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8-K - FORM 8-K - EAGLE MATERIALS INCd419112d8k.htm

EXHIBIT 99.1

 

LOGO   

Contact at 214/432-2000

David B. Powers

President & CEO

D. Craig Kesler

Executive Vice President & CFO

Robert S. Stewart

Executive Vice President

 

 

News For Immediate Release

EAGLE MATERIALS REPORTS FIRST QUARTER EPS UP 22%

ON RECORD REVENUES

DALLAS, TX (July 27, 2017) – Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2018 ended June 30, 2017. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior year’s first quarter):

Company First Quarter Results

 

    Record revenues of $366.1 million, up 23%

 

    Net earnings per diluted share of $1.13, up 22%

 

    Eagle’s first quarter financial results were impacted by approximately $1.5 million (pre-tax), or $0.02 per share, of costs associated with reduced production at one of its cement plants in connection with a plant modification project (described further below)

 

    Eagle’s first quarter financial results also include approximately $1.2 million (pre-tax), or $0.02 per share, of acquisition and purchase accounting related costs

First quarter earnings before interest and income taxes increased 22%, reflecting improved sales volumes and net sales prices across nearly all businesses and the financial results of the recently acquired cement plant in Fairborn, Ohio and related assets (the Fairborn Business).

Cement, Concrete and Aggregates

Cement revenues for the first quarter, including joint venture and intersegment revenues, totaled $182.9 million, which was 26% higher than the same quarter last year. The average net sales price for this quarter was $106.95 per ton, 6% higher than the same quarter last year. Total Cement sales volumes for the quarter were over 1.5 million tons, 21% higher than the same quarter a year ago. Like-for-like average net cement sales prices and sales volumes increased 4% and 7%, respectively, versus the first quarter of fiscal 2017 (comparison excludes cement sales from the Fairborn Business since its acquisition date).

Operating earnings from Cement for the first quarter were a record $43.2 million and 37% greater than the same quarter a year ago. The earnings improvement was driven primarily by improved average net cement sales prices and cement sales volumes and earnings from the Fairborn Business. During the quarter, our Nevada cement plant experienced reduced production


in connection with the installation of certain pollution control equipment to enable the plant to burn solid-waste fuels. The ability to use solid-waste fuel will lower energy costs in the future. The reduced production negatively affected the absorption of operating costs at the cement plant during the quarter. The project is expected to be completed in the fall.

Concrete and Aggregates reported revenues for the first quarter of $43.5 million, an increase of 26%. First quarter operating earnings were $6.0 million for the first quarter, a 63% improvement from the same quarter a year ago, reflecting improved concrete and aggregates pricing and concrete sales volumes.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard revenues for the first quarter totaled $153.9 million, which were 9% greater than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $159.01 per MSF, 1% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 654 million square feet (MMSF) represents an 11% increase from the same quarter last year. Paperboard sales volumes for the quarter were 79,000 tons, 5% less than the same quarter a year ago, reflecting the timing of third-party purchases. The average Paperboard net sales price this quarter was $549.69 per ton, 10% greater than the same quarter a year ago.

Gypsum Wallboard and Paperboard reported first quarter operating earnings of $48.8 million, down 4% from the same quarter last year. The earnings decline primarily reflects increased operating costs at our papermill due to the timing of our annual maintenance outage and higher recycled fiber costs, partially offset by improved Gypsum Wallboard sales volumes and sales prices.

Oil and Gas Proppants

Oil and Gas Proppants reported first quarter revenues of $18.9 million, a 271% increase from the prior year reflecting improved frac sand sales volumes and net sales prices. The first quarter’s operating loss of $2.0 million includes depreciation, depletion and amortization of $7.6 million.

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.

 

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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 8:30 a.m. Eastern Time (7:30 a.m. Central Time) on July 27, 2017. 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.

###

 

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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; material nonpayment or non-performance by any of our key customers; fluctuations in activity in the oil and gas industry, including the level of fracturing activities and the 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; changes in economic conditions specific to any one or more of the Company’s markets; competition; a cyber-attack or data security breach; announced increases in capacity in the gypsum wallboard, cement and frac sand industries; changes in the demand for residential housing construction or commercial construction; risks related to pursuit of acquisitions, joint ventures and other transactions; 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, 2017. This report is filed with the Securities and Exchange Commission. With respect to our completed acquisition of the Fairborn Business as described in this press release, factors, risks and uncertainties that may cause actual events and developments to vary materially from those anticipated in such forward-looking statements include, but are not limited to, failure to realize any expected synergies from or other benefits of the transaction, possible negative effects of consummation of the transaction, significant transaction or ownership transition costs, unknown liabilities or other adverse developments affecting the Fairborn Business, including the results of operations of the Fairborn Business prior and after the closing, the effect on the Fairborn Business of the same or similar factors discussed above to which our business is subject, including changes in market conditions in the construction industry and general economic and business conditions that may affect us following 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.

