EXP Eagle Materials Inc

Eagle Materials Inc. (NYSE: EXP) today reported financial results for the first quarter of fiscal 2022 ended June 30, 2021. Notable items for the quarter are highlighted below. (Unless otherwise noted, all comparisons are with the prior year’s fiscal first quarter):

First Quarter Fiscal 2022 Highlights

• Record revenue of $476 million, up 11%
• Net earnings per diluted share of $2.25, down 3%
  • Prior year results benefitted from a $52.0 million, or $0.93 per share, gain on the sale of our northern California concrete and aggregates businesses
• Eagle repurchased approximately 426,000 shares of its common stock

Commenting on the first quarter results, Michael Haack, President and CEO, said, “Fiscal 2022 is off to a good start for Eagle. In the first quarter we achieved record revenue of $476 million and net earnings per diluted share of $2.25. These results reflect strong market demand in both of our major business lines and exceptional operational execution by our team. Our Wallboard business continues to benefit from robust residential construction activity across our markets, and our Cement business benefited from sustained high levels of infrastructure spending. Gross margin increased to 26.6%, an improvement of 260 basis points over the prior year, in spite of heavy rainfall in our Texas markets, which resulted in lower Cement sales volume, and additional Cement maintenance costs this quarter compared with a year ago.”

Mr. Haack continued, “We expect underlying market conditions to remain strong as the US economy recovers, and we are well-positioned to continue to benefit from this growth. On July 1, 2021, we completed the issuance of $750 million of 10-year senior notes with an interest rate of 2.50%, which further strengthened our capital structure. We also restarted our share repurchase program and repurchased approximately 426,000 shares of our common stock during the quarter. With Eagle’s excellent balance sheet and steadfast execution of our operating strategies, we are extremely well-positioned for a strong fiscal 2022.”

Segment Financial Results

Heavy Materials: Cement, Concrete and Aggregates

Revenue in the Heavy Materials sector, which includes Cement, Concrete and Aggregates, Joint Venture and intersegment Cement revenue, was $315.0 million, a 3% improvement. Heavy Materials operating earnings also increased 3% to $67.9 million primarily because of improved Cement sales prices.

Cement revenue, including Joint Venture and intersegment revenue, was up 3% to $270.3 million. Operating earnings were also up 3% to a record $62.5 million. These increases reflect improved Cement quarterly sales prices, partially offset by lower Cement sales volume. The average net Cement sales price for the quarter was up 7% to $116.34 per ton. Cement sales volume for the quarter was down 2% to 2.0 million tons, mainly because of heavy rainfall in Texas during the quarter.

Concrete and Aggregates revenue increased 2% to $44.8 million, reflecting improved Concrete and Aggregates prices, partially offset by lower Aggregates sales volume. First quarter operating earnings decreased 1% to $5.3 million, reflecting lower Aggregates sales volume partially offset by improved Concrete and Aggregates net sales prices.

Light Materials: Gypsum Wallboard and Paperboard

Revenue in the Light Materials sector, which includes Gypsum Wallboard and Paperboard, increased 25% to $191.3 million, reflecting higher Wallboard sales volume and prices. Gypsum Wallboard sales volume increased 8% to 763 million square feet (MMSF), while the average Gypsum Wallboard net sales price increased 21% to $176.79 per MSF.

Paperboard sales volume increased 9% to a record 84,000 tons. The average Paperboard net sales price in the quarter was $498.49 per ton, up 8%, consistent with the pricing provisions in our long-term sales agreements.

Operating earnings were $66.6 million in the sector, an increase of 51%, reflecting increased Wallboard sales volume and pricing.

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 use 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 revenue 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 revenue as a part of a segment’s total revenue. Intersegment sales are eliminated on the income statement. Refer to Attachment 3 for a reconciliation of these amounts.

On September 18, 2020, the Company sold its Oil and Gas Proppants business to Smart Sand, Inc. The prior-year financial results of the Oil and Gas Proppants segment have been classified as Discontinued Operations on the Consolidated Statement of Earnings. The assets and liabilities of the Oil and Gas Proppants segment have been reflected on separate lines for Discontinued Operations on the Consolidated Balance Sheet.

About Eagle Materials Inc.

