Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2015 which ended December 31, 2014. Notable items for the quarter in relation to the prior-year's third quarter include:
  • Record quarterly revenues of $292 million, up 27%
  • Record third quarter cement earnings of $37.6 million, up 44%
  • Record quarterly paperboard earnings of $9.1 million, up 37%
  • Wallboard earnings of $40.0 million, up 30%
  • Record third quarter earnings per diluted share of $1.03, up 63%

Sales volumes improved across all major business lines, with cement volumes setting a third quarter record of over 1.2 million tons sold. Net sales prices also strengthened across all businesses, with average wallboard and cement sales prices increasing 11% and 8%, respectively, over the prior year's third quarter.

On November 14, 2014, Eagle completed its previously announced acquisition of CRS Proppants LLC and its subsidiaries, including Great Northern Sand LLC (CRS Proppants). Eagle used cash proceeds from borrowings under its bank credit facility to fund the purchase price of $237.2 million. The results of operations of CRS Proppants are included in the results disclosed in this press release for the period from November 14 through December 31, 2014.

Cement, Concrete and Aggregates

Operating earnings from Cement for the third quarter were $37.6 million, a 44% increase from the same quarter a year ago. The earnings increase resulted from record third quarter sales volumes and increased average net cement sales prices.

Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $124.0 million, 17% greater than the same quarter last year. The revenue improvement reflects an 8% increase in our third quarter Cement sales volume. Our average net cement sales price this quarter was $93.76 per ton, 8% higher than the same quarter last year.

Concrete and Aggregates reported operating earnings of $1.6 million for the third quarter, a $3.1 million improvement from the same quarter a year ago, reflecting improved concrete and aggregates pricing along with improved concrete sales volumes.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard's third quarter operating earnings of $49.1 million were up 31% compared to the same quarter last year. Improved Gypsum Wallboard net sales prices and increased Gypsum Wallboard and Paperboard sales volumes were the primary drivers of the quarterly earnings increase.

Gypsum Wallboard and Paperboard revenues for the third quarter totaled $144.2 million, a 16% 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 for the third quarter was $158.95 per MSF, 11% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 610 million square feet (MMSF) represents a 4% increase from the same quarter last year. The average Paperboard net sales price for this quarter was $504.30 per ton, about flat with the same quarter a year ago. Record Paperboard sales volumes for the quarter were 77,000 tons, 17% higher than the same quarter a year ago.

Oil and Gas Proppants

Oil and Gas Proppants reported third quarter revenues of $31.7 million and operating earnings of $3.2 million. During this year's third quarter, we continued to process and sell purchased sand while we built up inventory of our internally produced sand at our 1.5 million ton Corpus Christi facility.

Details of Financial Results

Beginning in our fiscal 2015, we have begun reporting our frac-sand business as a separately reportable segment - Oil and Gas Proppants. The results of this business were previously included in our Concrete and Aggregates segment during the start-up phase and have been reclassified to conform to the current year's presentation.

Acquisition and Litigation Expense consists of costs related to our acquisition of CRS Proppants and certain legal fees. Direct acquisition costs were approximately $0.7 million (pre-tax) during the quarter ended December 31, 2014.

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 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.

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, and Oil and Gas Proppants 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 Wednesday, February 4, 2015. 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.

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; fluctuations in activity in the oil and gas industry, including the level of fracturing activities; 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. These and other factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2014. These reports are filed with the Securities and Exchange Commission. With respect to our acquisition of CRS Proppants, 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, failure to realize the expected synergies or other benefits of the transaction, significant transaction costs or unknown liabilities, changes in market conditions in the frac sand and related industries and general economic and business conditions that may affect us after the acquisition. 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 Nine 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 EndedDecember 31,

Nine Months EndedDecember 31,
2014     2013 2014     2013
 
Revenues $ 291,529 $ 228,812 $ 842,588 $ 708,502
 
Cost of Goods Sold   212,380     178,964     631,977     552,571  
 
Gross Profit 79,149 49,848 210,611 155,931
 
Equity in Earnings of Unconsolidated JV 12,423 9,856 34,274 27,481
Other, net 488 400 2,050 1,300
Acquisition and Litigation Expenses (722 ) - (2,825 ) -
Corporate General and Administrative Expense   (9,371 )   (6,796 )   (23,827 )   (18,450 )
 
Earnings before Interest and Income Taxes 81,967 53,308 220,283 166,262
 
Interest Expense, Net   (4,101 )   (4,475 )   (12,054 )   (14,225 )
 
Earnings before Income Taxes 77,866 48,833 208,229 152,037
 
Income Tax Expense   (25,836 )   (17,212 )   (68,170 )   (50,412 )
 
Net Earnings $ 52,030   $ 31,621   $ 140,059   $ 101,625  
 
EARNINGS PER SHARE
Basic $ 1.05   $ 0.64   $ 2.82   $ 2.07  
Diluted $ 1.03   $ 0.63   $ 2.78   $ 2.03  
 
AVERAGE SHARES OUTSTANDING
Basic   49,655,405     49,294,010     49,583,210     49,091,476  
Diluted   50,411,147     50,162,962     50,375,619     49,948,178  
 
         

Eagle Materials Inc.