David B. Powers

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

Attachment 2

Attachment 3

Attachment 4

Attachment 5

  

Statement of Consolidated Earnings

Revenues and Earnings by Lines of Business (Quarter)

Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

Consolidated Balance Sheets

Depreciation, Depletion and Amortization by Lines of Business

 

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Eagle Materials Inc.

Attachment 1

Eagle Materials Inc.

Statement of Consolidated Earnings

(dollars in thousands, except per share data)

(unaudited)

 

     Quarter Ended
June 30,
 
     2017     2016  

Revenues

   $ 366,121     $ 297,504  

Cost of Goods Sold

     280,062       225,549  
  

 

 

   

 

 

 

Gross Profit

     86,059       71,955  

Equity in Earnings of Unconsolidated Joint Venture

     9,876       7,980  

Corporate General and Administrative Expenses

     (9,679     (9,833

Other, net

     757       1,075  
  

 

 

   

 

 

 

Earnings before Interest and Income Taxes

     87,013       71,177  

Interest Expense, net

     (7,483     (3,901
  

 

 

   

 

 

 

Earnings before Income Taxes

     79,530       67,276  

Income Tax Expense

     (24,648     (21,932
  

 

 

   

 

 

 

Net Earnings

   $ 54,882     $ 45,344  
  

 

 

   

 

 

 

NET EARNINGS PER SHARE

    

Basic

   $ 1.14     $ 0.94  
  

 

 

   

 

 

 

Diluted

   $ 1.13     $ 0.93  
  

 

 

   

 

 

 

AVERAGE SHARES OUTSTANDING

    

Basic

     48,121,890       48,014,195  
  

 

 

   

 

 

 

Diluted

     48,655,553       48,522,207  
  

 

 

   

 

 

 

 

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Eagle Materials Inc.

Attachment 2

Eagle Materials Inc.

Revenues and Segment Operating Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 

     Quarter Ended
June 30,
 
     2017     2016  

Revenues*

    

Gypsum Wallboard and Paperboard:

    

Gypsum Wallboard

   $ 126,813     $ 113,262  

Gypsum Paperboard

     27,056       28,309  
  

 

 

   

 

 

 
     153,869       141,571  

Cement (Wholly Owned)

     149,836       116,369  

Oil and Gas Proppants

     18,910       5,096  

Concrete and Aggregates

     43,506       34,468  
  

 

 

   

 

 

 

Total

   $ 366,121     $ 297,504  
  

 

 

   

 

 

 

Segment Operating Earnings

    

Gypsum Wallboard and Paperboard:

    

Gypsum Wallboard

   $ 43,821     $ 39,336  

Gypsum Paperboard

     4,938       11,227  
  

 

 

   

 

 

 
     48,759       50,563  

Cement:

    

Wholly Owned

     33,305       23,620  

Joint Venture

     9,876       7,980  
  

 

 

   

 

 

 
     43,181       31,600  

Oil and Gas Proppants

     (2,026     (5,912

Concrete and Aggregates

     6,021       3,684  

Other, net

     757       1,075  
  

 

 

   

 

 

 

Sub-total

   $ 96,692     $ 81,010  

Corporate General and Administrative Expense

     (9,679     (9,833
  

 

 

   

 

 

 

Earnings before Interest and Income Taxes

   $ 87,013     $ 71,177  
  

 

 

   

 

 

 

 

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

 

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Eagle Materials Inc.

Attachment 3

Eagle Materials Inc.

Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

(unaudited)

 

     Sales Volume  
     Quarter Ended
June 30,
 
     2017      2016      Change  

Gypsum Wallboard (MMSF’s)

     654        587        +11

Cement (M Tons):

        

Wholly Owned

     1,268        1,033        +23

Joint Venture

     243        218        +11
  

 

 

    

 

 

    
     1,511        1,251        +21

Paperboard (M Tons):

        

Internal

     31        29        +7

External

     48        54        -11
  

 

 

    

 

 

    
     79        83        -5

Concrete (M Cubic Yards)

     357        287        +24

Aggregates (M Tons)

     895        944        -5

Frac Sand (M Tons)

     315        74        +326
     Average Net Sales Price *  
     Quarter Ended
June 30,
 
     2017      2016      Change  

Gypsum Wallboard (MSF)

   $ 159.01      $ 157.69        +1

Cement (Ton)

   $ 106.95      $ 100.63        +6

Paperboard (Ton)

   $ 549.69      $ 498.92        +10

Concrete (Cubic Yard)

   $ 98.96      $ 92.73        +7

Aggregates (Ton)

   $ 9.22      $ 8.30        +11

 

* Net of freight and delivery costs billed to customers.

