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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 SECOND QUARTER EPS UP 5%

ON RECORD REVENUES

Quarterly Results Affected by Storms, Underlying Demand Remains Strong

DALLAS, TX (October 25, 2017) – Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2018 ended September 30, 2017. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior year’s second quarter):

Company Second Quarter Results

 

    Record revenues of $376.3 million, up 13%

 

    Earnings before income taxes of $92.3 million, up 3%

 

    Net Earnings per diluted share of $1.31, up 5%

Business Sales Volume Results Reflect Storm Interruption Effects

 

    Cement wholly-owned volumes were up 12%, including the Fairborn Business, while our Texas Lehigh cement joint venture volumes were down 6%; cement prices were up 7% overall

 

    Gypsum wallboard volumes and prices were essentially flat

Second quarter earnings before interest and income taxes increased 5%, reflecting the financial results of the recently acquired cement plant in Fairborn, Ohio and related assets (the Fairborn Business) and improved net sales prices across most businesses.

“Eagle Materials’ quarterly results reflect hurricane and other weather-related operational and demand interruptions. We were more fortunate than many as our employees remained safe and our operations incurred no damage. Eagle is poised to serve our customers’ additional needs as they meet the challenges of rebuilding over the coming quarters,” commented Dave Powers, President and CEO.

Cement, Concrete and Aggregates

Cement revenues for the second quarter, including joint venture and intersegment revenues, totaled $191.7 million, which was 15% higher than the same quarter last year. The average net sales price for this quarter was $106.96 per ton, 7% higher than the same quarter last

 


year. Total Cement sales volumes for the quarter were 1.6 million tons, 9% higher than the same quarter a year ago. Like-for-like average net cement sales prices increased 5% and sales volumes declined 5%, respectively, versus the second quarter of fiscal 2017 (comparison excludes cement sales from the Fairborn Business since its acquisition date). Our cement shipments during the quarter were negatively impacted by wet weather across our Midwest markets and our Texas cement shipments were impacted by the hurricane flooding that occurred along the Texas Gulf Coast.

During the quarter, our Nevada cement plant successfully completed the installation of certain pollution control equipment in connection with our plans to burn solid-waste fuels. The ability to use solid-waste fuel will lower energy costs in the future. To complete the project the plant reduced production output which negatively affected the absorption of operating costs at the cement plant during the quarter. The impact to the quarter was approximately $2 million, and the plant is currently up and operational.    

Operating earnings from Cement for the second quarter were a record $58.8 million and 16% greater than the same quarter a year ago. The earnings improvement was driven primarily by earnings from the Fairborn Business and improved average net cement sales prices offset by lower sales volumes from our legacy facilities and the project at our Nevada cement plant.

Concrete and Aggregates reported revenues for the second quarter of $43.0 million, an increase of 11%. Second quarter operating earnings were $5.6 million, a 17% improvement from the same quarter a year ago, reflecting improved concrete and aggregates sales volumes and net sales prices.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard revenues for the second quarter totaled $150.3 million, which were 1% less than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $153.71 per MSF, slightly below the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 651 million square feet (MMSF) were slightly greater than the same quarter last year; however, our wallboard shipments during the second quarter were negatively impacted by Hurricanes Harvey and Irma, which required the shutdown of our South Carolina facility to protect employees and impacted our customers’ ability to receive product. Our South Carolina facility was restarted without issue and shipping lanes have reopened.

Paperboard sales volumes for the quarter were 79,000 tons, 8% less than the same quarter a year ago. As the papermill has reached full utilization and demand for gypsum facing paper grows, we are transitioning sales to customers under contract which has negatively impacted our sales to non-contractual customers. The average Paperboard net sales price this quarter was $561.26 per ton, 12% greater than the same quarter a year ago, reflecting the delayed pass-through of higher recycled-fiber costs.

Gypsum Wallboard and Paperboard reported second quarter operating earnings of $46.1 million, down 11% from the same quarter last year. The earnings decline primarily reflects increased operating costs at our papermill due to higher recycled fiber costs, lower paperboard shipments and approximately $2.5 million related to the start-up of our Bernalillo wallboard plant.

 

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Oil and Gas Proppants

Oil and Gas Proppants reported second quarter revenues of $22.0 million, a 232% increase from the prior year reflecting improved frac sand sales volumes and net sales prices. The second quarter’s operating loss of $1.8 million includes depreciation, depletion and amortization of $8.5 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.

About Eagle Materials Inc.

