Eagle Materials Inc. (NYSE: EXP) today reported financial
results for the third quarter of fiscal 2024 ended December 31,
2023. Notable items for the quarter are highlighted below (unless
otherwise noted, all comparisons are with the prior year’s fiscal
third quarter):
Third Quarter Fiscal 2024 Highlights
- Record Revenue of $558.8 million, up 9%
- Record Net Earnings of $129.1 million, up 10%
- Net Earnings per share of $3.72, up 16%
- Adjusted EBITDA of $218.6 million, up 10%
- Adjusted EBITDA is a non-GAAP financial measure calculated by
excluding non-routine items and certain non-cash expenses in the
manner described in Attachment 6
- Repurchased 558,500 shares of Eagle’s common stock for $98
million
Commenting on the results, Michael Haack, President and CEO of
Eagle, said, “We are pleased to announce another exceptional
quarter against the backdrop of shifting, albeit constructive,
market conditions as interest rates moved materially lower during
the latter half of the quarter. In the third quarter, we achieved
record revenue of $559 million, produced record EPS of $3.72 and
expanded gross margins by 130 bps to 32.3%. We generated strong
free cash flow, repurchased 558,500 shares of our common stock and
returned $106 million of cash to shareholders, bringing total cash
returned to $276 million in the first nine months of the fiscal
year.”
“We continued making progress on our environmental stewardship
goals, expanding the production and sale of our eco-friendly
Portland Limestone Cement and other blended cement products. In
December, we announced an agreement with Terra CO2 granting us
exclusive rights to use Terra’s technology to build and operate
plants that would produce low-carbon supplementary cementitious
material in three of our core cement markets. Once fully developed,
this technology has the potential to not only reduce the carbon
intensity of the cementitious products we sell, but also to fulfill
the needs of our customers and meet the expected increase in demand
for cement and supplementary cementitious materials.”
Mr. Haack concluded, “Eagle’s heartland geographic footprint
remains well-positioned for long-term growth, supported by trends
in population growth, well-documented housing production deficits
and supply shortages, and a multi-year federal highway bill further
enhanced by state-level infrastructure spending. We expect that our
portfolio of businesses will continue to deliver leading financial
results, and our capital allocation strategies will continue to
generate superior shareholder value for the foreseeable
future.”
Segment Financial Results
Heavy Materials: Cement, Concrete and Aggregates
Revenue in the Heavy Materials sector, which includes Cement,
Concrete and Aggregates, as well as Joint Venture and intersegment
Cement revenue, was up 18% to $366.4 million. Heavy Materials
operating earnings increased 43% to $107.3 million, primarily
because of higher Cement net sales prices and sales volume.
Cement revenue for the quarter, including Joint Venture and
intersegment revenue, was up 20% to $308.7 million, and operating
earnings were a record $105.6 million, up 46%. These increases
reflect higher Cement sales volume and net sales prices as well as
the contribution of approximately $11 million of revenue from the
recently acquired Stockton Terminal. The average net sales price
for the quarter was up 13% to $151.32 per ton, reflecting Cement
price increases implemented in January 2023 and again in July 2023.
Cement sales volume increased 7% to 1.8 million tons. Excluding the
recently acquired Stockton Terminal, Cement sales volume increased
3%.
Concrete and Aggregates revenue increased 5% to $57.8 million,
reflecting higher Aggregates sales volume and record Concrete
pricing. Operating earnings for Concrete and Aggregates decreased
35% to $1.8 million, primarily because of higher input costs.
Light Materials: Gypsum Wallboard and Recycled
Paperboard
Revenue in the Light Materials sector, which includes Gypsum
Wallboard and Recycled Paperboard, decreased 4% to $226.9 million,
reflecting lower Wallboard and Paperboard sales prices and slightly
lower Wallboard sales volume, partially offset by increased
Paperboard sales volume. Gypsum Wallboard sales volume decreased 1%
to 722 million square feet (MMSF), while the average Gypsum
Wallboard net sales price declined 4% to $227.78 per MSF.
Paperboard sales volume for the quarter was up 9% to a record
84,000 tons. The average Paperboard net sales price was $559.49 per
ton, down 6%, consistent with the pricing provisions in our
long-term sales agreements that factor in changes to input
costs.
Operating earnings in the sector were $82.6 million, down 13%,
primarily related to lower 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 part of a segment’s total revenue.
Intersegment sales are eliminated on the consolidated income
statement. Refer to Attachment 3 for a reconciliation of these
amounts.
About Eagle Materials Inc.
