Eagle Materials Inc. Reports Continued Growth in Sales Volumes and Earnings in the Third Quarter Business Wire DALLAS -- February 6, 2013 Eagle Materials Inc. (NYSE: 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 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 EXP at 214-432-2000. Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933, Section21E 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 March31, 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) (unaudited) Quarter Ended Nine Months Ended December 31, December 31, 2012 2011 2012 2011 Revenues $ 164,743 $ 123,596 $ 483,444 $ 378,222 Cost of Goods 133,482 111,125 396,797 352,661 Sold Gross Profit 31,261 12,471 86,647 25,561 Equity in Earnings of 8,852 7,776 24,070 21,160 Unconsolidated JV Other Operating (223 ) 591 (427 ) 627 (Expense) Income Acquisition and Litigation (2,485 ) (9,117 ) (8,859 ) (9,117 ) Expense Corporate General and (6,268 ) (4,928 ) (16,942 ) (13,518 ) Administrative Expense Earnings before 31,137 6,793 84,489 24,713 Interest and Income Taxes Interest (3,836 ) (4,210 ) (11,149 ) (13,352 ) Expense, Net Loss on Debt - (2,094 ) - (2,094 ) Retirement Earnings before Income 27,301 489 73,340 9,267 Taxes Income Tax (Expense) (9,321 ) 2,408 (23,429 ) 462 Benefit Net Earnings $ 17,980 $ 2,897 $ 49,911 $ 9,729 EARNINGS PER SHARE Basic $ 0.37 $ 0.07 $ 1.09 $ 0.22 Diluted $ 0.37 $ 0.07 $ 1.07 $ 0.22 AVERAGE SHARES OUTSTANDING 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 Eagle Materials Inc. Attachment 2 Eagle Materials Inc. Revenues and Segment Operating Earnings by Lines of Business (dollars in thousands) (unaudited) Quarter Ended Nine Months Ended December 31, December 31, 2012 2011 2012 2011 Revenues* Gypsum Wallboard and Paperboard: Gypsum $ 80,737 $ 54,063 $ 228,284 $ 156,386 Wallboard Gypsum 19,551 19,407 58,173 59,686 Paperboard 100,288 73,470 286,457 216,072 Cement (Wholly 50,400 40,074 156,255 126,677 Owned) Concrete and 14,055 10,052 40,732 35,473 Aggregates Total $ 164,743 $ 123,596 $ 483,444 $ 378,222 Segment Operating Earnings Gypsum Wallboard and Paperboard: Gypsum $ 16,870 $ 228 $ 47,356 $ (4,074 ) Wallboard Gypsum 7,963 5,146 20,934 12,214 Paperboard 24,833 5,374 68,290 8,140 Cement: Wholly Owned 7,763 7,717 19,853 18,232 Joint Venture 8,852 7,776 24,070 21,160 16,615 15,493 43,923 39,392 Concrete and (1,335 ) (620 ) (1,496 ) (811 ) Aggregates Other Operating (223 ) 591 (427 ) 627 (Expense) Income Sub-total 39,890 20,838 110,290 47,348 Acquisition and Litigation (2,485 ) (9,117 ) (8,859 ) (9,117 ) Expense Corporate General and (6,268 ) (4,928 ) (16,942 ) (13,518 ) Administrative Expense Earnings Before $ 31,137 $ 6,793 $ 84,489 $ 24,713 Interest and Income Taxes * 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 Joint Venture Revenues (unaudited) Sales Volume Quarter Ended Nine Months Ended December 31, December 31, 2012 2011 Change 2012 2011 Change Gypsum Wallboard 519 421 +23 % 1,476 1,236 +19 % (MMSF’s) Cement (M Tons): Wholly Owned 592 497 +19 % 1,852 1,534 +21 % Joint Venture 226 203 +11 % 678 657 +3 % 818 700 +17 % 2,530 2,191 +15 % Paperboard (M Tons): Internal 23 19 +21 % 66 54 +22 % External 42 38 +11 % 121 120 +1 % 65 57 +14 % 187 174 +7 % Concrete (M Cubic 143 112 +28 % 421 391 +8 % Yards) Aggregates (M 639 463 +38 % 2,101 1,846 +14 % Tons) Average Net Sales Price* Quarter Ended Nine Months Ended December 31, December 31, 2012 2011 Change 2012 2011 Change Gypsum Wallboard $ 120.55 $ 94.86 +27 % $ 119.60 $ 92.35 +30 % (MSF) Cement $ 82.68 $ 80.02 +3 % $ 82.17 $ 80.77 +2 % (Ton) Paperboard $ 480.51 $ 527.42 -9 % $ 498.16 $ 519.20 -4 % (Ton) Concrete (Cubic $ 71.55 $ 67.11 +7 % $ 67.94 $ 63.98 +6 % Yard) Aggregates $ 6.13 $ 5.99 +2 % $ 6.04 $ 5.95 +2 % (Ton) *Net of freight and delivery costs billed to customers. Intersegment and Cement Revenues Quarter Ended Nine Months Ended December 31, December 31, 2012 2011 2012 2011 Intersegment Revenues: Cement $ 535 $ 803 $ 1,614 $ 3,044 Paperboard 11,780 10,594 35,217 30,728 Concrete and Aggregates 146 198 603 559 $ 12,461 $ 11,595 $ 37,434 $ 34,331 Cement Revenues: Wholly Owned $ 50,400 $ 40,074 $ 156,255 $ 126,677 Joint Venture 24,000 20,633 71,623 64,487 $ 74,400 $ 60,707 $ 227,878 $ 191,164 Eagle Materials Inc. Attachment 4 Eagle Materials Inc. Consolidated Balance Sheets (dollars in thousands) (unaudited) December 31, March 