Eagle Materials Inc. manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, Concrete and Aggregates, and Oil and Gas Proppants from over 75 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 October 25, 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 and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017. These reports are 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 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 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
September 30,
    Six Months Ended
September 30,
 
     2017     2016     2017     2016  

Revenues

   $ 376,315     $ 332,658     $ 742,436     $ 630,162  

Cost of Goods Sold

     279,561       241,448       559,623       466,997  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     96,754       91,210       182,813       163,165  

Equity in Earnings of Unconsolidated JV

     11,955       12,147       21,831       20,127  

Other, net

     887       504       1,644       1,579  

Acquisition and Litigation Expense

     —         —         —         —    

Corporate General and Administrative Expenses

     (9,821     (8,832     (19,500     (18,665
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Interest and Income Taxes

     99,775       95,029       186,788       166,206  

Interest Expense, net

     (7,456     (5,656     (14,939     (9,557
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before Income Taxes

     92,319       89,373       171,849       156,649  

Income Tax Expense

     (28,957     (29,136     (53,605     (51,068
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Earnings

   $ 63,362     $ 60,237     $ 118,244     $ 105,581  
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE

        

Basic

   $ 1.32     $ 1.26     $ 2.46     $ 2.20  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.31     $ 1.25     $ 2.43     $ 2.18  
  

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE SHARES OUTSTANDING

        

Basic

     48,053,733       47,809,476       48,087,625       47,911,276  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     48,504,767       48,229,485       48,579,984       48,375,116  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Eagle Materials Inc.

Attachment 2

Eagle Materials Inc.

Revenues and Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 

     Quarter Ended
September 30,
    Six Months Ended
September 30,
 
     2017     2016     2017     2016  

Revenues*

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 123,068     $ 122,923     $ 249,881     $ 236,185  

Gypsum Paperboard

     27,200       29,007       54,256       57,316  
  

 

 

   

 

 

   

 

 

   

 

 

 
     150,268       151,930       304,137       293,501  

Cement (Wholly Owned)

     160,996       135,300       310,832       251,669  

Oil and Gas Proppants

     22,022       6,631       40,932       11,727  

Concrete and Aggregates

     43,029       38,797       86,535       73,265  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 376,315     $ 332,658     $ 742,436     $ 630,162  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Earnings

        

Gypsum Wallboard and Paperboard:

        

Gypsum Wallboard

   $ 39,575     $ 41,698     $ 83,396     $ 81,034  

Gypsum Paperboard

     6,517       10,220       11,455       21,447  
  

 

 

   

 

 

   

 

 

   

 

 

 
     46,092       51,918       94,851       102,481  

Cement:

        

Wholly Owned

     46,797       38,569       80,102       62,189  

Joint Venture

     11,955       12,147       21,831       20,127  
  

 

 

   

 

 

   

 

 

   

 

 

 
     58,752       50,716       101,933       82,316  

Oil and Gas Proppants

     (1,754     (4,090     (3,780     (10,002

Concrete and Aggregates

     5,619       4,813       11,640       8,497  

Other, net

     887       504       1,644       1,579  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sub-total

     109,596       103,861       206,288       184,871  

Acquisition and Litigation Expenses

     —         —         —         —    

Corporate General and Administrative Expenses

     (9,821     (8,832     (19,500     (18,665
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Before Interest and Income Taxes

   $ 99,775     $ 95,029     $ 186,788     $ 166,206  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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
September 30,
    Six Months Ended
September 30,
 
     2017      2016      Change     2017      2016      Change  

Gypsum Wallboard (MMSF’s)

     651        650        0     1,305        1,237        +5

Cement (M Tons):

                

Wholly Owned

     1,343        1,200        +12     2,611        2,233        +17

Joint Venture

     227        242        –6     470        460        +2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     1,570        1,442        +9     3,081        2,693        +14

Paperboard (M Tons):

                

Internal

     32        30        +7     63        58        +9

External

     47        56        –16     95        111        –14
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     79        86        –8     158        169        –7

Concrete (M Cubic Yards)

     333        315        +6     690        602        +15

Aggregates (M Tons)

     1,049        1,027        +2     1,944        1,971        –1

Frac Sand (M Tons)

     389        111        +250     704        185        +281

 

     Average Net Sales Price*  
     Quarter Ended
September 30,
    Six Months Ended
September 30,
 
     2017      2016      Change     2017      2016      Change  

Gypsum Wallboard (MSF)

   $ 153.71      $ 154.41        0   $ 156.37      $ 155.97        0

Cement (Ton)

   $ 106.96      $ 99.95        +7   $ 106.95      $ 100.27        +7

Paperboard (Ton)

   $ 561.26      $ 501.84        +12   $ 555.48      $ 500.41        +11

Concrete (Cubic Yard)

   $ 100.66      $ 95.00        +6   $ 99.78      $ 93.92        +6

Aggregates (Ton)

   $ 9.26      $ 8.64        +7   $ 9.24      $ 8.48        +9

 

* Net of freight and delivery costs billed to customers.