Eagle Materials Inc. manufactures and distributes Portland Cement, Gypsum Wallboard, Recycled Gypsum Paperboard, and Concrete and Aggregates from more than 70 facilities across the US. Eagle’s corporate headquarters is in Dallas, Texas.

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 Wednesday, July 28, 2021. The conference call will be webcast simultaneously on the Eagle website, eaglematerials.com. A replay of the webcast and the presentation will be archived on the site for one year.

###

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 businesses; 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 the costs of energy, including, without limitation, natural gas, coal and oil, and the nature of our obligations to counterparties under energy supply contracts, such as those related to market conditions (such as fluctuations in spot market prices), governmental orders and other matters; 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; 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 and other environmental 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; severe weather conditions (such as winter storms, tornados and hurricanes) on our facilities, operations and contractual arrangements with third parties; competition; cyber-attacks or data security breaches; announced increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction or construction projects undertaken by state or local governments; risks related to pursuit of acquisitions, joint ventures and other transactions or the execution or implementation of such transactions, including the integration of operations acquired by the Company; 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. Finally, any forward-looking statements made by the Company are subject to the risks and impacts associated with natural disasters, pandemics or other unforeseen events, including, without limitation, the COVID-19 pandemic and responses thereto designed to contain its spread and mitigate its public health effects, as well as their impact on economic conditions, capital and financial markets. The COVID-19 pandemic and responses thereto may disrupt our business and are likely to have an adverse effect on demand for our products, attributable to, among other things, reductions in consumer spending, increases in unemployment and decreases in revenues and construction budgets of state or local governments. These and other factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021 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.

Attachment 1 Consolidated Statement of Earnings Attachment 2 Revenue and Earnings by Lines of Business Attachment 3 Sales Volume, Net Sales Prices and Intersegment and Cement Revenue Attachment 4 Consolidated Balance Sheets Attachment 5 Depreciation, Depletion and Amortization by Lines of Business

 

Attachment 1

Eagle Materials Inc.

Consolidated Statement of Earnings

(dollars in thousands, except per share data)

(unaudited)

 

Quarter Ended June 30,

 

2021

 

2020

 

 

 

 

Revenue

$

475,770

 

 

$

426,989

 

 

 

 

 

Cost of Goods Sold

 

349,259

 

 

 

324,692

 

 

 

 

 

Gross Profit

 

126,511

 

 

 

102,297

 

 

 

 

 

Equity in Earnings of Unconsolidated JV

 

7,970

 

 

 

7,796

 

Corporate General and Administrative Expenses

 

(9,468

)

 

 

(17,789

)

Gain on Sale of Businesses

 

-

 

 

 

51,973

 

Other Non-Operating Income

 

3,678

 

 

 

(309

)

 

 

 

 

Earnings from Continuing Operations before Interest and Income Taxes

 

128,691

 

 

 

143,968

 

 

 

 

 

Interest Expense, net

 

(6,972

)

 

 

(14,041

)

 

 

 

 

Earnings from Continuing Operations before Income Taxes

 

121,719

 

 

 

129,927

 

 

 

 

 

Income Tax Expense

 

(26,392

)

 

 

(32,836

)

 

 

 

 

Net Earnings from Continuing Operations

$

95,327

 

 

$

97,091

 

 

 

 

 

Loss from Discontinued Operations, net of tax

$

-

 

 

$

(885

)

 

 

 

 

Net Earnings

$

95,327

 

 

$

96,206

 

 

 

 

 

 

 

BASIC EARNINGS (LOSS) PER SHARE

 

 

 

Continuing Operations

$

2.27

 

 

$

2.34

 

Discontinued Operations

$

-

 

 

$

(0.02

)

Net Earnings

$

2.27

 

 

$

2.32

 

 

DILUTED EARNINGS (LOSS) PER SHARE

 

 

 

Continuing Operations

$

2.25

 

 

$

2.33

 

Discontinued Operations

$

-

 

 

$

(0.02

)

Net Earnings

$

2.25

 

 

$

2.31

 

 

 

 

 

AVERAGE SHARES OUTSTANDING

 

 

 

Basic

 

42,028,619

 

 

 

41,410,794

 

Diluted

 

42,437,366

 

 

 

41,563,268

 

 

 

 

 

Attachment 2

Eagle Materials Inc.