31, 2012 2011 2012* ASSETS Current Assets – Cash and Cash $ 9,247 $ 3,679 $ 6,481 Equivalents Accounts and Notes 86,588 54,491 56,197 Receivable, net Inventories 134,473 113,613 123,606 Federal Income Tax - 9,109 1,133 Receivable Prepaid and Other Assets 13,015 3,045 4,424 Total Current Assets 243,323 183,937 191,841 Property, Plant and 1,581,468 1,138,261 1,140,744 Equipment – Less: Accumulated (598,396 ) (548,284 ) (560,236 ) Depreciation Property, Plant and 983,072 589,977 580,508 Equipment, net Investments in Joint 41,760 37,571 38,939 Venture Notes Receivable 3,273 3,448 3,436 Goodwill and Intangibles 163,802 151,061 150,902 Other Assets 21,590 19,155 19,519 $ 1,456,820 $ 985,149 $ 985,145 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities – Accounts Payable $ 47,460 $ 33,344 $ 38,747 Accrued Liabilities 57,460 42,456 33,619 Federal Income Tax 5,532 3,392 - Payable Current Portion of - 4,677 4,677 Long-term Debt Total Current 110,452 83,869 77,043 Liabilities Long-term Liabilities 41,104 35,268 39,467 Bank Credit Facility 291,000 84,000 70,000 Senior Notes 192,259 192,259 192,259 Deferred Income Taxes 134,458 127,562 133,865 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 49,351,952; 44,944,310 and 45,269,493 Shares, 494 449 453 respectively. Capital in Excess of Par 216,440 29,235 37,692 Value Accumulated Other (5,168 ) (2,893 ) (5,516 ) Comprehensive Losses Retained Earnings 475,781 435,400 439,882 Total Stockholders’ 687,547 462,191 472,511 Equity $ 1,456,820 $ 985,149 $ 985,145 *From audited financial statements. Eagle Materials Inc. Attachment 5 Eagle Materials Inc. Non-GAAP Financial Measures (unaudited) (Dollars, other than earnings per share amounts, and number of shares in millions) Adjusted earnings per diluted share (Adjusted EPS) is a non-GAAP financial measure and represents earnings per diluted share excluding the impacts from non-routine items, including costs related with closing the Lafarge acquisition, litigation costs related to our lawsuit against the IRS, loss on debt retirements, discrete tax benefits and losses on arbitration or litigation rulings (Non-routine Items). Management uses measures of earnings excluding the impact of Non-routine Items as a basis for comparing operating results of the Company from period to period and for purposes of its budgeting and planning processes. Although management believes that Adjusted EPS is useful in evaluating the Company’s business, this information should be considered as supplemental in nature and is not meant to be considered in isolation, or as a substitute for earnings per diluted share and the related financial information prepared in accordance with GAAP. In addition, our presentation of Adjusted EPS may not be the same as similarly titled measures reported by other companies, limiting its usefulness as a comparative measure. The following shows the calculation of Adjusted EPS and reconciles Adjusted EPS to earnings per diluted share in accordance with GAAP for the three months ended December 31, 2012 and 2011. The amounts presented below are presented after-tax and were determined using our effective tax rate, before discrete items, for the three months ended December 31, 2012 and 2011 of 34% and 22%, respectively: Three Months Ended December 31, 2012 2011 After tax impact of costs associated with closing the Lafarge acquisition and initial purchase $ (1.9 ) $ - accounting After tax impact of costs associated with our (0.6 ) - lawsuit against the IRS After tax impact of loss on debt retirement - (1.6 ) After tax impact of tax and related interest - 2.8 benefits After tax impact of loss on arbitration and (0.3 ) (7.0 ) litigation Total Non-routine Items impact, net $ (2.8 ) $ (5.8 ) Diluted average shares outstanding for the three 49.2 44.4 months ended December 31, 2012 Diluted earnings per share impact from Non-routine $ (0.06 ) $ (0.13 ) Items Three Months Ended December 31, 2012 2011 Earnings per diluted share in accordance with $ 0.37 $ 0.07 generally accepted accounting principles Add back: Earnings per diluted share impact from 0.06 0.13 Non-routine Items Adjusted EPS $ 0.43 $ 0.20 Contact: 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
Eagle Materials Inc. Reports Continued Growth in Sales Volumes and Earnings in the Third Quarter
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