EAGLE MATERIALS INC - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - EAGLE MATERIALS INC	d99284d8k.htm

Exhibit 99.1


				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 THIRD QUARTER RESULTS

DALLAS, TX (January 28, 2016) – Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2016 ended December 31, 2015. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior fiscal year’s third quarter):

Company Quarterly Results

•

Quarterly revenues of $277.4 million, down 5%

•

Net earnings of $45.8 million, down 12%

•

Cash flow from operations of $108.7 million, up 66%

•

Net earnings per diluted share of $0.92, down 11%

Notable Highlights

•

Record third quarter Cement earnings of $41.8 million, up 11%

•

Net debt-to-capitalization ratio of 32%

•

The Company repurchased 870,000 shares of common stock during the quarter

Eagle’s construction products and building materials businesses performed well during the quarter, with the Cement business reporting record third quarter operating earnings despite our cement businesses in Texas and Oklahoma being impacted by heavy rains in October and December which resulted in lower sales volumes in both of those markets. Additionally, in Texas increased demand for construction grade cement continues to offset much of the impact from lower oil well cement demand.

Our third quarter Gypsum wallboard sales volumes did not benefit from pre-buying activity in advance of a price increase, as had been the case in the prior year’s third quarter, due to a shift in the timing of our announced wallboard price increase for 2016 from January 1^st to March 31^st.

Cash flow from operations improved 66% and was used to fund capital improvements, pay dividends, reduce debt and repurchase shares. Eagle ended the quarter with a net debt-to-capitalization ratio of 32%.

The decline in oil prices throughout calendar 2015 adversely impacted U.S. oil and gas drilling activity in the quarter leading to further reductions in demand and pricing for proppants.

Cement, Concrete and Aggregates

Operating earnings from Cement during the quarter were a third quarter record $41.8 million, and 11% higher than the same quarter a year ago. The earnings increase was driven primarily by a 4% increase in average net cement sales prices and record quarterly cement sales volumes.

Cement revenues for the third quarter, including joint venture and intersegment revenues, totaled $135.4 million, 9% greater than the same quarter last year. Our average net cement sales price for this quarter was $97.10 per ton, 4% higher than the same quarter last year. Cement sales volumes were a third quarter record 1.2 million tons, 1% higher than the same quarter a year ago.

Concrete and Aggregates reported operating earnings of $1.5 million for the third quarter, a 7% decline from the same quarter a year ago, reflecting higher raw material and quarry maintenance costs offset by improved concrete and aggregates pricing along with improved concrete sales volumes.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard reported third quarter operating earnings of $45.2 million, down 8% from the same quarter last year. Lower Gypsum Wallboard and Paperboard sales volumes were the primary drivers of the quarterly earnings decline.

Gypsum Wallboard and Paperboard revenues for the third quarter totaled $131.7 million, a 9% decrease from the same quarter a year ago. The revenue decrease reflects lower Gypsum Wallboard and Paperboard sales volumes. The average Gypsum Wallboard net sales price this quarter was $157.99 per MSF, 1% less than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 568 million square feet (MMSF) represents a 7% decline from the same quarter last year. Our third quarter Gypsum Wallboard sales volumes did not benefit from pre-buying activity in advance of a price increase, as had been the case in the prior year’s third quarter, due to a shift in the timing of our announced wallboard price increase for 2016 from January 1^st to March 31^st.

Paperboard sales volumes were 71,000 tons, 8% lower than the same quarter a year ago. The average Paperboard net sales price this quarter was $510.38 per ton, 1% higher than the same quarter a year ago.

Oil and Gas Proppants

Oil and Gas Proppants reported third quarter revenues of $8.5 million, a 73% decline from the prior year, which reflects the significant slowdown in oil and gas drilling and completion activities partially offset by our acquisition of CRS Proppants during the third quarter of the prior fiscal year. Sequentially, our frac sand sales volumes and sales prices declined 47% and 24%, respectively. The third quarter’s operating loss of $9.2 million compares to operating income of $3.2 million in the same quarter a year ago.

Details of Financial Results

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.

