July 25, 2016 - 6:00 AM EDT
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Eagle Materials Reports First Quarter EPS up 24% on Record Revenues

Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2017 ended June 30, 2016. 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 $297.5 million, up 4%
  • Earnings before interest and income taxes of $71.2 million, up 18%
  • Net Earnings of $45.3 million, up 20%
  • Net earnings per diluted share of $0.93, up 24%

Other Highlights

  • Eagle repurchased 525,000 shares of its common stock
  • Net debt-to-capitalization ratio of 32%

Eagle’s construction products and building materials businesses performed well during the quarter, with the Cement business reporting record first quarter operating earnings of $31.6 million. First quarter cash flow from operations improved 162% 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%.

Cement, Concrete and Aggregates

Cement revenues for the first quarter, including joint venture and intersegment revenues, totaled $144.8 million, which was 13% higher than the same quarter last year. The average net sales price for this quarter was $100.63 per ton, 2% higher than the same quarter last year. Wholly-owned average net sales prices improved 6% from the same quarter last year. The average net cement sales price at our Joint Venture declined year-over-year reflecting the shift from oil well cement to construction grade-cement over the past year; however, profitability remained strong at the Joint Venture. Total Cement sales volumes for the quarter were 1.3 million tons, 4% higher than the same quarter a year ago.

Operating earnings from Cement for the first quarter were a record $31.6 million and 23% 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 $3.1 million of earnings from the Skyway Cement facility we acquired in July of 2015.

Concrete and Aggregates reported revenues for the first quarter of $34.5 million, an increase of 22%. First quarter operating earnings were $3.7 million for the first quarter, a 91% improvement from the same quarter a year ago, reflecting improved concrete and aggregates pricing and sales volumes.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard revenues for the first quarter totaled $141.6 million, which were 4% greater than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $157.69 per MSF, 4% less than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 587 million square feet (MMSF) represents a 2% increase from the same quarter last year. Paperboard sales volumes for the quarter were a record 83,000 tons, 20% greater than the same quarter a year ago. The average Paperboard net sales price this quarter was $498.92 per ton, 1% less than the same quarter a year ago.

Gypsum Wallboard and Paperboard reported first quarter operating earnings of $50.6 million, up 8% from the same quarter last year. The earnings improvement reflects improved Gypsum Wallboard and Paperboard sales volumes and lower operating costs primarily driven by lower natural gas prices during the quarter.

Oil and Gas Proppants

Oil and Gas Proppants reported first quarter revenues of $5.1 million, a 78% decrease from the prior year reflecting a 68% decline in frac sand sales volumes. The first quarter’s operating loss of $5.9 million compares with an operating loss of $5.6 million in the same quarter a year ago. Our frac sand business continues to be impacted by the significant slowdown in oil and gas drilling activity over the past eighteen-months; however, we continue to right-size the business to match our business with current activity levels.

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 8:30 a.m. Eastern Time (7:30 a.m. Central Time) on July 25, 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; 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 and cement industries; changes in the demand for residential housing construction or commercial construction; risks related to pursuit of acquisitions, joint ventures and other transactions; the impact of our bylaws forum selection clause on stockholder disputes; 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, 2016. This report is filed with the Securities and Exchange Commission. 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)
Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
Attachment 4 Consolidated Balance Sheets
Attachment 5 Segment Depreciation, Depletion and Amortization

     

Eagle Materials Inc.

Attachment 1

 
Eagle Materials Inc.
Statement of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
 

Quarter Ended

June 30,

2016     2015
 
Revenues $ 297,504 $ 284,963
 
Cost of Goods Sold   225,549     223,866  
 

Gross Profit

71,955 61,097
 
Equity in Earnings of Unconsolidated Joint Venture 7,980 7,830
 
Corporate General and Administrative Expenses (9,833 ) (8,991 )
 
Other, net   1,075     435  
 
Earnings before Interest and Income Taxes 71,177 60,371
 
Interest Expense, net  

(3,901

)

 

(4,486

)

 
Earnings before Income Taxes 67,276 55,885
 
Income Tax Expense   (21,932 )   (18,123 )
 
Net Earnings $ 45,344   $ 37,762  
 
 

 

NET EARNINGS PER SHARE
Basic $ 0.94   $ 0.76  
Diluted $ 0.93   $ 0.75  
 
AVERAGE SHARES OUTSTANDING
Basic   48,014,195     49,767,424  
Diluted   48,522,207     50,450,908  
 
     

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,

2016     2015
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 113,262 $ 115,052
Gypsum Paperboard 28,309     20,767  
141,571 135,819
 
Cement (Wholly Owned) 116,369 98,039
 
Oil and Gas Proppants 5,096 22,825
 
Concrete and Aggregates 34,468     28,280  
 
Total $ 297,504   $ 284,963  

 

Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 39,336 $ 40,894
Gypsum Paperboard 11,227     6,030  
50,563 46,924
 
Cement:
Wholly Owned 23,620 17,883
Joint Venture 7,980     7,830  
31,600 25,713
 
Oil and Gas Proppants (5,912 ) (5,636 )
 
Concrete and Aggregates 3,684 1,926
 
Other, net 1,075     435  
 
Sub-total $ 81,010 $ 69,362
 

Corporate General and Administrative Expense

(9,833 )   (8,991 )
 

Earnings before Interest and Income Taxes

$ 71,177   $ 60,371  
 
     
* Net of Intersegment and Joint Venture Revenues listed on Attachment 3.
 
