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8-K - 8-K - EAGLE MATERIALS INCd811740d8k.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 REPORTS RECORD QUARTERLY REVENUES

AND STRONG EARNINGS PERFORMANCE

DALLAS, TX (October 28, 2014) – Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2015 ended September 30, 2014. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior fiscal year’s second quarter):

 

    Record quarterly revenues of $284.8 million, up 13%

 

    Record quarterly cement sales volumes of 1.5 million tons

 

    Record quarterly cement earnings of $38.5 million, up 19%

 

    Record quarterly paperboard earnings of $8.0 million, up 15%

 

    Wallboard earnings of $37.0 million, up 24%

 

    Net earnings per diluted share of $1.00, up 25%

 

    Adjusted net earnings per share of $1.03, up 29%

 

    Adjusted earnings per share is a non-GAAP financial measure calculated by excluding non-routine items in the manner described in Attachment 5

 

    Total after-tax impact of non-routine items, consisting of costs related to our pending acquisition of CRS Proppants and certain litigation costs, were $1.4 million, or $0.03 per diluted share. See Attachment 5.

Second quarter earnings before interest and income taxes increased 24% to $78.5 million, as both second quarter sales volumes and sales prices improved in nearly all businesses.

As previously announced on October 17, 2014, Eagle entered into a definitive agreement to acquire CRS Proppants LLC and its subsidiaries, including Great Northern Sand LLC, an established supplier of high-quality northern white frac-sand to the energy industry. The cash purchase price of $225 million is subject to customary post-closing adjustments. The acquisition will roughly double Eagle’s frac-sand production capacity and further expand Eagle’s frac-sand reserves. The acquisition is expected to close during Eagle’s fiscal third quarter, subject to receipt of required regulatory approvals.

Also, during the quarter, we began operating our frac-sand mine in Utica, Illinois and the first shipments of raw sand from our mine to our 1.5 million ton per year processing facility at Corpus Christi, Texas occurred in early September.

 

1


Cement, Concrete and Aggregates

Operating earnings from Cement for the second quarter were a record $38.5 million, and 19% higher than the same quarter a year ago. The earnings increase was driven by record quarter cement sales volumes and a 6% increase in average net cement sales prices. While underlying demand for our cement continues to increase, extraordinary rail congestion continued to impact the timing of cement shipments during the second quarter.

Cement revenues for the second quarter, including joint venture and intersegment revenues, totaled $145.9 million, 10% greater than the same quarter last year. Cement sales volumes for the quarter were 1.5 million tons, 3% higher than the same quarter a year ago. The average net sales price for this quarter was $90.20 per ton, 6% higher than the same quarter last year.

Concrete and Aggregates reported operating earnings of $3.0 million for the second quarter, a 215% 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 reported second quarter operating earnings of $45.0 million, up 22% from 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 second quarter totaled $132.9 million, an 11% 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 this quarter was $160.09 per MSF, 11% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 567 million square feet (MMSF) represents a 2% increase from the same quarter last year. The average Paperboard net sales price this quarter was $501.27 per ton, 1% lower than the same quarter a year ago. Paperboard sales volumes for the quarter were 70,000 tons, 4% higher than the same quarter a year ago.

Oil and Gas Proppants

Oil and Gas Proppants reported second quarter revenues of $10.4 million and operating earnings of $0.7 million. During this year’s second quarter, we continued to process and sell purchased sand while we started up the operation of our mine in Illinois. We expect to be able to sell our owned sand through our Corpus Christi facility no later than our fiscal third quarter, primarily into Eagle Ford shale-drilling applications.

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 initialization phase at start-up and have been reclassified to conform to the current year presentation.

Acquisition and Litigation Expense consists of direct costs related to our pending acquisition of CRS Proppants and certain legal fees. Direct acquisition costs were approximately $0.4 million (pre-tax) and legal fees were approximately $1.7 million (pre-tax) during the quarter ended September 30, 2014.

 

2


We conduct one of our cement plant operations, Texas Lehigh Cement Company LP, 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 within 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.

 

3


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, October 29, 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. For more information, contact Eagle at (214) 432-2000.

###

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 June 30, 2014. These reports are filed with the Securities and Exchange Commission. With respect to our proposed acquisition of CRS Proppants 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, our ability to complete the acquisition within the expected timeframe, or at all, failure to realize the expected synergies or other benefits of the transaction, possible negative effects of announcement or consummation 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.

