Eagle Materials Inc. Reports Record Fiscal Year

DALLAS--()--Eagle Materials Inc. (NYSE: EXP) today reported financial results for fiscal year 2015 and the fiscal fourth quarter ended March 31, 2015. Notable items for the fiscal year and quarter include:

  • Record fiscal year 2015 revenues of $1.1 billion, up 19%
  • Fiscal year 2015 net earnings per diluted share of $3.71, up 49%
  • Record fourth quarter revenues of $223.8 million, up 18%
  • Fourth quarter earnings per diluted share of $0.93, up 107%
    • Includes a benefit of $0.39 per diluted share related to the settlement of our lawsuit against the IRS and costs of $0.06 per diluted share related to acquisition and litigation costs
  • Eagle entered into a definitive agreement to acquire Holcim (US) Inc.’s slag grinding plant in South Chicago

Fiscal 2015 earnings before interest and income taxes increased 32% from the prior year to $264.7 million, reflecting improved sales volumes across nearly all business lines, with cement sales volumes setting an annual record of 4.8 million tons. Net sales prices also strengthened across all businesses. The results of operations for the recently acquired CRS Proppants LLC for the period from November 14, 2014 through March 31, 2015, are included in the results disclosed in this press release.

Fourth quarter earnings before interest and income taxes increased 31% to $44.4 million, as fourth quarter sales volumes improved across nearly all businesses, reflecting improving construction fundamentals in the US. In addition, improved pricing was achieved across all businesses.

On March 3, 2015, Eagle entered into a definitive agreement with Holcim (US) Inc. to purchase their 600,000 ton per year Granulated Ground Blast Furnace Slag (GGBFS) plant in South Chicago (“Skyway”). Among other applications, GGBFS is used in conjunction with Portland cement to make durable concrete structures. The purchase price of $30.0 million is subject to customary post-closing adjustments and will be funded from operating cashflow. The transaction is expected to close in our second fiscal quarter, and is conditioned upon the closing of the Lafarge-Holcim global merger.

Cement, Concrete and Aggregates

Fiscal 2015 operating earnings from Cement were a record $117.5 million, an increase of 31% compared to fiscal 2014. Revenues from Cement, including joint venture and intersegment sales, were $488.6 million for fiscal 2015, 12% higher than last year.

Operating earnings from Cement were a fourth quarter record of $21.0 million, a 74% increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $90.8 million, 11% greater than the same quarter last year. Cement sales volumes for the quarter were 827,000 tons, 3% higher than the same quarter a year ago. The average net sales price for this quarter was a record $100.03 per ton, 8% higher than the same quarter last year.

Concrete and Aggregates reported fiscal 2015 operating earnings of $6.7 million compared to $0.2 million in the prior year. Revenues from Concrete and Aggregates were $107.0 million for fiscal 2015, 12% higher than last year.

Gypsum Wallboard and Paperboard

Fiscal 2015 operating earnings from Gypsum Wallboard and Paperboard were $177.4 million, an increase of 28% compared to fiscal 2014. Revenues from Gypsum Wallboard and Paperboard were $525.1 million for fiscal 2015, 13% higher than last year’s revenues.

Gypsum Wallboard and Paperboard reported fourth quarter operating earnings of $38.3 million, up 32% from the same quarter last year. The increase in operating earnings was primarily due to higher net wallboard and paperboard sales prices and higher wallboard sales volumes.

Gypsum Wallboard and Paperboard revenues for the fourth quarter totaled $111.9 million, a 5% increase from the same quarter a year ago. The average Gypsum Wallboard net sales price for this quarter was $168.97 per MSF, 4% greater than the same quarter a year ago. Gypsum Wallboard sales volumes of 464 million square feet (MMSF) were up approximately 5% from the prior year’s fourth quarter. The average Paperboard net sales price this quarter was $516.75 per ton, 3% greater than the same quarter a year ago. Paperboard sales volumes for the quarter were 57,000 tons, 3% lower than the same quarter a year ago.

Oil and Gas Proppants

Eagle’s Oil and Gas Proppants business reported fiscal 2015 revenues of $81.4 million and an operating loss of $2.5 million. Depreciation, depletion and amortization expense was $8.8 million and purchase price adjustments totaled $1.5 million during fiscal 2015. The increased revenue reflects the ramp up of our greenfield frac sand business over the past year as well as the acquisition of CRS Proppants. We are pleased with the continuing growth and development of our frac sand business during fiscal 2015, including opening our frac sand mine in Northern Illinois, opening additional distribution sites in south Texas and acquiring CRS Proppants. The recent decline in rig count and completion activity has negatively impacted oil and gas activity leading to reduced demand and pricing for proppants. We expect these conditions to persist for the remainder of calendar 2015; however, we remain focused on strengthening our low-cost position and taking this opportunity to continue to build our low-delivered cost position to targeted shale plays.

Details of Financial Results

Beginning in our fiscal 2015, we have begun reporting our frac sand business as a separately reportable segment – Oil and Gas Proppants. The results of this business were previously included in our Concrete and Aggregates segment during the start-up phase and have been reclassified to conform to the current year’s presentation.

During the fourth quarter, Eagle’s settlement with the IRS regarding the Republic acquisition was finalized. Under the terms of the settlement agreement, we dismissed our lawsuit seeking to recover taxes, penalties and interest paid, in exchange for the IRS conceding 40% of the penalties, plus related interest, to date. The tax impact from the settlement with the IRS, including state benefits, was approximately $16.6 million, or $0.33 per diluted share, and was recorded as a reduction of income tax expense during the fourth quarter. The related interest award of approximately $4.4 million (pre-tax), or $0.06 per diluted share (after-tax), was recorded as a reduction of interest expense.

