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Press release from Business Wire

Eagle Materials Inc. Reports Fiscal Year and Fourth Quarter Results

Thursday, May 05, 2011

Eagle Materials Inc. Reports Fiscal Year and Fourth Quarter Results08:30 EDT Thursday, May 05, 2011 DALLAS (Business Wire) -- Eagle Materials Inc. (NYSE: EXP) today reported financial results for fiscal year 2011 and the fiscal fourth quarter ended March 31, 2011. Notable items for the fiscal year and quarter include: Fiscal year 2011 revenues of $462.2 million Fiscal year 2011 net earnings of $14.8 million, or $0.34 per diluted share Net debt-to-total capitalization ratio of 38% compared to 40% a year ago Fourth quarter revenues of $95.4 million Fourth quarter net loss of $10.8 million, or $0.25 loss per diluted share An extended plant shutdown for maintenance and inventory control at our Illinois cement facility, combined with an exceptionally harsh winter in the Midwest, increased our fourth quarter cement operating costs by approximately $5.0 million (after-tax $0.08 per share). Additionally, our fourth quarter results reflect $10.7 million (after-tax $0.17 per share) of non-operating expenses. Approximately $8.9 million of these non-operating expenses are associated with the write-off of deferred project costs as a result of our decision not to proceed with the Nevada Cement modernization. The remaining non-operating expenses include the write down of unused aggregates equipment at our Texas operation and other miscellaneous write downs. Cement, Concrete and Aggregates Fiscal 2011 operating earnings from Cement were $45.7 million, a decline of 21% compared to fiscal 2010. Revenues from Cement, including joint venture and intersegment sales, were $225.8 million for fiscal 2011, 1% lower than last year. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $40.6 million, 1% greater than the same quarter last year. Cement sales volumes for the quarter were 445,000 tons, 1% higher than the same quarter a year ago. The average net sales price for this quarter was $82.32 per ton, slightly higher than the same quarter last year. Operating earnings from Cement for the fourth quarter were $4.7 million, a 15% decline from the same quarter a year ago. Fiscal 2011 operating earnings from Concrete and Aggregates were $0.8 million, a decrease of 57% compared to fiscal 2010. Revenues from Concrete and Aggregates were $43.7 million for fiscal 2011, 3% lower than last year. Concrete and Aggregates reported an operating loss of $0.1 million for this quarter down from the $0.1 million operating profit for the same quarter last year, primarily due to lower net sales prices for both Concrete and Aggregates slightly offset by improved sales volumes. Revenues from Concrete and Aggregates were $9.4 million for the quarter, 25% greater than the same quarter a year ago. Concrete sales volume increased 51% for the quarter to 122,000 cubic yards. The Concrete average net sales price for this quarter was $57.36 per cubic yard, 12% less than the same quarter a year ago. Aggregates sales volume of 466,000 tons for the quarter was 19% greater than the quarter a year ago. Aggregates average net sales price for the quarter was $5.40 per ton, down 9% compared to last year's fourth quarter. Gypsum Wallboard and Paperboard Fiscal 2011 operating earnings from Gypsum Wallboard and Paperboard were $13.3 million, a decrease of 18% compared to fiscal 2010. Revenues from Gypsum Wallboard and Paperboard were $271.7 million for fiscal 2011, 3% higher than last year's revenues. Gypsum Wallboard and Paperboard had a fourth quarter operating loss of $0.4 million compared to operating earnings of $1.1 million in the same quarter last year. Lower net wallboard sales prices and higher recycled fiber costs were the primary drivers of the quarterly earnings decline. Gypsum Wallboard and Paperboard revenues for the fourth quarter totaled $64.8 million, a 3% decrease from the same quarter a