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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

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 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)
(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
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