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8-K - FORM 8-K - EAGLE MATERIALS INCd217836d8k.htm

Exhibit 99.1

 

LOGO   

Contact at 214/432-2000

David B. Powers

President & CEO

D. Craig Kesler

Executive Vice President & CFO

Robert S. Stewart

Executive Vice President

 

News For Immediate Release

EAGLE MATERIALS REPORTS FIRST QUARTER EPS UP 24%

ON RECORD REVENUES

DALLAS, TX (July 25, 2016) – 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.

 

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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.

David B. Powers

President and Chief Executive Officer

D. Craig Kesler

Executive Vice President and Chief Financial Officer

Robert S. Stewart

Executive Vice President, Strategy, Corporate Development and Communications

 

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

 

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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   
  

 

 

   

 

 

 

 

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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.

 

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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   
  

 

 

    

 

 

 

 

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Eagle Materials Inc.

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

     June 30,     March 31,
2016*
 
     2016     2015    

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.

 

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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   
  

 

 

    

 

 

 

 

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