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Eagle Materials Reports First Quarter EPS Up 22% On Record Revenues

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Eagle Materials Inc. (NYSE:EXP) today reported financial results for
the first quarter of fiscal 2019 ended June 30, 2018. Notable items for
the quarter are highlighted below. (Unless otherwise noted, all
comparisons are with the prior year's fiscal first quarter):

First Quarter Fiscal 2019 Results

  • Record revenue of $393.8 million, up 8%
  • Net earnings per diluted share of $1.38, up 22%
  • First Quarter Fiscal 2019 results were affected by the following items:
    • A $6.5 million (pre-tax) increase in maintenance expenses
      primarily due to the timing of the annual maintenance outage at
      our Fairborn cement plant; the previous outage occurred at
      Fairborn in the fourth quarter of fiscal 2017, shortly after we
      purchased the plant
    • A $1.8 million litigation loss at our Paperboard subsidiary
    • $1.6 million of start-up costs at our new frac sand plant in
      Illinois
  • New frac sand drying plant in Illinois started up on-time, on-budget
    and began production in late June
  • Approximately 500,000 shares were repurchased for $52 million

Commenting on the first quarter results, Dave Powers, President and CEO,
said, "We are pleased to report another quarter of record revenue and
net earnings. We saw strong margin improvement in our Light Materials
sector and pricing improved across nearly all businesses during the
quarter. We were also pleased to announce the start-up of our new frac
sand drying plant in Illinois and we began loading railcars in late
June. Tight freight markets continued to limit our ability to move
product and led to higher freight costs which impacted net sales prices
in both cement and wallboard this quarter."

Mr. Powers concluded, "Looking ahead, we anticipate another strong year,
as the backlog of work in our markets continues to drive demand for our
products."

Segment Results

Heavy Materials: Cement, Concrete and Aggregates

Revenue in the Heavy Materials sector, which includes Cement, Concrete
and Aggregates and Joint Venture and intersegment Cement revenue, was
$227.3 million, a slight improvement from the first quarter of fiscal
2018. Heavy Materials operating earnings decreased 13% to $42.8 million
primarily due to increased maintenance costs resulting from the timing
of the annual maintenance outage at our Fairborn Cement plant. Because
we had performed an outage at Fairborn after we purchased the plant in
March 2017, there was no outage in the quarter ended June 30, 2017.

Cement revenue for the quarter, including Joint Venture and intersegment
revenue, was up 2% to $186.8 million, reflecting higher sales prices.
The average net sales price for the quarter improved 2% to $108.69 per
ton. Higher freight costs impacted net cement prices by approximately
$1.50 per ton during the quarter. Cement sales volume for the quarter
was 1.5 million tons, flat with the prior year.

Operating earnings from Cement for the first quarter were $37.3 million,
14% below the same quarter a year ago. The earnings decline was
primarily due to the timing of the planned maintenance outage at our
Fairborn cement plant partially offset by improved average net cement
sales prices.

Concrete and Aggregates revenue for the first quarter of 2019 was $40.5
million, a decrease of 7%. First quarter operating earnings were $5.5
million, a 9% decline, reflecting lower sales volumes partially offset
by improved pricing.

Light Materials: Gypsum Wallboard and Paperboard

Revenue in the Light Materials sector, which includes Gypsum Wallboard
and Paperboard, increased 11% to $170.2 million. The improvement
reflects higher wallboard sales volume and net sales prices. The average
Gypsum Wallboard net sales price for the first quarter of fiscal 2019
was $160.71 per MSF, a 1% improvement. Sequentially, higher freight
costs during the quarter impacted the net sales price by approximately
$2 per MSF. Gypsum Wallboard sales volume was 710 million square feet
(MMSF), up approximately 9%.

The average Paperboard net sales price this quarter was $531.99 per ton,
down 3%. Paperboard sales volume for the quarter increased 4% to 82,000
tons.

Operating earnings were $60.5 million in the sector, an increase of 24%,
reflecting improved wallboard sales volumes and prices and lower
operating costs. The reduced operating costs primarily reflected lower
recycled fiber costs during the quarter.

Oil and Gas Proppants

Eagle's Oil and Gas Proppants segment reported revenue of $21.8 million,
an increase of 15%, primarily resulting from a 16% rise in frac sand
sales volume. The first quarter's operating loss of $2.7 million
includes $7.1 million of depreciation, depletion and amortization and
$1.6 million of start-up costs at our new frac sand facility in Illinois.