 

     Intersegment and Cement Revenues
($ in thousands)
 
     Quarter Ended
June 30,
 
     2017      2016  

Intersegment Revenues:

     

Cement

   $ 4,929      $ 3,535  

Paperboard

     17,357        14,506  

Concrete and Aggregates

     413        283  
  

 

 

    

 

 

 
   $ 22,699      $ 18,324  
  

 

 

    

 

 

 

Cement Revenues:

     

Wholly Owned

   $ 149,836      $ 116,369  

Joint Venture

     28,170        24,888  
  

 

 

    

 

 

 
   $ 178,006      $ 141,257  
  

 

 

    

 

 

 

 

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Eagle Materials Inc.

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

     June 30,     March 31,  
     2017     2016     2017*  

ASSETS

      

Current Assets –

      

Cash and Cash Equivalents

   $ 12,233     $ 9,180     $ 6,561  

Accounts and Notes Receivable, net

     175,002       142,298       136,313  

Inventories

     244,886       240,999       252,846  

Prepaid and Other Assets

     8,181       8,020       4,904  
  

 

 

   

 

 

   

 

 

 

Total Current Assets

     440,302       400,497       400,624  
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment –

     2,454,800       2,083,592       2,439,438  

Less: Accumulated Depreciation

     (919,732     (837,242     (892,601
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment, net

     1,535,068       1,246,350       1,546,837  

Investments in Joint Venture

     53,750       48,700       48,620  

Notes Receivable

     653       2,652       815  

Goodwill and Intangibles

     234,707       163,298       235,505  

Other Assets

     15,110       27,588       14,723  
  

 

 

   

 

 

   

 

 

 
   $ 2,279,590     $ 1,889,085     $ 2,247,124  
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Current Liabilities –

      

Accounts Payable

   $ 78,763     $ 61,322     $ 92,193  

Accrued Liabilities

     53,288       40,509       55,379  

Federal Income Tax Payable

     26,462       9,919       733  

Current Portion of Senior Notes

     81,214       8,000       81,214  
  

 

 

   

 

 

   

 

 

 

Total Current Liabilities

     239,727       119,750       229,519  
  

 

 

   

 

 

   

 

 

 

Long-term Liabilities

     42,026       58,642       42,878  

Bank Credit Facility

     200,000       373,000       225,000  

Private Placement Senior Unsecured Notes

     36,500       117,714       36,500  

4.500% Senior Unsecured Notes due 2026

     343,921       —         343,753  

Deferred Income Taxes

     162,329       163,536       166,024  

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 48,547,960; 48,391,969 and 48,453,268 Shares, respectively

     485       484       485  

Capital in Excess of Par Value

     151,141       144,076       149,014  

Accumulated Other Comprehensive Losses

     (7,199     (11,097     (7,396

Retained Earnings

     1,110,660       922,980       1,061,347  
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

     1,255,087       1,056,443       1,203,450  
  

 

 

   

 

 

   

 

 

 
   $ 2,279,590     $ 1,889,085     $ 2,247,124  
  

 

 

   

 

 

   

 

 

 
* From audited financial statements.

 

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Eagle Materials Inc.

Attachment 5

Eagle Materials Inc.

Depreciation, Depletion and Amortization by Lines of Business

(dollars in thousands)

(unaudited)

The following presents depreciation, depletion and amortization by segment for the quarters ended June 30, 2017 and 2016:

 

     Depreciation, Depletion and
Amortization

($ in thousands)
 
     Quarter Ended
June 30,
 
     2017      2016  

Cement

   $ 12,479      $ 8,611  

Gypsum Wallboard

     4,442        4,762  

Paperboard

     2,137        2,100  

Oil and Gas Proppants

     7,606        5,184  

Concrete and Aggregates

     1,914        1,749  

Other

     369        457  
  

 

 

    

 

 

 
   $ 28,947      $ 22,863  
  

 

 

    

 

 

 

 

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