Eagle Materials Inc. is a leading U.S. manufacturer of heavy
construction products and light building materials. Eagle’s primary
products, Portland Cement and Gypsum Wallboard, are essential for
building, expanding and repairing roads and highways and for
building and renovating residential, commercial and industrial
structures across America. Eagle manufactures and sells its
products through a network of more than 70 facilities spanning 21
states and is headquartered in Dallas, Texas. Visit
eaglematerials.com for more information.
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
Thursday, January 25, 2024. The conference call will be webcast on
the Eagle website, eaglematerials.com.
A replay of the webcast and the presentation will be archived on
the website 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
statements and generally arise when the Company is discussing its
beliefs, estimates or expectations as to future events. 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; fluctuations in 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; the availability and fluctuations in
the cost of raw materials; changes in the costs of energy,
including, without limitation, natural gas, coal and oil (including
diesel), and the nature of our obligations to counterparties under
energy supply contracts, such as those related to market conditions
(for example, 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; 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 or the nature or level of activity in any one
or more of the markets or industries in which the Company or its
customers are engaged; severe weather conditions (such as winter
storms, tornados and hurricanes) and their effects on our
facilities, operations and contractual arrangements with third
parties; competition; cyber-attacks or data security breaches;
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; the availability of
acquisitions or other growth opportunities that meet our financial
return standards and fit our strategic focus; 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, including inflation and recessionary conditions; and
changes in interest rates and the resulting effects on the Company
and demand for our products. 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) or the cost of our raw materials can be expected to
adversely 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,
the outbreak, escalation or resurgence of health emergencies,
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 our operations and on economic conditions,
capital and financial markets. These and other factors are
described in the Company’s Annual Report on Form 10-K for the
fiscal year ended March 31, 2023 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 Statement of Consolidated
Earnings
Attachment 2 Revenue and Earnings by Lines
of Business
Attachment 3 Sales Volume, Average Net
Sales Prices and Intersegment and Cement Revenue
Attachment 4 Consolidated Balance
Sheets
Attachment 5 Depreciation, Depletion and
Amortization by Lines of Business
Attachment 6 Reconciliation of Non-GAAP
Financial Measures
Attachment 7 Reconciliation of Net Debt to
Adjusted EBITDA
Attachment 1
Eagle Materials Inc.
Statement of Consolidated
Earnings
(dollars in thousands, except
per share data)
(unaudited)
Quarter Ended
December 31,
Nine Months Ended
December 31,
2023
2022
2023
2022
Revenue
$
558,833
$
511,487
$
1,782,590
$
1,677,942
Cost of Goods Sold
378,205
352,717
1,216,949
1,174,067
Gross Profit
180,628
158,770
565,641
503,875
Equity in Earnings of Unconsolidated
JV
9,285
11,377
22,790
23,631
Corporate General and Administrative
Expenses
(14,201
)
(12,497
)
(42,456
)
(37,944
)
Other Non-Operating Income
1,019
2,210
2,837
911
Earnings before Interest and Income
Taxes
176,731
159,860
548,812
490,473
Interest Expense, net
(10,128
)
(8,932
)
(32,571
)
(24,842
)
Earnings before Income Taxes
166,603
150,928
516,241
465,631
Income Tax Expense
(37,465
)
(33,744
)
(115,701
)
(104,447
)
Net Earnings
$
129,138
$
117,184
$
400,540
$
361,184
NET EARNINGS PER SHARE
Basic
$
3.75
$
3.23
$
11.47
$
9.72
Diluted
$
3.72
$
3.20
$
11.38
$
9.66
AVERAGE SHARES OUTSTANDING
Basic
34,466,141
36,336,056
34,931,378
37,149,927
Diluted
34,749,721
36,605,982
35,201,658
37,395,586
Attachment 2
Eagle Materials Inc.
Revenue and Earnings by Lines
of Business
(dollars in thousands)
(unaudited)
Quarter Ended
December 31,
Nine Months Ended
December 31,
2023
2022
2023
2022
Revenue*
Heavy Materials:
Cement (Wholly Owned)
$
274,167
$
220,974
$
888,532
$
754,853
Concrete and Aggregates
57,772
55,176
191,291
186,407
331,939
276,150
1,079,823
941,260
Light Materials:
Gypsum Wallboard
200,969
212,016
629,299
652,981
Recycled Paperboard
25,925
23,321
73,468
83,701
226,894
235,337
702,767
736,682
Total Revenue
$
558,833
$
511,487
$
1,782,590
$
1,677,942
Segment Operating Earnings
Heavy Materials:
Cement (Wholly Owned)
$
96,281
$
60,938
$
278,266
$
209,811
Cement (Joint Venture)
9,285
11,377
22,790
23,631
Concrete and Aggregates
1,760
2,692
13,434
15,700
107,326
75,007
314,490
249,142
Light Materials:
Gypsum Wallboard
75,063
87,335
251,625
261,164
Recycled Paperboard
7,524
7,805
22,316
17,200
82,587
95,140
273,941
278,364
Sub-total
189,913
170,147
588,431
527,506
Corporate General and Administrative
Expense
(14,201
)
(12,497
)
(42,456
)
(37,944
)
Other Non-Operating Income
1,019
2,210
2,837
911
Earnings before Interest and Income
Taxes
$
176,731
$
159,860
$
548,812
$
490,473
* Excluding Intersegment and Joint Venture
Revenue listed on Attachment 3
Attachment 3
Eagle Materials Inc.