Details of Financial Results

The first quarter litigation loss at our Paperboard subsidiary stems
from a judgment in a lawsuit filed by some of the plant's neighbors
regarding specific events that occurred in 2010 and 2012. The judgment
does not affect ongoing operations.

We conduct one of our cement plant operations through a 50/50 joint
venture, Texas Lehigh Cement Company LP (the Joint Venture). We use 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 revenue and operating earnings, which
is consistent with the way management organizes the segments within
Eagle for making operating decisions and assessing performance.

In addition, for segment reporting purposes, we report intersegment
revenue as a part of a segment's total revenue. Intersegment sales are
eliminated on the income statement. Refer to Attachment 3 for a
reconciliation of these amounts.

About Eagle Materials Inc.

Eagle Materials Inc. manufactures and distributes Cement, Aggregates,
Concrete, Gypsum Wallboard, Recycled Paperboard and Frac Sand from over
75 facilities across the U.S. Eagle 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
8:30 a.m. Eastern Time (7:30 a.m. Central Time) on Monday, July 30, 2018.

The conference call will be webcast simultaneously on the EXP web
site eaglematerials.com.
A
replay of the webcast and the presentation will be archived on the site
for one year.

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, cement and frac sand industries; changes in the
demand for residential housing construction or commercial construction;
risks related to pursuit of acquisitions, joint ventures and other
transactions; 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,
2018.
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
Revenue and Earnings by Lines of Business
Attachment 3 Sales
Volume, Net Sales Prices and Intersegment and Cement Revenue
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

June 30,

  2018       2017  
 
Revenue $ 393,756 $ 366,121
 
Cost of Goods Sold   302,122     280,062  
 
Gross Profit 91,634 86,059
 
Equity in Earnings of Unconsolidated JV 9,251 9,876
Corporate General and Administrative Expense (8,003 ) (9,679 )
Litigation Settlements and Losses (1,800 ) -
Other Non-Operating Income   571     757  
 
Earnings before Interest and Income Taxes 91,653 87,013
 
Interest Expense, Net   (6,632 )   (7,483 )
 
Earnings before Income Taxes 85,021 79,530
 
Income Tax Expense   (18,682 )   (24,648 )
 
Net Earnings $ 66,339   $ 54,882  

 

NET EARNINGS PER SHARE
Basic $ 1.39   $ 1.14  
Diluted $ 1.38   $ 1.13  
 
AVERAGE SHARES OUTSTANDING
Basic   47,690,351     48,121,890  
Diluted   48,144,325     48,655,553  
 

Eagle Materials Inc.

Attachment 2

 
 

 

Eagle Materials Inc.

Revenue and Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 
Quarter Ended

June 30,

  2018       2017  
Revenue*
 
Heavy Materials:
Cement (Wholly Owned) $ 155,346 $ 149,836
Concrete and Aggregates   40,509     43,506  
195,855 193,342
 
Light Materials:
Gypsum Wallboard $ 142,415 $ 126,813
Gypsum Paperboard   27,786     27,056  
170,201 153,869
 
Oil and Gas Proppants 21,758 18,910
 
Other   5,942     -  
 
Total Revenue $ 393,756   $ 366,121  

 

Segment Operating Earnings
 
Heavy Materials:
Cement (Wholly Owned) 28,083 33,305
Cement (Joint Venture) 9,251 9,876
Concrete and Aggregates   5,484     6,021  
42,818 49,202
 
Light Materials:
Gypsum Wallboard $ 50,480 $ 43,821
Gypsum Paperboard   9,994     4,938  
60,474 48,759
 
Oil and Gas Proppants (2,691 ) (2,026 )
 
Other Income   284     -  
 
Sub-total 100,885 95,935
 
Corporate General and Administrative Expense (8,003 ) (9,679 )
Litigation Settlements and Losses (1,800 ) -
Other Non-Operating Income   571     757  
 
Earnings before Interest and Income Taxes $ 91,653   $ 87,013  

 

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

 

Eagle Materials Inc.

Attachment 3

 
 

 

Eagle Materials Inc.

