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Press release from Business Wire

Eagle Materials Inc. Reports First Quarter Earnings

Thursday, July 28, 2011

Eagle Materials Inc. Reports First Quarter Earnings08:30 EDT Thursday, July 28, 2011 DALLAS (Business Wire) -- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2012 ended June 30, 2011. Notable items for the quarter include: Revenues of $119.8 million Earnings per diluted share of $0.07 Net earnings of $3.1 million Industry demand for building materials and construction products remains weak and we continue to “right-size” our operations to respond to these lower levels of construction activity. Revenues decreased from the prior year primarily due to lower sales volumes across all of our major businesses. Cement, Concrete and Aggregates Cement revenues for the first quarter, including joint venture and intersegment revenues, totaled $60.1 million, 4% less than the same quarter last year. Operating earnings from Cement for the first quarter were $8.8 million, a 36% decline from the same quarter a year ago. Lower cement sales volumes and higher maintenance costs associated with scheduled maintenance at our Texas cement facility were the primary drivers of the quarterly earnings decline. Cement sales volumes for the quarter were 674,000 tons, 4% lower than the same quarter a year ago. The average net sales price for this quarter was $81.25 per ton, about flat with the same quarter last year. Concrete and Aggregates reported an operating loss of $0.2 million for the first quarter, down from the $0.3 million operating profit for the same quarter a year ago, primarily due to lower aggregates sales volumes and net sales prices slightly offset by improved concrete volumes. Revenues from Concrete and Aggregates were $11.8 million for the quarter, 5% greater than the same quarter a year ago. Concrete sales volume increased 16% from the same quarter a year ago to 136,000 cubic yards. Concrete average net sales price for the quarter of $61.04 per cubic yard was 5% less than the same quarter a year ago. Aggregates sales volumes of 612,000 tons for this quarter were 2% less than the sales volume for the same quarter a year ago. Aggregates average net sales price for the quarter was $5.88, down 3% compared to last year's first quarter. Gypsum Wallboard and Paperboard Gypsum Wallboard and Paperboard's first quarter operating earnings of $4.3 million were down 53% over the same quarter last year. Lower Gypsum Wallboard net sales prices and sales volumes were the primary driver of the quarterly earnings decline. Gypsum Wallboard and Paperboard revenues for the first quarter totaled $70.3 million, a 9% decrease from the same quarter a year ago. The revenue decline reflects lower Gypsum Wallboard and Paperboard sales volumes and lower average Gypsum Wallboard net sales prices slightly offset by higher Paperboard net sales prices. The average Gypsum Wallboard net sales price this quarter was $90.03 per MSF, 8% less than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 412 million square feet (MMSF) represents a 9% decline from the same quarter last year. The average Paperboard net sales price this quarter was $505.61 per ton, 5% higher than the same quarter a year ago. Paperboard sales volume for the quarter was 57,000 tons, 3% lower than the same quarter a year ago. 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 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. Eagle'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 Standard Time (1:00 p.m. Central Standard Time) on Thursday, July 28, 2011.The conference call will be webcast simultaneously on the Eagle Web site 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; 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, 2011. 