Sales Volume, Average Net
Sales Prices and Intersegment and Cement Revenue
(unaudited)
Sales Volume
Quarter Ended
December 31,
Nine Months Ended
December 31,
2023
2022
Change
2023
2022
Change
Cement (M Tons):
Wholly Owned
1,663
1,527
+9%
5,470
5,313
+3%
Joint Venture
161
172
-6%
496
524
-5%
1,824
1,699
+7%
5,966
5,837
+2%
Concrete (M Cubic Yards)
308
353
-13%
1,055
1,210
-13%
Aggregates (M Tons)
1,034
626
+65%
3,362
2,333
+44%
Gypsum Wallboard (MMSFs)
722
728
-1%
2,218
2,309
-4%
Recycled Paperboard (M Tons):
Internal
37
39
-5%
110
115
-4%
External
47
38
+24%
137
131
+5%
84
77
+9%
247
246
0%
Average Net Sales
Price*
Quarter Ended
December 31,
Nine Months Ended
December 31,
2023
2022
Change
2023
2022
Change
Cement (Ton)
$
151.32
$
134.36
+13%
$
150.20
$
131.44
+14%
Concrete (Cubic Yard)
$
149.54
$
134.42
+11%
$
145.29
$
132.46
+10%
Aggregates (Ton)
$
11.18
$
11.70
-4%
$
11.20
$
11.21
0%
Gypsum Wallboard (MSF)
$
227.78
$
238.51
-4%
$
232.79
$
230.01
+1%
Recycled Paperboard (Ton)
$
559.49
$
594.93
-6%
$
546.21
$
603.73
-10%
*Net of freight and delivery costs billed
to customers.
Intersegment and Cement
Revenue
Quarter Ended
December 31,
Nine Months Ended
December 31,
2023
2022
2023
2022
Intersegment Revenue:
Cement
$
7,804
$
7,719
$
27,192
$
26,371
Concrete and Aggregates
3,414
-
10,235
-
Recycled Paperboard
21,128
24,453
61,929
71,819
$
32,346
$
32,172
$
99,356
$
98,190
Cement Revenue:
Wholly Owned
$
274,167
$
220,974
$
888,532
$
754,853
Joint Venture
26,683
27,620
82,713
79,065
$
300,850
$
248,594
$
971,245
$
833,918
Attachment 4
Eagle Materials Inc.
Consolidated Balance
Sheets
(dollars in thousands)
(unaudited)
December 31,
March 31,
2023
2022
2023*
ASSETS
Current Assets –
Cash and Cash Equivalents
$
48,912
$
60,937
$
15,242
Accounts and Notes Receivable, net
192,982
172,543
195,052
Inventories
333,828
247,155
291,882
Federal Income Tax Receivable
2,917
5,466
16,267
Prepaid and Other Assets
9,092
5,177
3,060
Total Current Assets
587,731
491,278
521,503
Property, Plant and Equipment, net
1,667,915
1,641,638
1,662,061
Investments in Joint Venture
104,822
85,268
89,111
Operating Lease Right-of-Use Assets
20,670
20,651
20,759
Notes Receivable
-
8,556
7,382
Goodwill and Intangibles
488,088
467,703
466,043
Other Assets
21,114
15,076
14,143
$
2,890,340
$
2,730,170
$
2,781,002
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current Liabilities –
Accounts Payable
$
117,270
$
106,571
$
110,408
Accrued Liabilities
88,178
83,759
86,472
Income Taxes Payable
1,848
1,964
-
Current Portion of Long-Term Debt
10,000
10,000
10,000
Operating Lease Liabilities
8,217
6,006
6,009
Total Current Liabilities
225,513
208,300
212,889
Long-term Liabilities
63,016
62,545
66,543
Bank Credit Facility
107,000
130,000
157,000
Bank Term Loan
175,000
185,000
182,500
2.500% Senior Unsecured Notes due 2031
740,482
739,215
739,532
Deferred Income Taxes
246,168
239,596
236,844
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 34,474,435; 36,242,274
and 35,768,376 Shares, respectively
345
362
358
Capital in Excess of Par Value
-
-
-
Accumulated Other Comprehensive Losses
(3,403
)
(3,105
)
(3,547
)
Retained Earnings
1,336,219
1,168,257
1,188,883
Total Stockholders’ Equity
1,333,161
1,165,514
1,185,694
$
2,890,340
$
2,730,170
$
2,781,002
*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 December 31, 2023 and 2022:
Depreciation, Depletion and
Amortization
Quarter Ended
December 31,
2023
2022
Cement
$
22,514
$
20,582
Concrete and Aggregates
4,857
4,402
Gypsum Wallboard
5,611
5,387
Paperboard
3,694
3,738
Corporate and Other
792
706
$
37,468
$
34,815
Attachment 6
Eagle Materials Inc.