Sales Volume, Net Sales Prices and Intersegment and Cement
Revenue

(dollars in thousands, except per ton data)

(unaudited)

 
Sales Volume
Quarter Ended

June 30,

2018   2017   Change
Cement (M Tons):
Wholly Owned 1,275 1,268 +1%
Joint Venture 236 243 -3%
1,511 1,511 0%
 
Concrete (M Cubic Yards) 319 357 -11%
 
Aggregates (M Tons) 856 895 -4%
 
Gypsum Wallboard (MMSF's) 710 654 +9%
 
Paperboard (M Tons):
Internal 32 31 +3%
External 50 48 +4%
82 79 +4%
 
Frac Sand (M Tons) 366 315 +16%
 
                        Average Net Sales Price*
Quarter Ended

June 30,

  2018               2017             Change
Cement (Ton) $ 108.69 $ 106.95 +2 %
Concrete (Cubic Yard) $ 101.66 $ 98.96 +3 %
Aggregates (Ton) $ 9.75 $ 9.22 +6 %
Gypsum Wallboard (MSF) $ 160.71 $ 159.01 +1 %
Paperboard (Ton) $ 531.99 $ 549.69 -3 %

*Net of freight and delivery costs billed to customers

                      Intersegment and Cement Revenue
Quarter Ended

June 30,

  2018           2017
Intersegment Revenues:
Cement $ 4,178 $ 4,929
Concrete and Aggregates 331 413
Paperboard   17,347   17,357
$ 21,856 $ 22,699
 
Cement Revenue:
Wholly Owned $ 155,346 $ 149,836
Joint Venture   27,264   28,170
$ 182,610 $ 178,006
 

Eagle Materials Inc.

Attachment 4

   

 

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 
June 30, March 31,
  2018       2017   2018*

ASSETS

Current Assets –
Cash and Cash Equivalents $ 14,334 $ 12,233 $ 9,315
Restricted Cash 38,753 - 38,753
Accounts and Notes Receivable, net 184,083 175,002 141,685
Inventories 241,000 244,886 258,159
Federal Income Tax Receivable 7,315 - 5,750
Prepaid and Other Assets   8,304     8,181     5,073  
Total Current Assets   493,789     440,302     458,735  
Property, Plant and Equipment – 2,627,261 2,454,800 2,586,528
Less: Accumulated Depreciation   (1,009,726 )   (919,732 )   (991,229 )
Property, Plant and Equipment, net 1,617,535 1,535,068 1,595,299
Investments in Joint Venture 60,309 53,750 60,558
Notes Receivable 3,266 653 115
Goodwill and Intangibles 238,541 234,707 239,342
Other Assets   13,535     15,110     13,954  
$ 2,426,975   $ 2,279,590   $ 2,368,003  

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities –
Accounts Payable $ 93,182 $ 78,763 $ 73,459
Accrued Liabilities 95,910 53,288 105,870
Federal Income Tax Payable - 26,462 -
Current Portion of Senior Notes   -     81,214     -  
Total Current Liabilities   189,092     239,727     179,329  
Long-term Liabilities 30,158 42,026 31,096
Bank Credit Facility 270,000 200,000 240,000
Private Placement Senior Unsecured Notes 36,500 36,500 36,500
4.500% Senior Unsecured Notes due 2026 344,590 343,921 344,422
Deferred Income Taxes 125,156 162,329 118,966
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 47,912,300; 48,547,960 and 48,282,784
Shares, respectively

479 485 483
Capital in Excess of Par Value 74,568 151,141 122,379
Accumulated Other Comprehensive Losses (3,956 ) (7,199 ) (4,012 )
Retained Earnings   1,360,388     1,110,660     1,298,840  
Total Stockholders' Equity   1,431,479     1,255,087     1,417,690  
$ 2,426,975   $ 2,279,590   $ 2,368,003  
 

*From audited financial statements

 
      Eagle Materials Inc.    
Attachment 5
 

Eagle Materials Inc.

Depreciation, Depletion and Amortization by Lines of Business

(dollars in thousands)

(unaudited)

The following table presents depreciation, depletion and
amortization

by lines of business for the quarter
ended June 30, 2018 and 2017:

        Depreciation, Depletion and Amortization

Quarter Ended
June 30,

  2018     2017
 
Cement $ 12,921 $ 12,479
Concrete and Aggregates 2,053 1,914
Gypsum Wallboard 4,830 4,442
Paperboard 2,109 2,137
Oil and Gas Proppants 7,139 7,606
Corporate and Other   798   369
$ 29,850 $ 28,947

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