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 Friday, January 29, 2016. 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 drilling and fracturing activity and demand for frac sand; 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 or governmental audits, inquiries or investigations; 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, 2015 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2015. These reports are filed with the Securities and Exchange Commission. With respect to our acquisition of CRS Proppants and the Skyway facility, 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 and general economic and business conditions that may affect us after the acquisitions. 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 Nine Months)

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

Attachment 4 Consolidated Balance Sheets

Attachment 5 Depreciation, Depletion and Amortization by Lines of Business

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,
	2015			2014			2015			2014
Revenues	$	277,409		$	291,529		$	891,360		$	842,588
Cost of Goods Sold		208,544			212,380			717,104	⁽¹⁾		631,977

Gross Profit		68,865			79,149			174,256			210,611
Equity in Earnings of Unconsolidated JV		10,483			12,423			29,993			34,274
Other, net		1,163			488			2,170			2,050
Acquisition and Litigation Expense		—			(722	)		—			(2,825	)
Corporate General and Administrative Expenses		(8,304	)		(9,371	)		(26,659	)		(23,827	)

Earnings before Interest and Income Taxes		72,207			81,967			179,760			220,283
Interest Expense, net		(4,002	)		(4,101	)		(12,830	)		(12,054	)

Earnings before Income Taxes		68,205			77,866			166,930			208,229
Income Tax Expense		(22,357	)		(25,836	)		(53,501	)		(68,170	)

Net Earnings	$	45,848		$	52,030		$	113,429		$	140,059

EARNINGS PER SHARE
Basic	$	0.93		$	1.05		$	2.29		$	2.82

Diluted	$	0.92		$	1.03		$	2.26		$	2.78

AVERAGE SHARES OUTSTANDING
Basic		49,187,738			49,655,405			49,593,821			49,583,210

Diluted		49,770,020			50,411,147			50,230,091			50,375,619

⁽¹⁾	Includes $37.8 million (pre-tax) of Non-Routine Items recorded in the second quarter of fiscal 2016

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,
	2015			2014			2015			2014
Revenues*
Gypsum Wallboard and Paperboard:
Gypsum Wallboard	$	108,907		$	118,573		$	343,660		$	342,905
Gypsum Paperboard		22,753			25,631			67,069			70,349

		131,660			144,204			410,729			413,254
Cement (Wholly Owned)		105,697			88,652			334,758			291,461
Oil and Gas Proppants		8,476			31,731			49,608			53,325
Concrete and Aggregates		31,576			26,942			96,265			84,548

Total	$	277,409		$	291,529		$	891,360		$	842,588

Segment Operating Earnings
Gypsum Wallboard and Paperboard:
Gypsum Wallboard	$	37,289		$	40,013		$	118,185		$	114,443
Gypsum Paperboard		7,923			9,102			22,091			24,633

		45,212			49,115			140,276			139,076
Cement:
Wholly Owned		31,285			25,155			86,065			62,261
Joint Venture		10,483			12,423			29,993			34,274

		41,768			37,578			116,058			96,535
Oil and Gas Proppants		(9,153	)		3,241			(59,389	)⁽¹⁾		3,315
Concrete and Aggregates		1,521			1,638			7,304			5,959
Other, net		1,163			488			2,170			2,050

Sub-total		80,511			92,060			206,419			246,935
Acquisition and Litigation Expenses		—			(722	)		—			(2,825	)
Corporate General and Administrative Expenses		(8,304	)		(9,371	)		(26,659	)		(23,827	)

Earnings Before Interest and Income Taxes	$	72,207		$	81,967		$	179,760		$	220,283

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

⁽¹⁾	Includes $37.8 million (pre-tax) of Non-Routine Items recorded in the second quarter of fiscal 2016

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,
	2015		2014		Change			2015		2014		Change
Gypsum Wallboard (MMSF’s)		568		610		-7	%		1,764		1,746		+1	%

Cement (M Tons):
Wholly Owned		999		935		+7	%		3,238		3,135		+3	%
Joint Venture		213		270		-21	%		661		837		-21	%

		1,212		1,205		+1	%		3,899		3,972		-2	%
Paperboard (M Tons):
Internal		27		28		-4	%		85		83		+2	%
External		44		49		-10	%		130		136		-4	%