 

     Intersegment and Cement Revenues  
     Quarter Ended
September 30,
     Six Months Ended
September 30,
 
     2017      2016      2017      2016  

Intersegment Revenues:

           

Cement

   $ 4,654      $ 4,536      $ 9,583      $ 8,071  

Paperboard

     18,159        15,452        35,516        29,958  

Concrete and Aggregates

     402        343        815        626  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 23,215      $ 20,331      $ 45,914      $ 38,655  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cement Revenues:

           

Wholly Owned

   $ 160,996      $ 135,300      $ 310,832      $ 251,669  

Joint Venture

     26,000        26,975        54,170        51,863  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 186,996      $ 162,275      $ 365,002      $ 303,532  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Eagle Materials Inc.

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

     September 30,     March 31,
2017*
 
     2017     2016    

ASSETS

      

Current Assets –

      

Cash and Cash Equivalents

   $ 31,056     $ 54,506     $ 6,561  

Accounts and Notes Receivable, net

     169,125       155,241       136,313  

Inventories

     239,189       217,582       252,846  

Federal Income Tax Receivable

     —         1,046       —    

Prepaid and Other Assets

     7,440       6,761       4,904  
  

 

 

   

 

 

   

 

 

 

Total Current Assets

     446,810       435,136       400,624  
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment –

     2,515,337       2,089,499       2,439,438  

Less: Accumulated Depreciation

     (946,934     (855,148     (892,601
  

 

 

   

 

 

   

 

 

 

Property, Plant and Equipment, net

     1,568,403       1,234,351       1,546,837  

Investments in Joint Venture

     52,960       47,852       48,620  

Notes Receivable

     476       1,158       815  

Goodwill and Intangibles

     240,947       162,506       235,505  

Other Assets

     11,445       27,132       14,723  
  

 

 

   

 

 

   

 

 

 
   $ 2,321,041     $ 1,908,135     $ 2,247,124  
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Current Liabilities –

      

Accounts Payable

   $ 79,194     $ 62,481     $ 92,193  

Accrued Liabilities

     59,788       53,793       55,379  

Federal Income Tax Payable

     1,211       —         733  

Current Portion of Senior Notes

     81,214       8,000       81,214  
  

 

 

   

 

 

   

 

 

 

Total Current Liabilities

     221,407       124,274       229,519  
  

 

 

   

 

 

   

 

 

 

Long-term Liabilities

     44,038       59,922       42,878  

Bank Credit Facility

     195,000       —         225,000  

Private Placement Senior Unsecured Notes

     36,500       117,714       36,500  

4.500% Senior Unsecured Notes due 2026

     344,088       343,468       343,753  

Deferred Income Taxes

     167,335       164,027       166,024  

Stockholders’ Equity –

      

Preferred Stock, Par Value $0.01; None Issued

     —         —         —    

Common Stock, Par Value $0.01; Authorized 100,000,000 Shares; Issued and Outstanding 48,624,085; 48,223,617 and 48,453,268 Shares, respectively

     486       482       485  

Capital in Excess of Par Value

     150,029       130,638       149,014  

Accumulated Other Comprehensive Losses

     (7,002     (10,785     (7,396

Retained Earnings

     1,169,160       978,395       1,061,347  
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

     1,312,673       1,098,730       1,203,450  
  

 

 

   

 

 

   

 

 

 
   $ 2,321,041     $ 1,908,135     $ 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 September 30, 2017 and 2016:

 

     Depreciation,
Depletion and
Amortization

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

Cement

   $ 12,662      $ 8,784  

Gypsum Wallboard

     4,473        4,768  

Paperboard

     2,172        2,106  

Oil and Gas Proppants

     8,518        4,261  

Concrete and Aggregates

     1,929        1,920  

Other

     552        547  
  

 

 

    

 

 

 
   $ 30,306      $ 22,386  
  

 

 

    

 

 

 

 

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