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

Quarter EndedDecember 31,

Nine Months EndedDecember 31,
2014     2013 2014     2013
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 118,573 $ 104,158 $ 342,905 $ 299,099
Gypsum Paperboard   25,631     19,703     70,349     59,646  
144,204 123,861 413,254 358,745
 
Cement (Wholly Owned) 88,652 76,832 291,461 267,007
 
Oil and Gas Proppants 31,731 3,960 53,325 6,153
 
Concrete and Aggregates   26,942     24,159     84,548     76,597  
 
Total $ 291,529   $ 228,812   $ 842,588   $ 708,502  

 
Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 40,013 $ 30,730 $ 114,443 $ 90,234
Gypsum Paperboard   9,102     6,661     24,633     19,277  
49,115 37,391 139,076 109,511
 
Cement:
Wholly Owned 25,155 16,155 62,261 49,970
Joint Venture   12,423     9,856     34,274     27,481  
37,578 26,011 96,535 77,451
 
Oil and Gas Proppants 3,241 (2,161 ) 3,315 (3,967 )
 
Concrete and Aggregates 1,638 (1,537 ) 5,959 417
 
Other, net   488     400     2,050     1,300  
 
Sub-total 92,060 60,104 246,935 184,712
Acquisition and Litigation Expenses (722 ) - (2,825 ) -
Corporate General and Administrative Expense   (9,371 )   (6,796 )   (23,827 )   (18,450 )
 
Earnings Before Interest and Income Taxes $ 81,967   $ 53,308   $ 220,283   $ 166,262  

 
 
* 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 EndedDecember 31,
   

Nine Months EndedDecember 31,
2014     2013     Change 2014     2013     Change
 
Gypsum Wallboard (MMSF's) 610 584 +4 % 1,746 1,670 +5 %
 
Cement (M Tons):
Wholly Owned 935 876 +7 % 3,135 3,037 +3 %
Joint Venture 270 239 +13 % 837 753 +11 %
1,205 1,115 +8 % 3,972 3,790 +5 %
Paperboard (M Tons):
Internal 28 27 +4 % 83 79 +5 %
External 49 39 +26 % 136 118 +15 %
77 66 +17 % 219 197 +11 %
 
Concrete (M Cubic Yards) 246 231 +6 % 767 723 +6 %
 
Aggregates (M Tons) 682 709 -4 % 2,372 2,606 -9 %
 
     
Average Net Sales Price*

Quarter EndedDecember 31,
   

Nine Months EndedDecember 31,
2014     2013     Change 2014     2013     Change
 
Gypsum Wallboard (MSF) $ 158.95 $ 143.40 +11 % $ 160.23 $ 144.54 +11 %
Cement (Ton) $ 93.76 $ 87.01 +8 % $ 91.43 $ 86.10 +6 %
Paperboard (Ton) $ 504.30 $ 504.08 0 % $ 505.09 $ 504.64 0 %
Concrete (Cubic Yard) $ 89.00 $ 84.88 +5 % $ 86.77 $ 82.02 +6 %
Aggregates (Ton) $ 7.36 $ 6.46 +14 % $ 7.54 $ 6.70 +13 %

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

Quarter EndedDecember 31,
     

Nine Months EndedDecember 31,
2014     2013 2014     2013
Intersegment Revenues:
Cement $ 2,489 $ 2,556 $ 7,760 $ 7,503
Paperboard 14,305 13,993 42,645 40,855
Concrete and Aggregates   174   217   691   889
$ 16,968 $ 16,766 $ 51,096 $ 49,247
 
Cement Revenues:
Wholly Owned $ 88,652 $ 76,832 $ 291,461 $ 267,007
Joint Venture   32,907   26,190   98,624   81,972
$ 121,559 $ 103,022 $ 390,085 $ 348,979
 
             

Eagle Materials Inc.
Attachment 4
 

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)
 

December 31,

March 31,

2014

2013

2014*

ASSETS
Current Assets -
Cash and Cash Equivalents $ 13,697 $ 7,424 $ 6,482
Accounts and Notes Receivable, net 136,823 96,357 102,917
Inventories 207,043 173,871 187,096
Federal Income Tax Receivable - - -
Prepaid and Other Assets 4,995 5,074 10,465
Total Current Assets 362,558 282,726 306,960
Property, Plant and Equipment - 1,929,177 1,647,138 1,660,975
Less: Accumulated Depreciation (724,351 ) (662,734 ) (676,924 )
Property, Plant and Equipment, net 1,204,826 984,404 984,051
Investments in Joint Venture 47,167 41,178 43,008
Notes Receivable 2,890 3,208 3,063
Goodwill and Intangibles 206,208 161,117 160,690
Other Assets 34,402 14,631 13,757
$ 1,858,051 $ 1,487,264 $ 1,511,529
 

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities -
Accounts Payable $ 68,466 $ 47,586 $ 57,098
Accrued Liabilities 45,269 39,622 41,520
Federal Income Tax Payable 1,508 6,835 702
Current Portion of Long-term Debt 57,045 9,500 9,500
Total Current Liabilities 172,288 103,543 108,820
Long-term Liabilities 84,911 52,317 53,678
Bank Credit Facility 335,000 200,000 189,000
Senior Notes 125,714 182,759 182,759
Deferred Income Taxes 167,116 143,217 145,773
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 50,277,425; 49,964,881 and
50,053,738 Shares, respectively. 503 500 501
 
Capital in Excess of Par Value 269,736 246,161 253,524
Accumulated Other Comprehensive Losses (5,165 ) (6,577 ) (5,483 )
Retained Earnings 707,948 565,344 582,957
Total Stockholders' Equity 973,022 805,428 831,499
$ 1,858,051 $ 1,487,264 $ 1,511,529
*From audited financial statements.

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