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 Summary of Consolidated EarningsAttachment 2 Revenues and Earnings by Lines of Business (Quarter)Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement RevenuesAttachment 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 EndedJune 30,   2011       2010     Revenues $ 119,807 $ 130,794   Cost of Goods Sold   112,434     114,363     Gross Profit 7,373 16,431   Equity in Earnings of Unconsolidated JV 5,448 6,512   Other Operating (Expense) Income   (79 )   717     Operating Earnings 12,742 23,660   Corporate General and Administrative Expense   (4,118 )   (3,703 )   Earnings before Interest and Income Taxes 8,624 19,957     Interest Expense, Net   (4,585 )   (5,290 )   Earnings before Income Taxes 4,039 14,667   Income Tax Expense   (982 )   (4,140 )   Net Earnings $ 3,057   $ 10,527     EARNINGS PER SHARE Basic $ 0.07   $ 0.24   Diluted $ 0.07   $ 0.24     AVERAGE SHARES OUTSTANDING Basic   44,180,039     43,832,372   Diluted   44,709,262     44,222,884     Eagle Materials Inc.Attachment 2 Eagle Materials Inc.Revenues and Earnings by Lines of Business(dollars in thousands)(unaudited)   Quarter EndedJune 30,2011   2010Revenues*   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ 51,342 $ 58,200 Gypsum Paperboard   18,994     18,761 70,336 76,961   Cement (Wholly Owned) 37,711 42,630   Concrete and Aggregates   11,760     11,203   Total $ 119,807   $ 130,794       Operating Earnings   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ 1,238 $ 5,201 Gypsum Paperboard   3,030     3,794 4,268 8,995   Cement: Wholly Owned 3,340 7,121 Joint Venture   5,448     6,512 8,788 13,633   Concrete and Aggregates (235 ) 315   Other, net   (79 )   717   Total Operating Earnings   12,742     23,660   * 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 Cement Revenues(unaudited)   Sales Volume Quarter Ended June 30, 2011   2010   Change   Gypsum Wallboard (MMSF's) 412 454 -9 %   Paperboard (M Tons): Internal 17 19 -11 % External 40 40 0 % 57 59 -3 %   Cement (M Tons): Wholly Owned 449 498 -10 % Joint Venture 225 204 +10 % 674 702 -4 %   Concrete (M Cubic Yards) 136 117 +16 %   Aggregates (M Tons) 612 627 -2 %     Average Net Sales Price * Quarter Ended June 30, 2011   2010   Change   Gypsum Wallboard (MSF) $ 90.03 $ 98.15 -8 % Paperboard (Ton) $ 505.61 $ 481.47 +5 % Cement (Ton) $ 81.25 $ 81.39 0 % Concrete (Cubic Yard) $ 61.04 $ 63.99 -5 % Aggregates (Ton) $ 5.88 $ 6.05 -3 %   *Net of freight and delivery costs billed to customers.     Intersegment and Cement Revenues ($ in thousands) Quarter Ended June 30, 2011   2010 Intersegment Revenues: Cement $ 1,039 $ 992 Paperboard 9,682 9,963 Concrete and Aggregates   140   120 $ 10,861 $ 11,075   Cement Revenues: Wholly Owned $ 37,711 $ 42,630 Joint Venture   21,394   18,840 $ 59,105 $ 61,470   Eagle Materials Inc.Attachment 4 Eagle Materials Inc.Consolidated Balance Sheets(dollars in thousands)(unaudited)     June 30,   March 31,   2011       2010   2011* ASSETS Current Assets – Cash and Cash Equivalents $ 3,478 $ 2,997 $ 1,874 Accounts and Notes Receivable, net 54,192 53,574 43,855 Inventories 114,124 106,505 115,237 Federal Income Tax Receivable 5,374 - 9,088 Prepaid and Other Assets   3,836     3,508     4,572   Total Current Assets   181,004     166,584     174,626   Property, Plant and Equipment – 1,119,346 1,103,616 1,112,058 Less: Accumulated Depreciation   (524,143 )   (480,198 )   (512,228 ) Property, Plant and Equipment, net 595,203 623,418 599,830 Investments in Joint Venture 34,109 33,190 33,661 Notes Receivable 5,139 10,201 5,326 Goodwill and Intangibles 151,380 152,016 151,539 Other Assets   18,376     23,480     17,828   $ 985,211   $ 1,008,889   $ 982,810     LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities – Accounts Payable $ 31,472 $ 27,381 $ 30,339 Federal Income Taxes Payable - 6,982 - Accrued Liabilities 33,388 35,270 40,011 Current Portion of Bank Credit Facility   -     10,000     -   Total Current Liabilities   64,860     79,633     70,350   Long-term Liabilities 37,905 68,726 37,807 Bank Credit Facility 11,000 - 2,000 Senior Notes 285,000 285,000 285,000 Deferred Income Taxes 127,689 122,424 128,089 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 44,906,232; 44,158,078 and 44,447,428 Shares, respectively. 449 442 444   Capital in Excess of Par Value 25,439 16,352 24,859 Accumulated Other Comprehensive Losses (2,893 ) (3,518 ) (2,893 ) Retained Earnings   435,762     439,830     437,154   Total Stockholders' Equity   458,757     453,106     459,564       $ 985,211     $ 1,008,889     $ 982,810     *From audited financial statements. Eagle Materials Inc.Steven R. Rowley, 214-432-2000President & CEOorD. Craig Kesler, 214-432-2000Executive Vice President & CFOorRobert S. Stewart, 214-432-2000Executive Vice President