |
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2023 |
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2022 |
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(dollars in thousands) |
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Net Earnings |
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$ |
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$ |
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Net Actuarial Change in Defined Benefit Plans |
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Amortization of Net Actuarial Loss |
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Tax Expense |
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Comprehensive Earnings |
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$ |
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$ |
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See Notes to Unaudited Consolidated Financial Statements.
2
EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
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June 30, |
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March 31, |
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2023 |
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2023 |
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(dollars in thousands) |
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ASSETS |
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Current Assets |
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Cash and Cash Equivalents |
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$ |
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$ |
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Accounts and Notes Receivable, net |
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Inventories |
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Income Tax Receivable |
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Prepaid and Other Assets |
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Total Current Assets |
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Property, Plant, and Equipment, net |
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Notes Receivable |
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Investment in Joint Venture |
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Operating Lease Right-of-Use Assets |
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Goodwill and Intangible Assets, net |
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Other Assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts Payable |
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$ |
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$ |
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Accrued Liabilities |
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Operating Lease Liabilities |
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Income Tax Payable |
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Current Portion of Long-term Debt |
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Total Current Liabilities |
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Long-term Debt |
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Noncurrent Operating Lease Liabilities |
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Other Long-term Liabilities |
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Deferred Income Taxes |
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Total Liabilities |
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Stockholders’ Equity |
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Preferred Stock, Par Value $ |
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Common Stock, Par Value $ |
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Capital in Excess of Par Value |
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Accumulated Other Comprehensive Losses |
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Retained Earnings |
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Total Stockholders’ Equity |
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$ |
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$ |
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See Notes to Unaudited Consolidated Financial Statements.
3
EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
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For the Three Months Ended June 30, |
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2023 |
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2022 |
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(dollars in thousands) |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net Earnings |
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$ |
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$ |
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Adjustments to Reconcile Net Earnings to Net Cash Provided |
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Depreciation, Depletion, and Amortization |
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Deferred Income Tax Provision |
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Stock Compensation Expense |
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Equity in Earnings of Unconsolidated Joint Venture |
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( |
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Distributions from Joint Venture |
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Changes in Operating Assets and Liabilities |
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Accounts and Notes Receivable |
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Inventories |
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Accounts Payable and Accrued Liabilities |
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Other Assets |
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( |
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Income Taxes Payable (Receivable) |
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Net Cash Provided by Operating Activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Additions to Property, Plant, and Equipment |
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Acquisition Spending |
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Net Cash Used in Investing Activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Increase (Decrease) in Credit Facility |
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Proceeds from Term Loan |
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Repayment of Term Loan |
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Dividends Paid to Stockholders |
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Purchase and Retirement of Common Stock |
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Proceeds from Stock Option Exercises |
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Payment of Debt Issuance Costs |
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Shares Redeemed to Settle Employee Taxes on Stock Compensation |
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Net Cash Provided by (Used in) Financing Activities |
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NET INCREASE IN CASH AND CASH EQUIVALENTS |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD |
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$ |
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$ |
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See Notes to Unaudited Consolidated Financial Statements.
4
EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
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Common |
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Capital in |
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Retained |
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Accumulated |
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Total |
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(dollars in thousands) |
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Balance at March 31, 2022 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
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Net Earnings |
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— |
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— |
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— |
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Stock Compensation Expense |
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— |
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— |
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— |
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Stock Option Exercises and Restricted Share Issuances |
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— |
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— |
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Shares Redeemed to Settle Employee Taxes |
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— |
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( |
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— |
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— |
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( |
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Purchase and Retirement of Common Stock |
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( |
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( |
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( |
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— |
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Dividends to Shareholders |
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— |
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— |
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— |
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Unfunded Pension Liability, net of tax |
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— |
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— |
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— |
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Balance at June 30, 2022 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
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Common |
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Capital in |
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Retained |
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Accumulated |
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Total |
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(dollars in thousands) |
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Balance at March 31, 2023 |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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Net Earnings |
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— |
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— |
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— |
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Stock Compensation Expense |
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— |
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— |
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— |
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Stock Option Exercises and Restricted Share Issuances |
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— |
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— |
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Shares Redeemed to Settle Employee Taxes |
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( |
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— |
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— |
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( |
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Purchase and Retirement of Common Stock |
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( |
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— |
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Dividends to Shareholders |
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— |
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— |
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— |
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Unfunded Pension Liability, net of tax |
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— |
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— |
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— |
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Balance at June 30, 2023 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
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See Notes to Unaudited Consolidated Financial Statements.
