Eagle Materials Inc. Reports Continued Growth in Sales Volumes and Earnings in the Third Quarter

Eagle Materials Inc. Reports Continued Growth in Sales Volumes and Earnings in the Third Quarter

DALLAS--(BUSINESS WIRE)-- Eagle Materials Inc. (NYS: EXP) today reported financial results for the third quarter of fiscal 2013 which ended December 31, 2012. Notable items for the quarter include (all comparisons, unless noted, are with the prior-year's third quarter):

  • Revenues of $164.7 million, up 33%
  • Segment operating earnings of $39.9 million, up 91%
  • Adjusted earnings per diluted share of $0.43, up 115%
    • Adjusted earnings per share is a non-GAAP financial measure calculated by excluding non-routine items in the manner described in Attachment 5
    • Total after-tax impact of non-routine items, including costs related to the closing of our acquisition of the Lafarge Target Business, was $2.8 million, or $0.06 per diluted share. See Attachment 5.
  • Earnings per diluted share of $0.37, up 429%

Third quarter sales volumes improved across all business lines. In addition, sales prices improved in all business lines other than Paperboard. Gypsum Wallboard experienced the most significant improvement, with an increase in average net sales prices of 27% as compared with the prior year's third quarter.

On November 30, 2012, Eagle completed its previously announced acquisition of Lafarge North America's Sugar Creek, Missouri and Tulsa, Oklahoma cement plants, as well as related assets, which included six distribution terminals, two aggregates quarries, eight ready-mix concrete plants and a fly ash business (the "Lafarge Target Business"). Eagle used cash proceeds from an equity offering completed on October 3, 2012, along with borrowings under its bank credit facility to fund the purchase. The results of operations of the Lafarge Target Business are included in the results disclosed in this press release for the period from November 30 through December 31, 2012. For information regarding the results of operations of the Lafarge Target Business for certain periods prior to November 30, 2012, including pro forma financial information that combines the results of operations of the Company and the Lafarge Target Business, please see our Form 8-K/A filed on January 23, 2013.

Cement, Concrete and Aggregates

Operating earnings from Cement for the third quarter were $16.6 million, a 7% increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $74.9 million, 22% greater than the same quarter last year. Cement sales volumes for the quarter were 818,000 tons, 17% above the same quarter a year ago. The average net sales price this quarter was $82.68 per ton, 3% higher than the same quarter last year.

Concrete and Aggregates reported a $1.3 million operating loss for the third quarter versus the $0.6 million operating loss for the same quarter a year ago, reflecting increased maintenance costs and a litigation settlement of approximately $0.4 million, pre-tax.

Gypsum Wallboard and Paperboard

Gypsum Wallboard and Paperboard's third quarter operating earnings of $24.8 million were up 362% compared to the same quarter last year. Higher wallboard average net sales prices, higher gypsum wallboard and gypsum paperboard sales volumes and lower recycled paper input costs were the primary driver of the quarterly earnings increase.

Gypsum Wallboard and Paperboard revenues for the third quarter totaled $100.3 million, a 37% increase from the same quarter a year ago. The revenue increase reflects primarily higher wallboard average net sales prices and sales volumes.

The average gypsum wallboard net sales price for the third quarter was $120.55 per MSF, 27% greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 519 million square feet (MMSF) represents a 23% increase from the same quarter last year. The average Paperboard net sales price for this quarter was $480.51 per ton, 9% lower than the same quarter a year ago. Paperboard sales volumes for the quarter were 65,000 tons, 14% higher than the same quarter a year ago.

Details of Financial Results

Current quarter Acquisition and Litigation Expense of $2.5 million consists of costs related to our acquisition of the Lafarge Target Business and legal fees related to our lawsuit against the IRS. In the prior year, we received an adverse ruling in an arbitration proceeding involving a contract dispute between one of our subsidiaries and another mining company. The award, along with our legal expenses, was approximately $9.1 million.