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

Attachment 1 Statement of Consolidated Earnings

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

Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

Attachment 4 Consolidated Balance Sheets

Attachment 5 Non-GAAP Financial Measures

 

4


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,
 
     2014     2013     2014     2013  

Revenues

   $ 284,808      $ 252,646      $ 551,059      $ 479,690   

Cost of Goods Sold

     209,747        193,167        419,597        373,607   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     75,061        59,479        131,462        106,083   

Equity in Earnings of Unconsolidated JV

     12,051        9,747        21,851        17,625   

Other, net

     883        317        1,562        900   

Acquisition and Litigation Expense

     (2,103     —          (2,103     —     

Corporate General and Administrative Expenses

     (7,414     (6,060     (14,456     (11,654
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Interest and Income Taxes

     78,478        63,483        138,316        112,954   

Interest Expense, net

     (3,901     (4,795     (7,953     (9,750
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Income Taxes

     74,577        58,688        130,363        103,204   

Income Tax Expense

     (24,258     (18,785     (42,334     (33,200
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Earnings

   $ 50,319      $ 39,903      $ 88,029      $ 70,004   
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE

        

Basic

   $ 1.01      $ 0.81      $ 1.78      $ 1.43   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.00      $ 0.80      $ 1.75      $ 1.40   
  

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE SHARES OUTSTANDING

        

Basic

     49,591,495        49,012,045        49,546,916        48,984,038   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     50,427,286        49,860,100        50,357,914        49,835,382   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


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,
 
     2014     2013     2014     2013  

Revenues*

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 111,655      $ 98,960      $ 224,332      $ 194,941   

Gypsum Paperboard

     21,255        20,992        44,718        39,943   
  

 

 

   

 

 

   

 

 

   

 

 

 
     132,910        119,952        269,050        234,884   

Cement (Wholly Owned)

     109,811        102,871        202,809        190,175   

Oil and Gas Proppants

     10,414        1,251        21,594        2,193   

Concrete and Aggregates

     31,673        28,572        57,606        52,438   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 284,808      $ 252,646      $ 551,059      $ 479,690   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Earnings

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 37,002      $ 29,868      $ 74,430      $ 59,504   

Gypsum Paperboard

     7,984        6,937        15,531        12,616   
  

 

 

   

 

 

   

 

 

   

 

 

 
     44,986        36,805        89,961        72,120   

Cement:

        

Wholly Owned

     26,399        22,683        37,106        33,815   

Joint Venture

     12,051        9,747        21,851        17,625   
  

 

 

   

 

 

   

 

 

   

 

 

 
     38,450        32,430        58,957        51,440   

Oil and Gas Proppants

     711        (951     74        (1,806

Concrete and Aggregates

     2,965        942        4,321        1,954   

Other, net

     883        317        1,562        900   
  

 

 

   

 

 

   

 

 

   

 

 

 

Sub-total

     87,995        69,543        154,875        124,608   

Acquisition and Litigation Expenses

     (2,103     —          (2,103     —     

Corporate General and Administrative Expenses

     (7,414     (6,060     (14,456     (11,654
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Before Interest and Income Taxes

   $ 78,478      $ 63,483      $ 138,316      $ 112,954   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

6


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,
 
     2014      2013      Change     2014      2013      Change  

Gypsum Wallboard (MMSF’s)

     567         554         +2     1,136         1,086         +5

Cement (M Tons):

                

Wholly Owned

     1,193         1,182         +1     2,200         2,161         +2

Joint Venture

     283         252         +12     567         514         +10
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     1,476         1,434         +3     2,767         2,675         +3

Paperboard (M Tons):

                

Internal

     28         26         +8     55         52         +6

External

     42         41         +2     87         79         +10
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     70         67         +4     142         131         +8

Concrete (M Cubic Yards)

     286         265         +8     521         492         +6

Aggregates (M Tons)

     872         995         -12     1,690         1,897         -11

 

     Average Net Sales Price*  
     Quarter Ended
September 30,
    Six Months Ended
September 30,
 
     2014      2013      Change     2014      2013      Change  

Gypsum Wallboard (MSF)

   $ 160.09       $ 144.05         +11   $ 160.92       $ 145.15         +11

Cement (Ton)

   $ 90.20       $ 85.34         +6   $ 90.42       $ 85.72         +5

Paperboard (Ton)

   $ 501.27       $ 507.28         -1   $ 505.52       $ 504.92         0

Concrete (Cubic Yard)

   $ 86.74       $ 82.15         +6   $ 85.73       $ 80.68         +6

Aggregates (Ton)

   $ 7.82       $ 6.70         +17   $ 7.61       $ 6.79         +12

 

* Net of freight and delivery costs billed to customers.