year ago. The quarterly comparative revenue decline reflects lower Gypsum Wallboard net sales prices and lower Gypsum Wallboard and Paperboard sales volumes. The average Gypsum Wallboard net sales price for this quarter was $85.68 per MSF, 1% less than the same quarter a year ago. Gypsum Wallboard sales volumes of 428 million square feet (MMSF) were down approximately 4% from the prior year's fourth quarter. The average Paperboard net sales price this quarter was $501.00 per ton, 15% greater than the same quarter a year ago. Paperboard sales volumes for the quarter were 48,000 tons, 16% less than the same quarter a year ago. Other Corporate Items During the fourth quarter, Eagle determined that it will not move forward with its planned modernization of Nevada Cement. This decision was based on the adverse economic impact of new environmental regulations combined with the current challenging market conditions in Northern Nevada and Northern California. As a result of this decision, the Company's fiscal 2011 financial results reflect a non-cash charge of approximately $8.9 million associated with the write-off of the deferred project costs. This charge is reported in Other Non-Operating Expense. Included in our prior year fourth quarter was a gain on sale of land at one of Eagle's wallboard facilities of $2.5 million (after-tax $0.04 per share). The gain on sale of land was reported in Other Operating Income in the prior year. Details of Financial Results We conduct one of our cement plant operations through a 50/50 joint venture, Texas Lehigh Cement Company LP (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 4 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 2:00 p.m. Eastern Time (1:00 p.m. Central Time) on Thursday, May 5, 2011.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; 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); 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, 2010 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010.These reports are 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. (1) Statement of Consolidated Earnings(2) Revenues and Earnings by Lines of Business (Quarter and Fiscal Year)(3) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues(4) Consolidated Balance Sheets Eagle Materials Inc.Attachment 1     Eagle Materials Inc.Statement of Consolidated Earnings(dollars in thousands, except per share data)(unaudited)         Quarter EndedMarch 31,Fiscal Year EndedMarch 31,2011201020112010   Revenues $ 95,381 $ 97,386 $ 462,180 $ 467,905   Cost of Goods Sold   97,624     96,516     426,603     416,032     Gross (Loss) Profit (2,243 ) 870 35,577 51,873   Equity in Earnings of Unconsolidated JV 6,365 5,881 24,233 24,157 Other Operating (Expense) Income   (244 )   3,048     840     3,161     Operating Earnings 3,878 9,799 60,650 79,191   Corporate General and Administrative Expense (4,607 ) (3,572 ) (16,667 ) (15,886 ) Other Non-Operating Expense   (10,701 )   -     (10,701 )   (2,548 )   Earnings (Loss) before Interest and Income Taxes (11,430 ) 6,227 33,282 60,757   Interest Expense, Net   (3,416 )   (4,531 )   (16,520 )   (21,460 )   Earnings (Loss) before Income Taxes (14,846 ) 1,696 16,762 39,297   Income Tax Benefit (Expense)   4,041     228     (1,913 )   (10,347 )   Net (Loss) Earnings $ (10,805 ) $ 1,924   $ 14,849   $ 28,950     EARNINGS (LOSS) PER SHARE Basic $ (0.25 ) $ 0.04   $ 0.34   $ 0.66   Diluted $ (0.25 ) $ 0.04   $ 0.34   $ 0.66     AVERAGE SHARES OUTSTANDING Basic   43,993,297     43,775,988     43,891,817     43,684,942   Diluted   43,993,297     44,052,749     44,251,276     44,038,401       Eagle Materials Inc.Attachment 2           Eagle Materials Inc.Revenues and Earnings by Lines of Business(dollars in thousands)(unaudited)   Quarter EndedMarch 31,Fiscal Year EndedMarch 31,2011201020112010Revenues*   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ 50,657 $ 51,655 $ 204,560 $ 210,671 Gypsum Paperboard   14,155     15,497     