Attached files

file filename
8-K - FORM 8-K - EAGLE MATERIALS INCd668883d8k.htm

Exhibit 99.1

 

LOGO

   Contact at 214/432-2000
   Steven R. Rowley
   President & CEO
   D. Craig Kesler
   Executive Vice President & CFO
   Robert S. Stewart
   Executive Vice President

News For Immediate Release

EAGLE MATERIALS INC. REPORTS CONTINUED

STRONG GROWTH IN SALES VOLUMES AND EARNINGS

IN THE THIRD QUARTER

DALLAS, TX (February 4, 2014)—Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2014 which ended December 31, 2013. Notable items for the quarter in relation to the prior-year’s third quarter include:

 

    Record third quarter Revenues of $228.8 million, up 39%

 

    Earnings before interest and income taxes of $53.3 million, up 71%

 

    Earnings per diluted share of $0.63, up 70%

 

    Reduced outstanding debt by 20%

Sales volumes improved across all business lines, with cement volumes setting a third quarter record of over 1.1 million tons sold. Net sales prices also strengthened across all businesses, with wallboard sales prices increasing 19% over the prior year’s third quarter. Quarterly revenue and earnings improvement also reflects the acquisition of assets, primarily two cement plants in Missouri and Oklahoma (the Acquired Assets) on November 30, 2012.

Cement, Concrete and Aggregates

Operating earnings from Cement for the third quarter were $26.0 million, a 57% 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 $105.6 million, 41% greater than the same quarter last year. The revenue improvement reflects a 36% increase in our third quarter Cement sales volume, including sales volumes attributable to the Acquired Assets. Our average net cement sales price this quarter was $87.01 per ton, 5% higher than the same quarter last year.

Concrete and Aggregates reported a $3.7 million operating loss for the third quarter. The quarterly loss was impacted by start-up costs associated with our new frac sand business of approximately $2.1 million and the settlement of a litigation matter in California for $0.5 million.


Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard’s third quarter operating earnings of $37.4 million were up 51% compared to the same quarter last year. Improved Gypsum Wallboard net sales prices and sales volumes were the primary drivers of the quarterly earnings increase.

Gypsum Wallboard and Paperboard revenues for the third quarter totaled $123.9 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 third quarter was $143.40 per MSF, 19% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 584 million square feet (MMSF) represents a 13% increase from the same quarter last year. The average Paperboard net sales price for this quarter was $504.08 per ton, 5% greater than the same quarter a year ago. Paperboard sales volumes for the quarter were 66,000 tons, 2% 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 prior year’s third 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 $2.8 million (pre-tax), or $0.06 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 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 from 25 facilities across the US. The company is headquartered in Dallas, Texas.

 

2


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 5, 2014. 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; 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 September 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.

For additional information, contact at 214/432-2000.

Steven R. Rowley

President and Chief Executive Officer

D. Craig Kesler

Executive Vice President and Chief Financial Officer

Robert S. Stewart

Executive Vice President, Strategy, Corporate Development and Communications

 

(1) Statement of Consolidated Earnings

 

(2) Revenues and Earnings by Lines of Business (Quarter and Nine Months)

 

(3) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

 

(4) Consolidated Balance Sheets

 

3


Eagle Materials Inc.

Attachment 1

 

Eagle Materials Inc.

Statement of Consolidated Earnings

(dollars in thousands, except per share data)

(unaudited)

 

     Quarter Ended
December 31,
    Nine Months Ended
December 31,
 
     2013     2012     2013     2012  

Revenues

   $ 228,812      $ 164,743      $ 708,502      $ 483,444   

Cost of Goods Sold

     178,964        133,482        552,571        396,797   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     49,848        31,261        155,931        86,647   

Equity in Earnings of Unconsolidated JV

     9,856        8,852        27,481        24,070   

Other Operating (Expense) Income

     400        (223     1,300        (427

Acquisition and Litigation Expense

     —          (2,485     —          (8,859

Corporate General and Administrative Expense

     (6,796     (6,268     (18,450     (16,942
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Interest and Income Taxes

     53,308        31,137        166,262        84,489   

Interest Expense, Net

     (4,475     (3,836     (14,225     (11,149
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Income Taxes

     48,833        27,301        152,037        73,340   

Income Tax Expense

     (17,212     (9,321     (50,412     (23,429
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Earnings

   $ 31,621      $ 17,980      $ 101,625      $ 49,911   
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE

        

Basic

   $ 0.64      $ 0.37      $ 2.07      $ 1.09   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.63      $ 0.37      $ 2.03      $ 1.07   
  

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE SHARES OUTSTANDING

        

Basic

     49,294,010        48,331,185        49,091,476        45,920,452   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     50,162,962        49,249,547        49,948,178        46,574,724   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

4


Eagle Materials Inc.

Attachment 2

 

Eagle Materials Inc.

Revenues and Segment Operating Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 

     Quarter Ended
December 31,
    Nine Months Ended
December 31,
 
     2013     2012     2013     2012  

Revenues*

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 104,158      $ 80,737      $ 299,099      $ 228,284   

Gypsum Paperboard

     19,703        19,551        59,646        58,173   
  

 

 

   

 

 

   

 

 

   

 

 

 
     123,861        100,288        358,745        286,457   

Cement (Wholly Owned)

     76,832        50,400        267,007        156,255   

Concrete and Aggregates

     28,119        14,055        82,750        40,732   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 228,812      $ 164,743      $ 708,502      $ 483,444   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Earnings

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 30,730      $ 16,870      $ 90,234      $ 47,356   

Gypsum Paperboard

     6,661        7,963        19,277        20,934   
  

 

 

   

 

 

   

 

 

   

 

 

 
     37,391        24,833        109,511        68,290   

Cement:

