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 January 28, 2016 - 4:15 PM EST
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Eagle Materials Reports Third Quarter Results

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 1st to March 31st.

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 1st to March 31st.

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.

 
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

       

2014

 

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

Eagle Materials Inc.
Steven R. Rowley, 214-432-2000
President and Chief Executive Officer
or
D. Craig Kesler, 214-432-2000
Executive Vice President and Chief Financial Officer
or
Robert S. Stewart, 214-432-2000
Executive Vice President, Strategy, Corporate Development and Communications


Source: Business Wire (January 28, 2016 - 4:15 PM EST)

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