 

     Intersegment and Cement Revenues  
     Quarter Ended
September 30,
     Six Months Ended
September 30,
 
     2014      2013      2014      2013  

Intersegment Revenues:

           

Cement

   $ 2,911       $ 2,955       $ 5,271       $ 4,947   

Paperboard

     14,324         13,650         28,340         26,862   

Concrete and Aggregates

     288         274         517         672   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 17,523       $ 16,879       $ 34,128       $ 32,481   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cement Revenues:

           

Wholly Owned

   $ 109,811       $ 102,871       $ 202,809       $ 190,175   

Joint Venture

     33,139         27,378         65,717         55,782   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 142,950       $ 130,249       $ 268,526       $ 245,957   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

7


Eagle Materials Inc.

Attachment 4

 

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

     September 30,     March 31,
2014*
 
     2014     2013    

ASSETS

      

Current Assets –

      

Cash and Cash Equivalents

   $ 11,063      $ 10,628      $ 6,482   

Accounts and Notes Receivable, net

     132,823        119,748        102,917   

Inventories

     190,711        162,094        187,096   

Federal Income Tax Receivable

     —          —          —     

Prepaid and Other Assets

     6,309        8,235        10,465   
  

 

 

   

 

 

   

 

 

 

Total Current Assets

     340,906        300,705        306,960   
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment –

     1,698,495        1,636,244        1,660,975   

Less: Accumulated Depreciation

     (708,311     (646,142     (676,924
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment, net

     990,184        990,102        984,051   

Investments in Joint Venture

     45,489        40,071        43,008   

Notes Receivable

     2,966        3,488        3,063   

Goodwill and Intangibles

     159,835        161,432        160,690   

Other Assets

     15,007        14,377        13,757   
  

 

 

   

 

 

   

 

 

 
   $ 1,554,387      $ 1,510,175      $ 1,511,529   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Current Liabilities –

      

Accounts Payable

   $ 66,953      $ 50,878      $ 57,098   

Accrued Liabilities

     47,845        40,785        41,520   

Federal Income Tax Payable

     8,610        10,028        702   

Current Portion of Long-term Debt

     9,500        —          9,500   
  

 

 

   

 

 

   

 

 

 

Total Current Liabilities

     132,908        101,691        108,820   
  

 

 

   

 

 

   

 

 

 

Long-term Liabilities

     54,070        53,334        53,678   

Bank Credit Facility

     120,000        263,000        189,000   

Senior Notes

     182,759        192,259        182,759   

Deferred Income Taxes

     142,259        135,571        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 50,265,957; 49,675,688 and 50,053,738 Shares, respectively.

     503        497        501   

Capital in Excess of Par Value

     266,212        231,836        253,524   

Accumulated Other Comprehensive Losses

     (5,271     (6,732     (5,483

Retained Earnings

     660,947        538,719        582,957   
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

     922,391        764,320        831,499   
  

 

 

   

 

 

   

 

 

 
   $ 1,554,387      $ 1,510,175      $ 1,511,529   
  

 

 

   

 

 

   

 

 

 

 

* From audited financial statements.

 

8


Eagle Materials Inc.

Attachment 5

 

Eagle Materials Inc.

Non-GAAP Financial Measures

(unaudited)

(Dollars, other than earnings per share amounts, and number of shares in millions)

Adjusted earnings per diluted share (Adjusted EPS) is a non-GAAP financial measure and represents earnings per diluted share excluding the impacts from non-routine items, including costs related to our pending acquisition of CRS Proppants and certain litigation costs (Non-routine Items). Management uses measures of earnings excluding the impact of Non-routine Items as a basis for comparing operating results of the Company from period to period and for purposes of its budgeting and planning processes. Although management believes that Adjusted EPS is useful in evaluating the Company’s business, this information should be considered as supplemental in nature and is not meant to be considered in isolation, or as a substitute for earnings per diluted share and the related financial information prepared in accordance with GAAP. In addition, our presentation of Adjusted EPS may not be the same as similarly titled measures reported by other companies, limiting its usefulness as a comparative measure.

The following shows the calculation of Adjusted EPS and reconciles Adjusted EPS to earnings per diluted share in accordance with GAAP for the three months ended September 30, 2014. The amounts presented below are presented after-tax and were determined using our effective tax rate for the three months ended September 30, 2014 of 32.5%:

 

     Three Months
Ended
September 30,
2014
 

After tax impact of costs associated with the pending acquisition of CRS Proppants

   $ (0.2

After tax impact of certain litigation costs

     (1.2
  

 

 

 

Total Non-routine Items impact, net

   $ (1.4

Diluted average shares outstanding for the three months ended September 30, 2014

     50.4   

Diluted earnings per share impact from Non-routine Items

   $ (0.03

 

     Three Months
Ended
September 30,
2014
 

Earnings per diluted share in accordance with generally accepted accounting principles

   $ 1.00   

Add back: Earnings per diluted share impact from Non-routine Items

     0.03   
  

 

 

 

Adjusted EPS

   $ 1.03   

 

9