Revenue and Earnings by Lines of Business

(dollars in thousands)

(unaudited)

 

Quarter Ended June 30,

 

2021

 

2020

Revenue*

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

Cement (Wholly Owned)

$

239,731

 

 

$

230,080

 

Concrete and Aggregates

 

44,754

 

 

 

44,084

 

 

 

284,485

 

 

 

274,164

 

 

 

 

 

Light Materials:

 

 

 

Gypsum Wallboard

$

166,267

 

 

$

130,150

 

Gypsum Paperboard

 

25,018

 

 

 

22,675

 

 

 

191,285

 

 

 

152,825

 

 

 

 

 

Total Revenue

$

475,770

 

 

$

426,989

 

 

 

 

 

 

Segment Operating Earnings

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

Cement (Wholly Owned)

$

54,577

 

 

$

52,659

 

Cement (Joint Venture)

 

7,970

 

 

 

7,796

 

Concrete and Aggregates

 

5,344

 

 

 

5,418

 

 

 

67,891

 

 

 

65,873

 

 

 

 

 

Light Materials:

 

 

 

Gypsum Wallboard

$

63,253

 

 

$

41,325

 

Gypsum Paperboard

 

3,337

 

 

 

2,895

 

 

 

66,590

 

 

 

44,220

 

 

 

 

 

Sub-total

 

134,481

 

 

 

110,093

 

 

 

 

 

Corporate General and Administrative Expense

 

(9,468

)

 

 

(17,789

)

Gain on Sale of Businesses

 

-

 

 

 

51,973

 

Other Non-Operating Income

 

3,678

 

 

 

(309

)

 

 

 

 

Earnings from Continuing Operations before Interest and Income Taxes

$

128,691

 

 

$

143,968

 

 

* Excluding Intersegment and Joint Venture Revenue listed on Attachment 3

Attachment 3

Eagle Materials Inc.

Sales Volume, Net Sales Prices and Intersegment and Cement Revenue

(dollars in thousands, except per ton data)

(unaudited)

 

Sales Volume

 

Quarter Ended June 30,

 

2021

 

2020

 

Change

Cement (M Tons):

 

 

 

 

 

Wholly Owned

1,852

 

1,866

 

-1%

Joint Venture

184

 

219

 

-16%

 

2,036

 

2,085

 

-2%

 

 

 

 

 

 

Concrete (M Cubic Yards)

348

 

348

 

-%

 

 

 

 

 

 

Aggregates (M Tons)

361

 

475

 

-24%

 

 

 

 

 

 

Gypsum Wallboard (MMSFs)

763

 

704

 

+8%

 

 

 

 

 

 

Paperboard (M Tons):

 

 

 

 

 

Internal

36

 

30

 

+20%

External

48

 

47

 

+2%

 

84

 

77

 

+9%

 

 

 

 

 

 

 

 

Average Net Sales Price*

 

Quarter Ended June 30,

 

2021

 

2020

 

Change

Cement (Ton)

$ 116.34

$ 109.10

+7%

Concrete (Cubic Yard)

$ 118.19

$ 113.61

+4%

Aggregates (Ton)

$ 9.93

$ 9.77

+2%

Gypsum Wallboard (MSF)

$ 176.79

$ 146.28

+21%

Paperboard (Ton)

$ 498.49

$ 461.87

+8%

 

*Net of freight and delivery costs billed to customers

 

Intersegment and Cement Revenue

 

Quarter Ended June 30,

 

2021

 

2020

Intersegment Revenue:

 

 

 

Cement

$

7,833

 

$

6,031

Concrete and Aggregates

 

-

 

 

106

Paperboard

 

18,249

 

 

14,069

 

$

26,082

 

$

20,206

 

 

 

 

Cement Revenue:

 

 

 

Wholly Owned

$

239,731

 

$

230,080

Joint Venture

 

22,691

 

 

25,300

 

$

262,422

 

$

255,380

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

 

June 30,

 

March 31,

 

 

2021

 

2020

 

2021*

ASSETS

 

 

 

 

 

 

Current Assets –

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

306,542

 

 

$

199,441

 

 

$

263,520

 

Restricted Cash

 

 

5,000

 

 

 

-

 

 

 

5,000

 

