10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

September 30, 2023

Commission File Number 1-12984

 

https://cdn.kscope.io/cb8e86cd54edaafb165f6e35a5542be8-img30446933_0.jpg 

EAGLE MATERIALS INC.

(Exact name of registrant as specified in its charter)

 

Delaware (State of Incorporation)

75-2520779 (I.R.S. Employer Identification No.)

5960 Berkshire Lane, Suite 900, Dallas, Texas 75225 (Address of principal executive offices)

(214) 432-2000 (Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value $.01 per share)

 

EXP

 

New York Stock Exchange

 

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.

Yes NO

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). Yes NO

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.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

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.

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 October 24, 2023, the number of outstanding shares of common stock was:

 

Class

Outstanding Shares

Common Stock, $.01 Par Value

34,886,889

 

 

 


TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION (unaudited)

 

 

 

 

Page

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three and Six Months Ended September 30, 2023 and 2022

 

1

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended September 30, 2023 and 2022

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2023, and March 31, 2023

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three and Six Months Ended September 30, 2023 and 2022

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended September 30, 2023 and 2022

 

5

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

35

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

 

 

 

 

 

Item 1a.

 

Risk Factors

 

36

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

Item 4.

 

Mine Safety Information

 

36

 

 

 

 

 

Item 5.

 

Other Information

 

36

 

 

 

 

 

Item 6.

 

Exhibits

 

37

 

 

 

 

 

SIGNATURES

 

38

 

 

 

 


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(dollars in thousands, except share and per share data)

 

Revenue

 

$

622,236

 

 

$

605,068

 

 

$

1,223,757

 

 

$

1,166,455

 

Cost of Goods Sold

 

 

413,218

 

 

 

410,829

 

 

 

838,744

 

 

 

821,350

 

Gross Profit

 

 

209,018

 

 

 

194,239

 

 

 

385,013

 

 

 

345,105

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

10,346

 

 

 

7,156

 

 

 

13,505

 

 

 

12,254

 

Corporate General and Administrative Expense

 

 

(16,576

)

 

 

(13,627

)

 

 

(28,255

)

 

 

(25,447

)

Other Non-Operating Income (Loss)

 

 

1,605

 

 

 

(664

)

 

 

1,818

 

 

 

(1,299

)

Interest Expense, net

 

 

(10,204

)

 

 

(8,580

)

 

 

(22,443

)

 

 

(15,910

)

Earnings before Income Taxes

 

 

194,189

 

 

 

178,524

 

 

 

349,638

 

 

 

314,703

 

Income Taxes

 

 

(43,636

)

 

 

(39,529

)

 

 

(78,236

)

 

 

(70,703

)

Net Earnings

 

 

150,553

 

 

 

138,995

 

 

 

271,402

 

 

 

244,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

4.29

 

 

$

3.74

 

 

$

7.72

 

 

$

6.50

 

Diluted

 

 

4.26

 

 

 

3.72

 

 

 

7.66

 

 

 

6.46

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,056,973

 

 

 

37,140,197

 

 

 

35,165,268

 

 

 

37,559,087

 

Diluted

 

 

35,336,966

 

 

 

37,366,879

 

 

 

35,433,837

 

 

 

37,792,613

 

CASH DIVIDENDS PER SHARE

 

$

0.25

 

 

$

0.25

 

 

$

0.50

 

 

$

0.50

 

See Notes to Unaudited Consolidated Financial Statements.

 

 

1


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(dollars in thousands)

 

Net Earnings

 

$

150,553

 

 

$

138,995

 

 

$

271,402

 

 

$

244,000

 

Net Actuarial Change in Defined Benefit Plans

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Net Actuarial Loss

 

 

63

 

 

 

30

 

 

 

126

 

 

 

60

 

Tax Expense

 

 

(15

)

 

 

(6

)

 

 

(30

)

 

 

(13

)

Comprehensive Earnings

 

$

150,601

 

 

$

139,019

 

 

$

271,498

 

 

$

244,047

 

See Notes to Unaudited Consolidated Financial Statements.

