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Press release from Business Wire

Eagle Materials Inc. Reports Second Quarter Results

Thursday, October 27, 2011

Eagle Materials Inc. Reports Second Quarter Results08:30 EDT Thursday, October 27, 2011 DALLAS (Business Wire) -- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2012 ended September 30, 2011. Notable items for the quarter include: Revenues of $134.8 million Cash flow from operations of $26.4 million Net earnings of $6.0 million Diluted earnings per share of $0.14 Revenues increased 2% from the prior year reflecting improved sales volumes across most of our business lines. Operating earnings were down 6% due primarily to higher raw material costs in our gypsum wallboard segment. Operating cash flow was strong during the quarter, further strengthening our financial position. Prior year's net earnings include approximately $2.5 million, or $0.06 per diluted share, of tax and interest benefits associated with the final assessment from the IRS related to their audit of the Republic asset acquisition in tax years 2001 through 2006. Cement, Concrete and Aggregates Operating earnings from Cement for the second quarter were $15.1 million, a 25% increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $72.6 million, 7% greater than the same quarter last year. Cement sales volumes for the quarter were 817,000 tons, 5% above the same quarter a year ago. The average net sales price this quarter was $81.23 per ton, 1% higher than the same quarter last year. Concrete and Aggregates reported a slight operating profit for the second quarter, down from the $0.5 million operating profit for the same quarter a year ago, primarily due to lower aggregates sales volumes and lower concrete average net sales prices. Revenues from Concrete and Aggregates were $13.7 million for the quarter, 7% greater than the same quarter a year ago. Concrete sales volume increased 17% from the same quarter a year ago to 144,000 cubic yards. Concrete average net sales price for the quarter of $64.33 per cubic yard was 4% less than the same quarter a year ago. Aggregates sales volume of 0.8 million tons for this quarter was 3% less than the sales volume for the same quarter a year ago. The aggregates average net sales price for the quarter was $5.98 per ton, up 1% compared to last year's second quarter. Gypsum Wallboard and Paperboard Gypsum Wallboard and Paperboard's second quarter operating earnings of $1.5 million were down 71% compared to the same quarter last year. Lower wallboard average net sales prices and higher raw material costs were the primary driver of the quarterly earnings decline. Gypsum Wallboard and Paperboard revenues for the second quarter totaled $72.3 million, a 2% increase from the same quarter a year ago. The revenue increase reflects higher wallboard sales volumes and higher paperboard sales prices, offset by lower gypsum wallboard average net sales prices. The average gypsum wallboard net sales price this quarter was $92.09 per MSF, 4% less than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 403 million square feet (MMSF) represents a 2% increase from the same quarter last year. The average Paperboard net sales price this quarter was $524.20 per ton, 11% higher than the same quarter a year ago. Paperboard sales volumes for the quarter were 60,000 tons, 3% lower than the same quarter a year ago. Details of Financial Results 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 2:00 p.m. Eastern Time (1:00 p.m. Central Time) on Thursday, October 27, 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, 2011 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011.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) Summary of Consolidated Earnings(2) Revenues and Earnings by Lines of Business (Quarter and Six Months)(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 EndedSeptember 30,Six Months EndedSeptember 30,2011201020112010   Revenues $ 134,819 $ 132,135 $ 254,626 $ 262,929   Cost of Goods Sold   126,102     118,586     238,536     232,949     Gross Profit 8,717 13,549 16,090 29,980   Equity in Earnings of Unconsolidated JV 7,936 4,160 13,384 10,672   Other Operating Income   115     175     36     892     Operating Earnings 16,768 17,884 29,510 41,544   Corporate General and Administrative Expense   (4,472 )   (4,415 )   (8,590 )   (8,118 )   Earnings before Interest and Income Taxes 12,296 13,469 20,920 33,426   Interest Expense, Net   (4,557 )   (3,148 )   (9,142 )   (8,438 )   Earnings before Income Taxes 7,739 10,321 11,778 24,988   Income Tax Expense   (1,714 )   (691 )   (2,696 )   (4,831 )   Net Earnings $ 6,025   $ 9,630   $ 9,082   $ 20,157     EARNINGS PER SHARE Basic $ 0.14   $ 0.22   $ 0.21   $ 0.46   Diluted $ 0.14   $ 0.22   $ 0.20   $ 0.46     AVERAGE SHARES OUTSTANDING Basic   44,200,291     43,855,326     44,190,220     43,843,912   Diluted   44,325,277     44,169,251     44,433,809     44,200,303       Eagle Materials Inc. Attachment 2         Eagle Materials Inc.Revenues and Earnings by Lines of Business(dollars in thousands)(unaudited)   Quarter EndedSeptember 30,Six Months EndedSeptember 30,2011201020112010Revenues*   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ 50,981 $ 50,314 $ 102,323 $ 108,514 Gypsum Paperboard   21,285     20,347   40,279     39,108 72,266 70,661 142,602 147,622   Cement (Wholly Owned) 48,892 48,721 86,603 91,351   Concrete and Aggregates   13,661     12,753   25,421     23,956   Total $ 134,819   $ 132,135 $ 254,626   $ 262,929   Operating Earnings   Gypsum Wallboard and Paperboard: Gypsum Wallboard $ (2,540 ) $ 1,295 $ (1,302 ) $ 6,496 Gypsum Paperboard   4,038     3,833   7,068     7,627 1,498 5,128 5,766 14,123   Cement: Wholly Owned 7,175 7,967 10,515 15,088 Joint Venture   7,936     4,160   13,384     10,672 15,111 12,127 23,899 25,760   Concrete and Aggregates 44 454 (191 ) 769   Other, net   115     175   36     892   Total Operating Earnings   16,768     17,884   29,510     41,544     * 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 September 30, Six Months Ended September 30, 2011 2010 Change 2011 2010 Change   Gypsum Wallboard (MMSF's) 403 397 +2 % 815 851 -4 %   Cement (M Tons): Wholly Owned 588 576 +2 % 1,037 1,074 -3 % Joint Venture 229 199 +15 % 454 403 +13 % 817 775 +5 % 1,491 1,477 +1 % Paperboard (M Tons): Internal 18 17 +6 % 35 36 -3 % External 42 45 -7 % 82 85 -4 % 60 62 -3 % 117 121 -3 %   Concrete (M Cubic Yards) 144 123 +17 % 280 240 +17 %   Aggregates (M Tons) 771 794 -3 % 1,383 1,421 -3 %       Average Net Sales Price* Quarter Ended September 30,   Six Months Ended September 30, 2011   2010   Change 2011   2010   Change   Gypsum Wallboard (MSF) $ 92.09 $ 96.08 -4 % $ 91.05 $ 97.18 -6 % Cement (Ton) $ 81.23 $ 80.03 +1 % $ 81.24 $ 80.67 +1 % Paperboard (Ton) $ 524.20 $ 474.29 +11 % $ 515.21 $ 477.82 +8 % Concrete (Cubic Yard) $ 64.33 $ 67.01 -4 % $ 62.73 $ 65.54 -4 % Aggregates (Ton) $ 5.98 $ 5.90 +1 % $ 5.94 $ 5.97 -1 %   *Net of freight and delivery costs billed to customers.       Intersegment and Cement Revenues Quarter Ended September 30,   Six Months Ended September 30, 2011   2010 2011   2010 Intersegment Revenues: Cement $ 1,202 $ 1,164 $ 2,241 $ 2,156 Paperboard 10,452 8,857 20,134 18,820 Concrete and Aggregates   221   187   361   307 $ 11,875 $ 10,208 $ 22,736 $ 21,283   Cement Revenues: Wholly Owned $ 48,892 $ 48,721 $ 86,603 $ 91,351 Joint Venture   22,460   17,928   43,854   36,768 $ 71,352 $ 66,649 $ 130,457 $ 128,119     Eagle Materials Inc. Attachment 4 Eagle Materials Inc.Consolidated Balance Sheets(dollars in thousands)(unaudited)   September 30,   March 31,2011   20102011*ASSETS Current Assets – Cash and Cash Equivalents $ 10,692 $ 8,001 $ 1,874 Accounts and Notes Receivable, net 64,447 54,744 43,855 Inventories 108,156 102,952 115,237 Federal Income Tax Receivable 6,688 - 9,088 Prepaid and Other Assets   2,856     5,132     4,572   Total Current Assets   192,839     170,829     174,626   Property, Plant and Equipment – 1,122,895 1,105,216 1,112,058 Less: Accumulated Depreciation   (536,057 )   (491,788 )   (512,228 ) Property, Plant and Equipment, net 586,838 613,428 599,830 Investments in Joint Venture 35,545 30,350 33,661 Notes Receivable 5,005 9,857 5,326 Goodwill and Intangibles 151,221 151,857 151,539 Other Assets   18,685     24,214     17,828   $ 990,133   $ 1,000,535   $ 982,810     LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities – Accounts Payable $ 35,285 $ 31,954 $ 30,339 Accrued Liabilities 42,939 42,172 40,011 Current Portion of Bank Credit Facility   -     10,000     -   Total Current Liabilities   78,224     84,126     70,350   Long-term Liabilities 38,097 40,330 37,807 Bank Credit Facility - - 2,000 Senior Notes 285,000 285,000 285,000 Deferred Income Taxes 127,077 124,761 128,089 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 44,899,310; 44,178,359 and 44,447,428 Shares, respectively 449 442 444   Capital in Excess of Par Value 26,882 18,066 24,859 Accumulated Other Comprehensive Losses (2,893 ) (3,518 ) (2,893 ) Retained Earnings   437,297     451,328     437,154   Total Stockholders' Equity   461,735     466,318     459,564   $ 990,133   $ 1,000,535   $ 982,810   *From audited financial statements. 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