5
Eagle Materials Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(A) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements as of and for the three-month period ended June 30, 2023, include the accounts of Eagle Materials Inc. and its majority-owned subsidiaries (collectively, the Company, us, or we) and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 19, 2023.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. In our opinion, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the information in the following unaudited consolidated financial statements of the Company have been included. The results of operations for interim periods are not necessarily indicative of the results for the full year.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
There have been no recent accounting pronouncements that are expected to materially affect the Company.
(B) SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
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For the Three Months Ended June 30, |
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2023 |
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2022 |
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(dollars in thousands) |
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Cash Payments |
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Interest |
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$ |
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$ |
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Income Taxes |
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Operating Cash Flows Used for Operating Leases |
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Noncash Financing Activities |
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Excise Tax on Share Repurchases |
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$ |
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$ |
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Right-of-Use Assets Acquired for Capitalized Operating Leases |
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6
(C) ACQUISITION
On May 3, 2023, we purchased the assets of a cement import terminal in Stockton, California (the Stockton Terminal Acquisition), which was accounted for under the acquisition method. The purchase price of the Stockton Terminal Acquisition was approximately $
The following table summarizes the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed (based on Level 3 inputs) as of June 30, 2023:
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Estimated Fair Value |
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Inventory |
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$ |
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Prepaid and Other Current Assets |
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Property, Plant, and Equipment |
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Lease Right-of-Use Assets |
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Intangible Assets |
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Lease Obligations |
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( |
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Other Long-term Liabilities |
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( |
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Goodwill |
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Total Estimated Purchase Price |
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$ |
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The estimated useful lives assigned to Property, Plant, and Equipment range from
The following table presents the Revenue and Operating Loss related to the Stockton Terminal Acquisition that has been included in our Consolidated Statement of Earnings from May 3, 2023 through June 30, 2023.
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(dollars in thousands) |
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Revenue |
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$ |
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Operating Loss |
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$ |
( |
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Included in Operating Loss shown above is approximately $
(D) REVENUE
We earn Revenue primarily from the sale of products, which include cement, concrete, aggregates, gypsum wallboard, and recycled paperboard. The vast majority of Revenue from the sale of concrete, aggregates, and gypsum wallboard is originated by purchase orders from our customers, who are mostly third-party contractors and suppliers. Revenue from the sale of cement is recognized at the point-of-sale to customers under sales orders. Revenue from our Recycled Paperboard segment is generated mainly through long-term supply agreements. These agreements do not have a stated maturity date, but may be terminated by either party with a to
7
Revenue from sales under our long-term supply agreements is also recognized upon transfer of control to the customer, which generally occurs at the time the product is shipped from the production facility or terminal location. Our long-term supply agreements with customers define, among other commitments, the volume of product that we must provide and the volume that the customer must purchase by the end of the defined periods. Pricing structures under our agreements are generally market-based, but are subject to certain contractual adjustments. Shortfall amounts, if applicable under these arrangements, are constrained and not recognized as Revenue until an agreement is reached with the customer and, therefore, are not subject to the risk of reversal.
The Company offers certain of its customers, including those with long-term supply agreements, rebates and incentives, which we treat as variable consideration. We adjust the amount of Revenue recognized for the variable consideration using the most likely amount method based on past history and projected volumes in the rebate and incentive period. Any amounts billed to customers for taxes are excluded from Revenue.
The Company has elected to treat freight and delivery charges we pay for the delivery of goods to our customers as a fulfilment activity rather than a separate performance obligation. When we arrange for a third party to deliver products to customers, fees for shipping and handling billed to the customer are recorded as Revenue, while costs we incur for shipping and handling are recorded as expenses and included in Cost of Goods Sold.
Other Non-Operating Income includes lease and rental income, asset sale income, non-inventoried aggregates sales income, distribution center income, and trucking income, as well as other miscellaneous revenue items and costs that have not been allocated to a business segment.
(E) ACCOUNTS AND NOTES RECEIVABLE
Accounts Receivable are shown net of the allowance for doubtful accounts totaling $
(F) INVENTORIES
Inventories are stated at the lower of average cost (including applicable material, labor, depreciation, and plant overhead) or net realizable value. Raw Materials and Materials-in-Progress include clinker, which is an intermediary product before it is ground into cement powder. Quantities of Raw Materials and Materials-in-Progress, Aggregates, and Coal inventories, are based on measured volumes, subject to estimation based on the size and location of the inventory piles, and are converted to tonnage using standard inventory density factors.
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June 30, |
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March 31, |
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2023 |
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2023 |
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(dollars in thousands) |
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