 

 

2


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

September 30,

 

 

March 31,

 

 

 

2023

 

 

2023

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

47,321

 

 

$

15,242

 

Accounts and Notes Receivable, net

 

 

244,832

 

 

 

195,052

 

Inventories

 

 

301,374

 

 

 

291,882

 

Income Tax Receivable

 

 

8,144

 

 

 

16,267

 

Prepaid and Other Assets

 

 

10,135

 

 

 

3,060

 

Total Current Assets

 

 

611,806

 

 

 

521,503

 

Property, Plant, and Equipment, net

 

 

1,676,738

 

 

 

1,662,061

 

Notes Receivable

 

 

 

 

 

7,382

 

Investment in Joint Venture

 

 

100,115

 

 

 

89,111

 

Operating Lease Right-of-Use Assets

 

 

22,068

 

 

 

20,759

 

Goodwill and Intangible Assets, net

 

 

490,180

 

 

 

466,043

 

Other Assets

 

 

16,187

 

 

 

14,143

 

Total Assets

 

$

2,917,094

 

 

$

2,781,002

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts Payable

 

$

113,737

 

 

$

110,408

 

Accrued Liabilities

 

 

90,815

 

 

 

86,472

 

Operating Lease Liabilities

 

 

8,205

 

 

 

6,009

 

Income Taxes Payable

 

 

1,778

 

 

 

 

Current Portion of Long-term Debt

 

 

10,000

 

 

 

10,000

 

Total Current Liabilities

 

 

224,535

 

 

 

212,889

 

Long-term Debt

 

 

1,079,665

 

 

 

1,079,032

 

Noncurrent Operating Lease Liabilities

 

 

22,699

 

 

 

24,940

 

Other Long-term Liabilities

 

 

39,891

 

 

 

41,603

 

Deferred Income Taxes

 

 

243,670

 

 

 

236,844

 

Total Liabilities

 

 

1,610,460

 

 

 

1,595,308

 

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
35,031,889 and 35,768,376 Shares, respectively

 

 

350

 

 

 

358

 

Capital in Excess of Par Value

 

 

 

 

 

 

Accumulated Other Comprehensive Losses

 

 

(3,451

)

 

 

(3,547

)

Retained Earnings

 

 

1,309,735

 

 

 

1,188,883

 

Total Stockholders’ Equity

 

 

1,306,634

 

 

 

1,185,694

 

Total Liabilities and Stockholders’ Equity

 

$

2,917,094

 

 

$

2,781,002

 

See Notes to Unaudited Consolidated Financial Statements.

 

3


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

For the Six Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

 

(dollars in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Earnings

 

$

271,402

 

 

$

244,000

 

Adjustments to Reconcile Net Earnings to Net Cash Provided
by Operating Activities, Net of Effect of Non-Cash Activity

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

73,879

 

 

 

68,874

 

Deferred Income Tax Provision

 

 

6,826

 

 

 

6,198

 

Stock Compensation Expense

 

 

10,999

 

 

 

9,548

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

(13,505

)

 

 

(12,254

)

Distributions from Joint Venture

 

 

2,500

 

 

 

7,500

 

Changes in Operating Assets and Liabilities

 

 

 

 

 

 

Accounts and Notes Receivable

 

 

(42,398

)

 

 

(50,697

)

Inventories

 

 

5,317

 

 

 

18,101

 

Accounts Payable and Accrued Liabilities

 

 

3,996

 

 

 

1,634

 

Other Assets

 

 

(14,487

)

 

 

4,589

 

Income Taxes Payable (Receivable)

 

 

8,310

 

 

 

2,952

 

Net Cash Provided by Operating Activities

 

 

312,839

 

 

 

300,445

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Additions to Property, Plant, and Equipment

 

 

(65,453

)

 

 

(43,249

)

Acquisition Spending

 

 

(55,053

)

 

 

(158,451

)

Net Cash Used in Investing Activities

 

 

(120,506

)

 

 

(201,700

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Increase in Credit Facility

 

 

5,000

 

 

 

200,000

 

Repayment of Term Loan

 

 

(5,000

)

 

 

(2,500

)

Dividends Paid to Stockholders

 

 

(17,908

)

 

 

(19,149

)

Purchase and Retirement of Common Stock

 

 

(151,321

)

 

 

(210,398

)

Proceeds from Stock Option Exercises

 

 

11,469

 

 

 

735

 

Payment of Debt Issuance Costs

 

 

 

 

 

(903

)

Shares Redeemed to Settle Employee Taxes on Stock Compensation

 

 

(2,494

)

 

 

(1,806

)

Net Cash Used in Financing Activities

 

 

(160,254

)

 

 

(34,021

)

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

32,079

 

 

 

64,724

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

15,242

 

 

 

19,416

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

47,321

 

 

$

84,140

 

See Notes to Unaudited Consolidated Financial Statements.