Reconciliation of Non-GAAP
Financial Measures
(dollars in thousands)
(unaudited)
EBITDA and Adjusted EBITDA
We present Earnings before Interest,
Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
to provide additional measures of operating performance and allow
for more consistent comparison of operating performance from period
to period. EBITDA is a non-GAAP financial measure that provides
supplemental information regarding the operating performance of our
business without regard to financing methods, capital structures or
historical cost basis. Adjusted EBITDA is also a non-GAAP financial
measure that further excludes the impact from non-routine items and
stock-based compensation. Management uses EBITDA and Adjusted
EBITDA as alternative bases for comparing the operating performance
of Eagle from period to period and for purposes of its budgeting
and planning processes. Adjusted EBITDA may not be comparable to
similarly titled measures of other companies because other
companies may not calculate Adjusted EBITDA in the same manner.
Neither EBITDA nor Adjusted EBITDA should be considered in
isolation or as an alternative to net income, cash flow from
operations or any other measure of financial performance or
liquidity in accordance with GAAP. The following shows the
calculation of EBITDA and Adjusted EBITDA and reconciles them to
net earnings in accordance with GAAP for the quarters and nine
months ended December 31, 2023 and 2022, and the trailing twelve
months ended December 31, 2023 and March 31, 2023:
Quarter Ended
Nine Months Ended
December 31,
December 31,
2023
2022
2023
2022
Net Earnings, as reported
$
129,138
$
117,184
$
400,540
$
361,184
Income Tax Expense
37,465
33,744
115,701
104,447
Interest Expense
10,128
8,932
32,571
24,842
Depreciation, Depletion and
Amortization
37,468
34,815
111,347
103,689
EBITDA
$
214,199
$
194,675
$
660,159
$
594,162
Purchase accounting 1
-
-
4,568
2,067
Stock-based Compensation
4,357
4,088
15,356
13,636
Adjusted EBITDA
$
218,556
$
198,763
$
680,083
$
609,865
Twelve Months Ended
December 31,
March 31,
2023
2023
Net Earnings, as reported
$
500,896
$
461,540
Income Tax Expense
138,307
127,053
Interest Expense
42,900
35,171
Depreciation, Depletion and
Amortization
146,212
138,554
EBITDA
$
828,315
$
762,318
Purchase accounting 1
4,568
2,067
Stock-based Compensation
18,875
17,155
Adjusted EBITDA
$
851,758
$
781,540
1 Represents the impact of purchase
accounting on inventory costs and related business development
costs
Attachment 7
Eagle Materials Inc.
Reconciliation of Net Debt to
Adjusted EBITDA
(unaudited)
(dollars in thousands)
GAAP does not define “Net Debt” and it
should not be considered as an alternative to cash flow or
liquidity measures defined by GAAP. We define Net Debt as total
debt minus cash and cash equivalents to indicate the amount of
total debt that would remain if the Company applied the cash and
cash equivalents held by it to the payment of outstanding debt. The
Company also uses “Net Debt to Adjusted EBITDA,” which it defines
as Net Debt divided by Adjusted EBITDA for the trailing twelve
months, as a metric of its current leverage position. We present
this metric for the convenience of the investment community and
rating agencies who use such metrics in their analysis, and for
investors who need to understand the metrics we use to assess
performance and monitor our cash and liquidity positions.
As of
As of
December 31, 2023
March 31, 2023
Total debt, excluding debt issuance
costs
$
1,042,000
$
1,099,500
Cash and cash equivalents
48,912
15,242
Net Debt
$
993,088
$
1,084,258
Trailing Twelve Months Adjusted EBITDA
$
851,758
$
781,540
Net Debt to Adjusted EBITDA
1.2x
1.4x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125472575/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 Alex Haddock Vice President,
Investor Relations, Strategy and Corporate Development
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