        

Wholly Owned

     16,155        7,763        49,970        19,853   

Joint Venture

     9,856        8,852        27,481        24,070   
  

 

 

   

 

 

   

 

 

   

 

 

 
     26,011        16,615        77,451        43,923   

Concrete and Aggregates

     (3,698     (1,335     (3,550     (1,496

Other Operating (Expense) Income

     400        (223     1,300        (427
  

 

 

   

 

 

   

 

 

   

 

 

 

Sub-total

     60,104        39,890        184,712        110,290   

Acquisition and Litigation Expense

     —          (2,485     —          (8,859

Corporate General and Administrative Expense

     (6,796     (6,268     (18,450     (16,942
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Before Interest and Income Taxes

   $ 53,308      $ 31,137      $ 166,262      $ 84,489   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Net of Intersegment and Joint Venture Revenues listed on Attachment 3

 

5


Eagle Materials Inc.

Attachment 3

 

Eagle Materials Inc.

Sales Volume, Net Sales Prices and Intersegment and Joint Venture Revenues

(unaudited)

 

     Sales Volume  
     Quarter Ended
December 31,
    Nine Months Ended
December 31,
 
     2013      2012      Change     2013      2012      Change  

Gypsum Wallboard (MMSF’s)

     584         519         +13     1,670         1,476         +13

Cement (M Tons):

                

Wholly Owned

     876         592         +48     3,037         1,852         +64

Joint Venture

     239         226         +6     753         678         +11
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     1,115         818         +36     3,790         2,530         +50

Paperboard (M Tons):

                

Internal

     27         23         +17     79         66         +20

External

     39         42         -7     118         121         -2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     66         65         +2     197         187         +5

Concrete (M Cubic Yards)

     231         143         +62     723         421         +72

Aggregates (M Tons)

     748         639         +17     2,663         2,101         +27

 

     Average Net Sales Price*  
     Quarter Ended
December 31,
    Nine Months Ended
December 31,
 
     2013      2012      Change     2013      2012      Change  

Gypsum Wallboard (MSF)

   $ 143.40       $ 120.55         +19   $ 144.54       $ 119.60         +21

Cement (Ton)

   $ 87.01       $ 82.68         +5   $ 86.10       $ 82.17         +5

Paperboard (Ton)

   $ 504.08       $ 480.51         +5   $ 504.64       $ 498.16         +1

Concrete (Cubic Yard)

   $ 84.88       $ 71.55         +19   $ 82.02       $ 67.94         +21

Aggregates (Ton)

   $ 11.44       $ 6.13         +87   $ 8.86       $ 6.04         +47

 

* Net of freight and delivery costs billed to customers.

 

     Intersegment and Cement Revenues  
     Quarter Ended
December 31,
     Nine Months Ended
December 31,
 
     2013      2012      2013      2012  

Intersegment Revenues:

           

Cement

   $ 2,556       $ 535       $ 7,503       $ 1,614   

Paperboard

     13,993         11,780         40,855         35,217   

Concrete and Aggregates

     217         146         889         603   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 16,766       $ 12,461       $ 49,247       $ 37,434   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cement Revenues:

           

Wholly Owned

   $ 76,832       $ 50,400       $ 267,007       $ 156,255   

Joint Venture

     26,190         24,000         81,972         71,623   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 103,022       $ 74,400       $ 348,979       $ 227,878   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

6


Eagle Materials Inc.

Attachment 4

 

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

     December 31,     March 31,  
     2013     2012     2013*  

ASSETS

      

Current Assets –

      

Cash and Cash Equivalents

   $ 7,424      $ 9,247      $ 3,897   

Accounts and Notes Receivable, net

     96,357        86,588        87,543   

Inventories

     173,871        134,473        156,380   

Federal Income Tax Receivable

     —          —          2,443   

Prepaid and Other Assets

     5,074        13,015        11,008   
  

 

 

   

 

 

   

 

 

 

Total Current Assets

     282,726        243,323        261,271   
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment –

     1,647,138        1,581,468        1,599,992   

Less: Accumulated Depreciation

     (662,734     (598,396     (614,268
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment, net

     984,404        983,072        985,724   

Investments in Joint Venture

     41,178        41,760        42,946   

Notes Receivable

     3,208        3,273        3,893   

Goodwill and Intangibles

     161,117        163,802        162,400   

Other Assets

     14,631        21,590        19,999   
  

 

 

   

 

 

   

 

 

 
   $ 1,487,264      $ 1,456,820      $ 1,476,233   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Current Liabilities –

      

Accounts Payable

   $ 47,586      $ 47,460      $ 58,880   

Accrued Liabilities

     39,622        57,460        41,349   

Federal Income Tax Payable

     6,835        5,532        —     

Current Portion of Long-term Debt

     9,500        —          —     
  

 

 

   

 

 

   

 

 

 

Total Current Liabilities

     103,543        110,452        100,229   
  

 

 

   

 

 

   

 

 

 

Long-term Liabilities

     52,317        41,104        51,547   

Bank Credit Facility

     200,000        291,000        297,000   

Senior Notes

     182,759        192,259        192,259   

Deferred Income Taxes

     143,217        134,458        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 49,964,881; 49,351,952 and 49,503,496 Shares, respectively.

     500        494        495   

Capital in Excess of Par Value

     246,161        216,440        224,053   

Accumulated Other Comprehensive Losses

     (6,577     (5,168     (7,042

Retained Earnings

     565,344        475,781        478,664   
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

     805,428        687,547        696,170   
  

 

 

   

 

 

   

 

 

 
   $ 1,487,264      $ 1,456,820      $ 1,476,233   
  

 

 

   

 

 

   

 

 

 

 

* From audited financial statements.

 

7