 

 

4


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

 

 

Common
Stock

 

 

Capital in
Excess of
Par Value

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2022

 

$

387

 

 

$

 

 

$

1,136,344

 

 

$

(3,175

)

 

$

1,133,556

 

Net Earnings

 

 

 

 

 

 

 

 

105,005

 

 

 

 

 

 

105,005

 

Stock Compensation Expense

 

 

 

 

 

5,146

 

 

 

 

 

 

 

 

 

5,146

 

Stock Option Exercises and Restricted Share Issuances

 

 

1

 

 

 

666

 

 

 

 

 

 

 

 

 

667

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(1,497

)

 

 

 

 

 

 

 

 

(1,497

)

Purchase and Retirement of Common Stock

 

 

(8

)

 

 

(4,315

)

 

 

(105,289

)

 

 

 

 

 

(109,612

)

Dividends to Shareholders

 

 

 

 

 

 

 

 

(9,507

)

 

 

 

 

 

(9,507

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

23

 

Balance at June 30, 2022

 

$

380

 

 

$

 

 

$

1,126,553

 

 

$

(3,152

)

 

$

1,123,781

 

Net Earnings

 

 

 

 

 

 

 

 

138,995

 

 

 

 

 

 

138,995

 

Stock Compensation Expense

 

 

 

 

 

4,402

 

 

 

 

 

 

 

 

 

4,402

 

Stock Option Exercise and Restricted Share Issuances

 

 

 

 

 

68

 

 

 

 

 

 

 

 

 

68

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(309

)

 

 

 

 

 

 

 

 

(309

)

Purchase and Retirement of Common Stock

 

 

(9

)

 

 

(4,161

)

 

 

(96,616

)

 

 

 

 

 

(100,786

)

Dividends to Shareholders

 

 

 

 

 

 

 

 

(9,471

)

 

 

 

 

 

(9,471

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

24

 

Balance at September 30, 2022

 

$

371

 

 

$

 

 

$

1,159,461

 

 

$

(3,128

)

 

$

1,156,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common
Stock

 

 

Capital in
Excess of
Par Value

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2023

 

$

358

 

 

$

 

 

$

1,188,883

 

 

$

(3,547

)

 

$

1,185,694

 

Net Earnings

 

 

 

 

 

 

 

 

120,849

 

 

 

 

 

 

120,849

 

Stock Compensation Expense

 

 

 

 

 

6,457

 

 

 

 

 

 

 

 

 

6,457

 

Stock Option Exercises and Restricted Share Issuances

 

 

2

 

 

 

10,383

 

 

 

 

 

 

 

 

 

10,385

 

Shares Redeemed to Settle Employee Taxes

 

 

(1

)

 

 

(1,359

)

 

 

 

 

 

 

 

 

(1,360

)

Purchase and Retirement of Common Stock

 

 

(5

)

 

 

(15,481

)

 

 

(59,313

)

 

 

 

 

 

(74,799

)

Dividends to Shareholders

 

 

 

 

 

 

 

 

(8,863

)

 

 

 

 

 

(8,863

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

48

 

Balance at June 30, 2023

 

$

354

 

 

$

 

 

$

1,241,556

 

 

$

(3,499

)

 

$

1,238,411

 

Net Earnings

 

 

 

 

 

 

 

 

150,553

 

 

 

 

 

 

150,553

 

Stock Compensation Expense

 

 

 

 

 

4,542

 

 

 

 

 

 

 

 

 

4,542

 

Stock Option Exercise and Restricted Share Issuances

 

 

 

 

 

1,084

 

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