Eagle Materials Inc. Reports Continued Strong Growth In Sales Volumes And Earnings In The Second Quarter

Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2014 which ended September 30, 2013. Notable items for the quarter in relation to the prior-year’s second quarter include:
  • Revenues of $252.6 million, up 53%
  • Earnings before interest and income taxes of $63.5 million, up 114%
  • Net earnings per diluted share of $0.80, up 100%

Sales volumes improved across all business lines, with cement volumes setting a quarterly record at 1.4 million tons. Net sales prices strengthened across nearly all businesses, with wallboard sales prices increasing 21% over the prior year’s second quarter. Quarterly revenue and earnings improvement also reflects the acquisition of assets, primarily two cement plants in Missouri and Oklahoma and the 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 second quarter were $32.4 million, an 86% increase from the same quarter a year ago. The earnings increase resulted from increased sales volumes and average net cement sales prices.

Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $133.2 million, 70% greater than the same quarter last year. The revenue improvement reflects a 66% increase in our second quarter Cement sales volume, including sales volumes attributable to the Acquired Assets. Our average net cement sales price this quarter was $85.34 per ton, 3% higher than the same quarter last year.

Concrete and Aggregates reported a small operating loss for the second quarter, an improvement from the same quarter a year ago.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard’s second quarter operating earnings of $36.8 million were up 52% compared to 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 second quarter totaled $120.0 million, a 24% increase from the same quarter a year ago. The revenue increase reflects primarily higher wallboard average net sales prices and improved gypsum wallboard and paperboard sales volumes.

The average gypsum wallboard net sales price for the second quarter was $144.05 per MSF, 21% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 554 million square feet (MMSF) represents an 11% increase from the same quarter last year. The average Paperboard net sales price for this quarter was $507.28 per ton, 1% lower than the same quarter a year ago. Paperboard sales volumes for the quarter were 67,000 tons, 8% 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 September 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.

The prior year’s second quarter results include Acquisition and Litigation Expenses related primarily to the acquisition of the Acquired Assets and litigation costs related to our lawsuit against the IRS. The total impact from these non-routine items was $5.7 million (pre-tax), or $0.09 per diluted share (after-tax).

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 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 in the Company for making operating decisions and assessing performance. Attachment 3 shows the proportional consolidation of our Cement revenues.

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, Frac Sand, 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, October 31, 2013. The conference call will be webcast simultaneously on the Eagle website http://www.eaglematerials.com . A replay of the webcast and the presentation will be archived on that site for one year.

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, coal and oil; changes in the cost and availability of transportation; unexpected operational difficulties, including unexpected maintenance costs, equipment downtime and interruption of production; 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, coal 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 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013. These reports are 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 EarningsAttachment 2 Revenues and Earnings by Lines of Business (Quarter and Six Months)Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement RevenuesAttachment 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

September 30,
Six Months Ended

September 30,
2013     2012 2013     2012
 
Revenues $ 252,646 $ 164,659 $ 479,690 $ 318,701
 
Cost of Goods Sold   193,167     132,170     373,607     263,315  
 
Gross Profit 59,479 32,489 106,083 55,386
 
Equity in Earnings of Unconsolidated JV 9,747 8,750 17,625 15,218
Other, net 317 66 900 (204 )
Acquisition and Litigation Expense - (5,713 ) - (6,374 )
Corporate General and Administrative Expenses   (6,060 )   (5,919 )   (11,654 )   (10,674 )
 
Earnings before Interest and Income Taxes 63,483 29,673 112,954 53,352
 

Interest Expense, net
  (4,795 )   (3,548 )   (9,750 )   (7,313 )
 
Earnings before Income Taxes 58,688 26,125 103,204 46,039
 

Income Tax Expense
  (18,785 )   (8,172 )   (33,200 )   (14,108 )
 
Net Earnings $ 39,903   $ 17,953   $ 70,004   $ 31,931  
 
 

 
EARNINGS PER SHARE
Basic $ 0.81   $ 0.40   $ 1.43   $ 0.71  
Diluted $ 0.80   $ 0.40   $ 1.40   $ 0.71  
 
AVERAGE SHARES OUTSTANDING
Basic   49,012,045     44,746,225     48,984,038     44,708,499  
Diluted   49,860,100     45,353,778     49,835,382     45,219,224  
 
 

Eagle Materials Inc.
Attachment 2
             
Eagle Materials Inc.
Revenues and Segment Operating Earnings by Lines of Business
(dollars in thousands)
(unaudited)
 
Quarter Ended

September 30,
Six Months Ended

September 30,
2013     2012 2013     2012
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 98,960 $ 77,327 $ 194,941 $ 147,547
Gypsum Paperboard   20,992     19,215     39,943     38,622  
119,952 96,542 234,884 186,169
 
Cement (Wholly Owned) 102,871 54,105 190,175 105,855
 
Concrete and Aggregates   29,823     14,012     54,631     26,677  
 
Total $ 252,646   $ 164,659   $ 479,690   $ 318,701  
 

 
Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 29,868 $ 16,464 $ 59,504 $ 30,486
Gypsum Paperboard   6,937     7,695     12,616     12,971  
36,805 24,159 72,120 43,457
 
