Eagle Materials Announces Selection of Chairman and CEO for Independent Companies after Spin-off
February 11 2020 - 4:30PM
Business Wire
The Eagle Materials Inc. (NYSE: EXP) Board of Directors approved
a plan in 2019 to separate its Heavy and Light Materials businesses
into independent, publicly-traded companies by means of a tax-free
spin-off to Eagle shareholders. Significant progress has been made
on this plan since the announcement, and the Company continues to
target the summer of 2020 for the completion of the separation.
Today the Board of Directors announced the selection of the
Chairman and CEO for each of the two companies, which would become
effective upon the completion of the spin-off.
- The Heavy Materials business will be spun-off and will be named
Eagle Materials Inc. Mike Nicolais, current Eagle Materials
Chairman, will become Chairman of the Board of the spun-off
company, and Eagle Materials current President and CEO, Michael
Haack, will become President and CEO.
- The Light Materials business will be named American Gypsum
Company. Dave Powers, former Eagle Materials CEO and current Eagle
Materials board member, will become the Chairman of American
Gypsum. Craig Kesler, current CFO of Eagle Materials, will become
the President and CEO of American Gypsum.
These decisions lay the ground-work for further decision-making
with respect to the separation that will be made and communicated
over the coming months, including decisions pertaining to matters
such as the broader leadership teams and the capital structures for
the two companies.
Mike Nicolais, Eagle’s Chairman, remarked, “It is a Board
imperative that both companies be launched this year with the
experienced leadership required to assure continued success and to
provide continuity on the factors that have made these businesses
the benchmark operating performers in their respective industries.
We are fortunate to have great leadership options due to the
strength and experience in our ranks. Dave Powers led the American
Gypsum organization for 11 years before becoming the President and
CEO of Eagle Materials. Craig Kesler is a 16-year Eagle veteran and
has served as CFO for the past 11 years. This degree of continuity
and directly-relevant experience gives us every confidence that the
transition to creating two separate, top-performing companies will
be seamless and that both companies will continue to generate value
for all shareholders.”
Heavy Materials Business
After the separation, the Company’s existing Heavy Materials
business, a US-heartland cement-plant system with complementary
concrete, aggregates and sand operations, is expected to continue
to produce strong margins and significant cash flows. Eagle will
remain focused on low-cost production, operate in key US
geographies with favorable market dynamics and drive profitable
growth through both strategic acquisitions and the organic
development of its asset network. The business enjoys long-lived,
owned raw material reserves that will sustain its operations over
the long term. This business will operate as a distinct pure-play,
US-only cement company with excellent future prospects as the
largest US-owned producer. The Company continues to evaluate
strategic alternatives with respect to its frac sand business.
Light Materials Business
Upon separation, Eagle’s existing Light Materials business is
expected to continue to be a benchmark producer of gypsum wallboard
and recycled paperboard. This business has a long track-record of
superior margin performance and free cash flow generation, driven
by its sustainable low-cost producer positions in US sunbelt
markets, and has uniquely distinguished itself through industry
business cycles. The business includes an integrated paperboard
mill that utilizes advanced technologies to supply the wallboard
plants with high-performing, low-cost facing paper. The business
enjoys long-lived raw material reserves as well as industry leading
levels of customer satisfaction.
Conditions
Upon completion of the transaction, each company is expected to
be publicly listed and traded on the New York Stock Exchange. Both
companies are expected to remain headquartered in Dallas, TX.
The transaction is subject to certain conditions, including,
among others, obtaining final approval by Eagle’s Board of
Directors, receipt of a favorable opinion of tax advisors with
respect to the tax-free nature of the transaction for US federal
income tax purposes and effectiveness of a Form 10 registration
statement to be filed with the US Securities and Exchange
Commission. Eagle may, at any time and for any reason until the
proposed transaction is complete, abandon the separation or modify
or change its terms.
About Eagle Materials Inc.
Eagle Materials Inc. manufactures and distributes Cement, Gypsum
Wallboard, Recycled Paperboard, Concrete, Aggregates and Sand from
more than 75 facilities across the US. Eagle is headquartered in
Dallas, Texas.
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 or
changes in the nature of activity in the oil and gas industry,
including fluctuations in the level of fracturing activities and
the demand for frac sand and changes in processes or substitutions
in materials used in well fracturing; 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 revenue 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. With respect to our proposed acquisition of
certain assets from Kosmos Cement Company as described in this
press release, factors, risks and uncertainties that may cause
actual events and developments to vary materially from those
anticipated in such forward-looking statements include, but are not
limited to, the inability to complete the acquisition within the
expected time frame, or at all, failure to realize expected
synergies from or other benefits of the transaction, possible
negative effects resulting from consummation of the transaction,
significant transaction or ownership transition costs, unknown
liabilities or other adverse developments affecting the assets to
be acquired and the target business, including the effect on the
target business of the same or similar factors discussed above to
which our Heavy Materials business is subject. Finally, the
proposed separation of our Heavy Materials and Light Materials
businesses into two independent, publicly traded corporations is
subject to various risks and uncertainties, and may not be
completed on the terms or timeline currently contemplated, or at
all. These and other factors are described in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2019 and
subsequent quarterly and annual reports upon filing. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200211006004/en/
For additional information, contact at
214-432-2000 Michael Haack President and CEO
D. Craig Kesler Executive Vice President and CFO
Robert S. Stewart Executive Vice President, Strategy,
Corporate Development and Communications
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