Accounts and Notes Receivable, net

 

 

187,411

 

 

 

193,733

 

 

 

147,133

 

Inventories

 

 

217,052

 

 

 

242,658

 

 

 

235,749

 

Federal Income Tax Receivable

 

 

-

 

 

 

123,709

 

 

 

2,838

 

Prepaid and Other Assets

 

 

15,298

 

 

 

10,614

 

 

 

7,449

 

Current Assets of Discontinued Operations

 

 

-

 

 

 

1,438

 

 

 

-

 

Total Current Assets

 

 

731,303

 

 

 

771,593

 

 

 

661,689

 

 

 

 

 

 

 

 

Property, Plant and Equipment, net

 

 

1,641,063

 

 

 

1,720,791

 

 

 

1,659,100

 

Investments in Joint Venture

 

 

76,369

 

 

 

72,254

 

 

 

75,399

 

Operating Lease Right-of-Use Asset

 

 

24,776

 

 

 

28,949

 

 

 

25,811

 

Notes Receivable

 

 

8,485

 

 

 

9,068

 

 

 

8,419

 

Goodwill and Intangibles

 

 

391,211

 

 

 

395,673

 

 

 

392,315

 

Assets from Discontinued Operations

 

 

-

 

 

 

6,527

 

 

 

-

 

Other Assets

 

 

17,623

 

 

 

10,309

 

 

 

15,948

 

 

 

$

2,890,830

 

 

$

3,015,164

 

 

$

2,838,681

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities –

 

 

 

 

 

 

Accounts Payable and Accrued Liabilities

 

$

171,870

 

 

$

153,682

 

 

$

163,011

 

Income Taxes Payable

 

 

11,016

 

 

 

32,130

 

 

 

Operating Lease Liabilities

 

 

6,127

 

 

 

6,899

 

 

 

6,343

 

Current Liabilities of Discontinued Operations

 

 

-

 

 

 

7,322

 

 

 

-

 

Total Current Liabilities

 

 

189,013

 

 

 

200,033

 

 

 

169,354

 

Long-term Liabilities

 

 

73,665

 

 

 

77,597

 

 

 

75,735

 

Bank Credit Facility

 

 

-

 

 

 

485,000

 

 

 

-

 

Bank Term Loan

 

 

662,487

 

 

 

661,160

 

 

 

662,186

 

4.500% Senior Unsecured Notes due 2026

 

 

346,548

 

 

 

345,928

 

 

 

346,430

 

Deferred Income Taxes

 

 

227,785

 

 

 

162,940

 

 

 

225,986

 

Liabilities from Discontinued Operations

 

 

-

 

 

 

14,548

 

 

 

-

 

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 42,101,619; 41,756,684 and 42,370,878 Shares, respectively

 

 

421

 

 

 

418

 

 

 

424

 

Capital in Excess of Par Value

 

 

10,035

 

 

 

14,571

 

 

 

62,497

 

Accumulated Other Comprehensive Losses

 

 

(3,413

)

 

 

(3,302

)

 

 

(3,440

)

Retained Earnings

 

 

1,384,289

 

 

 

1,056,271

 

 

 

1,299,509

 

Total Stockholders’ Equity

 

 

1,391,332

 

 

 

1,067,958

 

 

 

1,358,990

 

 

 

$

2,890,830

 

 

$

3,015,164

 

 

$

2,838,681

 

*From audited financial statements

Attachment 5

 

Eagle Materials Inc.

 

Depreciation, Depletion and Amortization by Lines of Business

 

(dollars in thousands)

 

(unaudited)

 

The following table presents Depreciation, Depletion and Amortization by lines of business for the quarters ended June 30, 2021 and 2020:

     

 

Depreciation, Depletion and Amortization

 

 

Quarter Ended June 30,

 

 

2021

 

2020

 

 

 

 

 

 

Cement

$

19,531

 

$

19,243

 

Concrete and Aggregates

 

2,578

 

 

2,721

 

Gypsum Wallboard

 

5,396

 

 

5,200

 

Paperboard

 

3,668

 

 

3,352

 

Corporate and Other

 

771

 

 

1,300

 

 

$

31,944

 

$

31,816

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005031/en/

For additional information, contact at 214-432-2000.

Michael R. Haack 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