67,153   53,795 64,812 67,152 271,713 264,466   Cement (Wholly Owned) 21,134 22,702 146,786 158,588   Concrete and Aggregates   9,435     7,532     43,681   44,851   Total $ 95,381   $ 97,386   $ 462,180 $ 467,905   Operating Earnings   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ (2,719 ) $ (1,070 ) $ 1,242 $ 1,383 Gypsum Paperboard   2,299     2,187     12,086   14,805 (420 ) 1,117 13,328 16,188   Cement: Wholly Owned (1,694 ) (390 ) 21,455 33,850 Joint Venture   6,365     5,881     24,233   24,157 4,671 5,491 45,688 58,007   Concrete and Aggregates (129 ) 143 794 1,835   Other, net**   (244 )   3,048     840   3,161   Total Operating Earnings   3,878     9,799     60,650   79,191     * Net of Intersegment and Joint Venture Revenues listed on Attachment 3. ** Fiscal fourth quarter and fiscal year ended 2010 includes approximately $2.5 million gain on sale of land.     Eagle Materials Inc.Attachment 3           Eagle Materials Inc.Sales Volume, Net Sales Prices and Intersegment and Joint Venture Revenues(unaudited)   Sales Volume Quarter Ended March 31, Fiscal Year Ended March 31, 2011 2010 2011 2010   Gypsum Wallboard (MMSF's) 428 448 1,665 1,750   Cement (M Tons): Wholly Owned 236 257 1,718 1,754 Joint Venture 209 184 823 713 445 441 2,541 2,467 Paperboard (M Tons): Internal 19 20 72 73 External 29 37 144 142 48 57 216 215   Concrete (M Cubic Yards) 122 81 475 461   Aggregates (M Tons) 466 390 2,564 2,318     Average Net Sales Price* Quarter Ended March 31,   Fiscal Year Ended March 31, 2011   2010 2011   2010   Gypsum Wallboard (MSF) $ 85.68 $ 86.30 $ 91.79 $ 92.10 Cement (Ton) $ 82.32 $ 82.15 $ 80.83 $ 85.59 Paperboard (Ton) $ 501.00 $ 436.88 $ 483.03 $ 417.28 Concrete (Cubic Yard) $ 57.36 $ 64.83 $ 62.77 $ 67.23 Aggregates (Ton) $ 5.40 $ 5.94 $ 5.61 $ 6.29 *Net of freight and delivery costs billed to customers.         Intersegment and Cement Revenues Quarter Ended March 31, Fiscal Year Ended March 31, 2011 2010 2011 2010 Intersegment Revenues: Cement $ 536 $ 701 $ 4,086 $ 4,449 Paperboard 10,311 9,616 37,622 36,369 Concrete and Aggregates   95   99   555   771 $ 10,942 $ 10,416 $ 42,263 $ 41,589   Cement Revenues: Wholly Owned $ 21,134 $ 22,702 $ 146,786 $ 158,588 Joint Venture   18,963   16,702   74,912   65,438 $ 40,097 $ 39,404 $ 221,698 $ 224,026     Eagle Materials Inc.Attachment 4       Eagle Materials Inc.Consolidated Balance Sheets(dollars in thousands)(unaudited)   March 31, 2011 2010 ASSETS Current Assets – Cash and Cash Equivalents $ 1,874 $ 1,416 Accounts and Notes Receivable, net 43,855 49,721 Inventories 115,237 105,871 Federal Income Tax Receivable 9,088 - Prepaid and Other Assets   4,572     4,266   Total Current Assets   174,626     161,274   Property, Plant and Equipment – 1,112,058 1,100,590 Less: Accumulated Depreciation   (512,228 )   (468,121 ) Property, Plant and Equipment, net 599,830 632,469 Investments in Joint Venture 33,661 33,928 Notes Receivable 5,326 10,586 Goodwill and Intangibles 151,539 152,175 Other Assets   17,828     23,344   $ 982,810   $ 1,013,776   LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities – Accounts Payable $ 30,339 $ 27,840 Accrued Liabilities   40,011     44,044   Total Current Liabilities   70,350     71,884   Long-term Liabilities 37,807 67,946 Bank Credit Facility 2,000 3,000 Senior Notes 285,000 300,000 Deferred Income Taxes 128,089 119,299 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 44,447,428 and 43,830,794 Shares, respectively. 444 438 Capital in Excess of Par Value 24,859 14,723 Accumulated Other Comprehensive Losses (2,893 ) (3,518 ) Retained Earnings   437,154     440,004   Total Stockholders' Equity   459,564     451,647   $ 982,810   $ 1,013,776   Eagle Materials Inc.Steven R. Rowley, 214-432-2000President and Chief Executive OfficerorD. Craig Kesler, 214-432-2000Executive Vice President and Chief Financial OfficerorRobert S. Stewart, 214-432-2000Executive Vice President, Strategy, Corporate Development and Communications