Cement:
Wholly Owned 22,683 8,692 33,815 12,090
Joint Venture   9,747     8,750     17,625     15,218  
32,430 17,442 51,440 27,308
 
Concrete and Aggregates (9 ) (362 ) 148 (161 )
 
Other, net   317     66     900     (204 )
 
Sub-total 69,543 41,305 124,608 70,400
Acquisition and Litigation Expenses - (5,713 ) - (6,374 )
Corporate General and Administrative Expenses   (6,060 )   (5,919 )   (11,654 )   (10,674 )
 
Earnings Before Interest and Income Taxes $ 63,483   $ 29,673   $ 112,954   $ 53,352  

 
 
* 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

September 30,
      Six Months Ended

September 30,
2013     2012     Change 2013     2012     Change
 
Gypsum Wallboard (MMSF’s) 554 500 +11 % 1,086 957 +13 %
 
Cement (M Tons):
Wholly Owned 1,182 639 +85 % 2,161 1,260 +72 %
Joint Venture 252 225 +12 % 514 452 +14 %
1,434 864 +66 % 2,675 1,712 +56 %
Paperboard (M Tons):
Internal 26 23 +13 % 52 43 +21 %
External 41 39 +5 % 79 79 0 %
67 62 +8 % 131 122 +7 %
 
Concrete (M Cubic Yards) 265 141 +88 % 492 278 +77 %
 
Aggregates (M Tons) 1,006 810 +24 % 1,915 1,462 +31 %
 
     
Average Net Sales Price*
Quarter Ended

September 30,
      Six Months Ended

September 30,
2013     2012     Change 2013     2012     Change
 
Gypsum Wallboard (MSF) $ 144.05 $ 119.44 +21 % $ 145.15 $ 119.09 +22 %
Cement (Ton) $ 85.34 $ 82.77 +3 % $ 85.72 $ 81.92 +5 %
Paperboard (Ton) $ 507.28 $ 512.12 -1 % $ 504.92 $ 507.57 -1 %
Concrete (Cubic Yard) $ 82.15 $ 66.83 +23 % $ 80.68 $ 66.07 +22 %
Aggregates (Ton) $ 7.87 $ 6.01 +31 % $ 7.85 $ 6.00 +31 %
 

*Net of freight and delivery costs billed to customers.
 
       
Intersegment and Cement Revenues
Quarter Ended

September 30,
      Six Months Ended

September 30,
2013     2012 2013     2012
Intersegment Revenues:

Cement
$ 2,955 $ 512 $ 4,947 $ 1,079
Paperboard 13,650 12,515 26,862 23,437
Concrete and Aggregates   274   245   672   457
$ 16,879 $ 13,272 $ 32,481 $ 24,973
 
Cement Revenues:
Wholly Owned $ 102,871 $ 54,105 $ 190,175 $ 105,855
Joint Venture   27,378   23,916   55,782   47,623
$ 130,249 $ 78,021 $ 245,957 $ 153,478
 
               

Eagle Materials Inc.
Attachment 4
 

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)
 

September 30,

March 31,
 

2013
 

2012

2013*

ASSETS
Current Assets –
Cash and Cash Equivalents $ 10,628 $

8,149

$
3,897
Accounts and Notes Receivable, net 119,748 74,066 87,543
Inventories 162,094 109,004 156,380
Federal Income Tax Receivable

 

-
- 2,443
Prepaid and Other Assets 8,235   2,588   11,008  
Total Current Assets 300,705   193,807   261,271  
Property, Plant and Equipment – 1,636,244 1,149,075 1,599,992
Less: Accumulated Depreciation (646,142 ) (584,773 ) (614,268 )
Property, Plant and Equipment, net 990,102 564,302 985,724
Investments in Joint Venture 40,071 39,908 42,946
Notes Receivable 3,488 3,316 3,893
Goodwill and Intangibles 161,432 150,584 162,400
Other Assets 14,377   22,971   19,999  
$ 1,510,175   $ 974,888   $ 1,476,233  
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities –
Accounts Payable $ 50,878 $ 34,730 $ 58,880
Accrued Liabilities 40,785 42,602 41,349
Federal Income Tax Payable 10,028 11,455 -
Current Portion of Long-term Debt

 

-
  4,677   -  
Total Current Liabilities   101,691   93,464     100,229  
Long-term Liabilities 53,334 39,747 51,547
Bank Credit Facility 263,000 20,000 297,000
Senior Notes 192,259 192,259 192,259
Deferred Income Taxes 135,571 127,307 139,028
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 49,675,688; 45,438,711 and
49,503,496 Shares, respectively. 497 454 495
 
Capital in Excess of Par Value 231,836 44,208 224,053
Accumulated Other Comprehensive Losses (6,732 ) (5,284 ) (7,042 )
Retained Earnings 538,719   462,733   478,664  
Total Stockholders’ Equity 764,320   502,111   696,170  
$ 1,510,175   $ 974,888   $ 1,476,233  
*From audited financial statements.

Copyright Business Wire 2010

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