     

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,

2016     2015     Change
 
Gypsum Wallboard (MMSF’s) 587 577 +2 %
 
Cement (M Tons):
Wholly Owned 1,033 991 +4 %
Joint Venture 218 212 +3 %
1,251 1,203 +4 %
 
Paperboard (M Tons):
Internal 29 28 +4 %
External 54 41 +32 %
83 69 +20 %
 
Concrete (M Cubic Yards) 287 249 +15 %
 
Aggregates (M Tons) 944 667 +42 %
 
Frac Sand (M Tons) 74 231 -68 %
     
Average Net Sales Price *
Quarter Ended

June 30,

2016     2015     Change
 
Gypsum Wallboard (MSF) $ 157.69 $ 163.46 -4 %
Cement (Ton) $ 100.63 $ 98.39 +2 %
Paperboard (Ton) $ 498.92 $ 503.80 -1 %
Concrete (Cubic Yard) $ 92.73 $ 92.04 +1 %
Aggregates (Ton) $ 8.30 $ 7.94 +5 %

*Net of freight and delivery costs billed to customers.

     
Intersegment and Cement Revenues

($ in thousands)

Quarter Ended

June 30,

2016     2015
Intersegment Revenues:
Cement $ 3,535 $ 3,126
Paperboard 14,506 14,551
Concrete and Aggregates   283   252
$ 18,324 $ 17,929
 
Cement Revenues:
Wholly Owned $ 116,369 $ 98,039
Joint Venture   24,888   27,011
$ 141,257 $ 125,050
 
         

Eagle Materials Inc.

Attachment 4

 
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
 
June 30, March 31,
2016     2015 2016*

ASSETS

Current Assets –
Cash and Cash Equivalents $ 9,180 $ 7,551 $ 5,391
Accounts and Notes Receivable, net 142,298 135,696 120,221
Inventories 240,999 234,741 243,595
Federal Income Tax Receivable - - 5,623
Prepaid and Other Assets   8,020     10,110     5,173  
Total Current Assets   400,497     388,098     380,003  
Property, Plant and Equipment – 2,083,592 1,988,971 2,072,776
Less: Accumulated Depreciation   (837,242 )   (759,979 )   (817,465 )
Property, Plant and Equipment, net 1,246,350 1,228,992 1,255,311
Investments in Joint Venture 48,700 49,199 49,465
Notes Receivable 2,652 2,803 2,672
Goodwill and Intangibles 163,298 207,047 165,827
Other Assets   27,588     32,209     30,357  
$ 1,889,085   $ 1,908,348   $ 1,883,635  

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities –
Accounts Payable $ 61,322 $ 61,037 $ 66,614
Accrued Liabilities 40,509 36,373 45,975
Federal Income Tax Payable 9,919 11,606 -
Current Portion of Senior Notes   8,000     57,045     8,000  
Total Current Liabilities   119,750     166,061     120,589  
Long-term Liabilities 58,642 68,876 61,122
Bank Credit Facility 373,000 341,000 382,000
Senior Notes 117,714 125,714 117,714
Deferred Income Taxes 163,536 158,472 161,679
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 48,391,969; 50,357,355 and

48,526,843 Shares, respectively 484 504 485
Capital in Excess of Par Value 144,076 277,026 168,969
Accumulated Other Comprehensive Losses (11,097 ) (11,748 ) (11,409 )
Retained Earnings   922,980     782,443     882,486  
Total Stockholders’ Equity   1,056,443     1,048,225     1,040,531  
$ 1,889,085   $ 1,908,348   $ 1,883,635  
 

*From audited financial statements.

 

Eagle Materials Inc.
Attachment 5

Eagle Materials Inc.
Segment Depreciation, Depletion and Amortization
(dollars in thousands)
(unaudited)

The following presents depreciation, depletion and amortization by segment for the quarters ended June 30, 2016 and 2015:

     

Depreciation, Depletion and
Amortization
($ in thousands)

Quarter Ended

June 30,

2016     2015
 
Cement $ 8,611 $ 7,866
Gypsum Wallboard 4,762 4,786
Paperboard 2,100 2,053
Oil and Gas Proppants 5,184 7,559
Concrete and Aggregates 1,749 1,505
Other   457   495
$ 22,863 $ 24,264

Eagle Materials Inc.
David B. Powers, 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 (July 25, 2016 - 6:00 AM EDT)

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