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
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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
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