		71		77		-8	%		215		219		-2	%

Concrete (M Cubic Yards)		266		246		+8	%		839		767		+9	%

Aggregates (M Tons)		792		682		+16	%		2,223		2,372		-6	%


	Average Net Sales Price*
	Quarter Ended December 31,							Nine Months Ended December 31,
	2015		2014		Change			2015		2014		Change
Gypsum Wallboard (MSF)	$	157.99	$	158.95		-1	%	$	159.74	$	160.23		0	%
Cement (Ton)	$	97.10	$	93.76		+4	%	$	97.54	$	91.43		+7	%
Paperboard (Ton)	$	510.38	$	504.30		+1	%	$	506.42	$	505.09		0	%
Concrete (Cubic Yard)	$	93.56	$	89.00		+5	%	$	92.54	$	86.77		+7	%
Aggregates (Ton)	$	8.34	$	7.36		+13	%	$	8.28	$	7.54		+10	%

*	Net of freight and delivery costs billed to customers.


	Intersegment and Cement Revenues
	Quarter Ended December 31,				Nine Months Ended December 31,
	2015		2014		2015		2014
Intersegment Revenues:
Cement	$	3,714	$	2,489	$	11,072	$	7,760
Paperboard		14,069		14,305		44,216		42,645
Concrete and Aggregates		203		174		717		691

	$	17,986	$	16,968	$	56,005	$	51,096

Cement Revenues:
Wholly Owned	$	105,697	$	88,652	$	334,758	$	291,461
Joint Venture		26,008		32,907		82,555		98,624

	$	131,705	$	121,559	$	417,313	$	390,085

Eagle Materials Inc.

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)


	December 31,						March 31, 2015*
	2015			2014			March 31, 2015*
ASSETS
Current Assets –
Cash and Cash Equivalents	$	15,756		$	13,697		$	7,514
Accounts and Notes Receivable, net		103,859			136,823			113,577
Inventories		232,447			207,043			235,464
Federal Income Tax Receivable		5,319			—			—
Prepaid and Other Assets		8,013			4,995			10,080

Total Current Assets		365,394			362,558			366,635

Property, Plant and Equipment –		2,065,745			1,929,177			1,962,215
Less: Accumulated Depreciation		(799,494	)		(724,351	)		(740,396	)

Property, Plant and Equipment, net		1,266,251			1,204,826			1,221,819
Investments in Joint Venture		50,372			47,167			47,614
Notes Receivable		2,716			2,890			2,847
Goodwill and Intangibles		174,916			206,208			211,167
Other Assets		28,921			34,402			32,509

		$1,888,570		$	1,858,051		$	1,882,591

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities –
Accounts Payable	$	61,327		$	68,466		$	77,749
Accrued Liabilities		46,750			45,269			46,830
Federal Income Tax Payable		—			1,508			2,952
Current Portion of Long-term Debt		8,000			57,045			57,045

Total Current Liabilities		116,077			172,288			184,576

Long-term Liabilities		70,673			84,911			69,055
Bank Credit Facility		375,000			335,000			330,000
Senior Notes		117,714			125,714			125,714
Deferred Income Taxes		159,790			167,116			162,653
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 49,305,408; 50,277,425 and 50,245,364 Shares, respectively.		493			503			502
Capital in Excess of Par Value		211,781			269,736			272,441
Accumulated Other Comprehensive Losses		(11,109	)		(5,165	)		(12,067	)
Retained Earnings		848,151			707,948			749,717

Total Stockholders’ Equity		1,049,316			973,022			1,010,593

		$1,888,570		$	1,858,051		$	1,882,591

*	From audited financial statements.

Eagle Materials Inc.

Attachment 5

Eagle Materials Inc.

Depreciation, Depletion and Amortization by Lines of Business

(unaudited)

The following presents depreciation, depletion and amortization by segment for the quarters ended December 31, 2015 and 2014:


	Depreciation, Depletion and Amortization
	($ in thousands)
	Quarter Ended December 31,
	2015		2014
Cement	$	8,390	$	8,089
Gypsum Wallboard		5,445		4,967
Paperboard		2,093		2,069
Oil and Gas Proppants		7,210		2,673
Concrete and Aggregates		1,597		1,465
Other		476		425

	$	25,211	$	19,688

Attached files

Stock widget

Investing forum

EAGLE MATERIALS INC Reports