Texas Lehigh Cement Company LP, one of our cement plant operations, is conducted 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 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 in 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 from 25 facilities across the US. The company is headquartered in Dallas, Texas.

EXP'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 Thursday, February 7, 2013.The conference call will be webcast simultaneously on the EXP Web sitehttp://www.eaglematerials.com.A replay of the webcast and the presentation will be archived on that site for one year.For more information, contact EXP 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 and oil; changes in the cost and availability of transportation; unexpected operational difficulties; inability to timely execute announced capacity expansions; 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; 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 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, 2012 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012.These reports are filed with the Securities and Exchange Commission. With respect to our acquisition of the Lafarge Target 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 forward-looking statements include, but are not limited to, the risk that we may not be able to integrate the Lafarge Target Business in an efficient and cost-effective manner with our other assets and operations, the possible inability to realize synergies or other expected benefits of the transaction, the possibility that we may incur significant costs relating to transition or integration activities, the discovery of undisclosed liabilities associated with the business, the need to repay the indebtedness incurred to fund the acquisition and the fact that increased debt may limit our ability to respond to any changes in general economic and business conditions that occur after 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.

(1) Statement of Consolidated Earnings

(2) Revenues and Earnings by Lines of Business (Quarter and Nine Months)

(3) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues

(4) Consolidated Balance Sheets

(5) Non-GAAP Financial Measures


Eagle Materials Inc.

Attachment 1

Eagle Materials Inc.
Statement of Consolidated Earnings
(dollars in thousands, except per share data)
  Quarter Ended  Nine Months Ended
December 31,December 31,
 2012    2011  2012    2011 
Cost of Goods Sold 133,482  111,125  396,797  352,661 
Gross Profit31,26112,47186,64725,561
Equity in Earnings of Unconsolidated JV8,8527,77624,07021,160
Other Operating (Expense) Income(223)591(427)627
Acquisition and Litigation Expense(2,485)(9,117)(8,859)(9,117)
Corporate General and Administrative Expense (6,268) (4,928) (16,942) (13,518)
Earnings before Interest and Income Taxes31,1376,79384,48924,713
Interest Expense, Net(3,836)(4,210)(11,149)(13,352)
Loss on Debt Retirement -  (2,094) -  (2,094)
Earnings before Income Taxes27,30148973,3409,267
Income Tax (Expense) Benefit (9,321) 2,408  (23,429) 462 
Net Earnings$17,980 $2,897 $49,911 $9,729 
Basic$0.37 $0.07 $1.09 $0.22 
Diluted$0.37 $0.07 $1.07 $0.22 
Basic 48,331,185  44,212,098  45,920,452  44,197,540 
Diluted 49,249,547  44,395,982  46,574,724  44,423,467 
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Eagle Materials Inc.

Attachment 2

Eagle Materials Inc.
Revenues and Segment Operating Earnings by Lines of Business
(dollars in thousands)
  Quarter Ended  Nine Months Ended
December 31,December 31,
 2012    2011  2012    2011 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard$80,737$54,063$228,284$156,386
Gypsum Paperboard 19,551  19,407  58,173  59,686 
Cement (Wholly Owned)50,40040,074156,255126,677
Concrete and Aggregates 14,055  10,052  40,732  35,473 
Total$164,743 $123,596 $483,444 $378,222 


Segment Operating Earnings
Gypsum Wallboard and Paperboard:
Gypsum Wallboard$16,870$228$47,356$(4,074)
Gypsum Paperboard 7,963  5,146  20,934  12,214 
Wholly Owned7,7637,71719,85318,232
Joint Venture 8,852  7,776  24,070  21,160 
Concrete and Aggregates(1,335)(620)(1,496)(811)
Other Operating (Expense) Income (223) 591  (427) 627 
Acquisition and Litigation Expense(2,485)(9,117)(8,859)(9,117)
Corporate General and Administrative Expense (6,268) (4,928) (16,942) (13,518)
Earnings Before Interest and Income Taxes$31,137 $6,793 $84,489 $24,713 


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