The fourth quarter’s financial results were negatively impacted by business development expenses primarily related to due diligence efforts aimed at growing Eagle’s construction products business and administrative costs related to our settlement of our lawsuit against the IRS. The total impact from these non-routine items was $4.1 million (pre-tax), or $0.06 per diluted share (after-tax).

We conduct one of our cement plant operations through a 50/50 joint venture, Texas Lehigh Cement Company LP (the “Joint Venture”). We utilize 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 revenues and operating earnings, which is consistent with the way management organizes the segments within Eagle 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 these amounts.

About Eagle Materials Inc.

Eagle Materials Inc. manufactures and distributes Cement, Aggregates, Concrete, Gypsum Wallboard, Recycled Paperboard and Frac Sand from 40 facilities across the U.S. Eagle 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 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Friday, May 15, 2015. 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.

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; fluctuations in activity in the oil and gas industry, including the level of fracturing activities; 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; 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, coal 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, 2014 and in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2014. These reports are filed with the Securities and Exchange Commission. With respect to our acquisition of CRS Proppants, factors, risks and uncertainties that may cause actual events and developments to vary materially from those anticipated in forward-looking statements include, but are not limited to, failure to realize the expected synergies or other benefits of the transaction, significant transaction costs or unknown liabilities, changes in market conditions in the frac sand and related industries and general economic and business conditions that may affect us after the acquisition. 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) Statement of Consolidated Earnings
(2) Revenues and Earnings by Lines of Business (Quarter and Fiscal Year)
(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 Ended
March 31,

Fiscal Year Ended
March 31,

2015   2014 2015   2014
 
Revenues $ 223,780 $ 189,894 $ 1,066,368 $ 898,396
 
Cost of Goods Sold   180,258     160,366     812,235     712,937  
 
Gross Profit 43,522 29,528 254,133 185,459
 
Equity in Earnings of Unconsolidated JV 10,693 10,330 44,967 37,811
Corporate General and Administrative Expense (6,924 ) (6,102 ) (30,751 ) (24,552 )
Other Operating Income (Expense) 1,151 68 3,201 1,368
Acquisition and Litigation Expense   (4,055 )   -     (6,880 )   -  
 
Earnings before Interest and Income Taxes 44,387 33,824 264,670 200,086
 
Interest Income (Expense), Net   311     (4,057 )   (11,743 )   (18,282 )
 
Earnings before Income Taxes 44,698 29,767 252,927 181,804
 
Income Tax Benefit (Expense)   2,096     (7,149 )   (66,074 )   (57,561 )
 
Net Earnings $ 46,794   $ 22,618   $ 186,853   $ 124,243  

 

NET EARNINGS PER SHARE
Basic $ 0.94   $ 0.46   $ 3.77   $ 2.53  
Diluted $ 0.93   $ 0.45   $ 3.71   $ 2.49  
 
AVERAGE SHARES OUTSTANDING
Basic   49,668,533     49,365,344     49,604,249     49,090,750  
Diluted   50,363,458     50,187,433     50,372,243     49,939,165  
     
 

Eagle Materials Inc.

Attachment 2
 
 
Eagle Materials Inc.
Revenues and Segment Operating Earnings by Lines of Business
(dollars in thousands)
(unaudited)
 

Quarter Ended
March 31,

Fiscal Year Ended
March 31,

2015   2014 2015   2014
Revenues*
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 94,609 $ 87,917 $ 437,514 $ 387,016
Gypsum Paperboard   17,281     18,413     87,630     78,059  
111,890 106,330 525,144 465,075
 
Cement (Wholly Owned) 61,365 50,872 352,826 317,879
 
Oil and Gas Proppants 28,056 13,404 81,381 19,557
 
Concrete and Aggregates   22,469     19,288     107,017     95,885  
 
Total Revenues $ 223,780   $ 189,894   $ 1,066,368   $ 898,396  

 

Segment Operating Earnings
 
Gypsum Wallboard and Paperboard:
Gypsum Wallboard $ 31,428 $ 24,618 $ 145,871 $ 114,852
Gypsum Paperboard   6,879     4,333     31,512     23,610  
38,307 28,951 177,383 138,462
 
Cement:
Wholly Owned 10,299 1,705 72,560 51,675
Joint Venture   10,693     10,330     44,967     37,811  
20,992 12,035 117,527 89,486
 
Oil and Gas Proppants (5,861 ) (923 ) (2,546 ) (4,890 )
 
Concrete and Aggregates 777 (205 ) 6,736 212
 
Other, net   1,151     68     3,201     1,368  
 
Sub-total 55,366 39,926 302,301 224,638
 
Corporate General and Administrative Expense (6,924 ) (6,102 ) (30,751 ) (24,552 )
Acquisition and Litigation Expense   (4,055 )   -     (6,880 )   -  
 
Earnings before Interest and Income Taxes $ 44,387   $ 33,824   $ 264,670   $ 200,086  
 

* 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
March 31,

   

Fiscal Year Ended
March 31,

2015     2014     Change 2015     2014     Change
 
Gypsum Wallboard (MMSF’s) 464 442 +5 % 2,210 2,112 +5 %
 
Cement (M Tons):
Wholly Owned 609 543 +12 % 3,744 3,580 +5 %
Joint Venture 218 260 -16 % 1,055 1,013 +4 %
827 803 +3 % 4,799 4,593 +5 %
Paperboard (M Tons):
Internal 23 22 +5 % 106 101 +5 %
External 34 37 -8 % 170 155 +10 %
57 59 -3 % 276 256 +8 %
 
Concrete (M Cubic Yards) 191 176 +9 % 958 899 +7 %
 
Aggregates (M Tons) 654 623 +5 % 3,026 3,228 -6 %
   
 
Average Net Sales Price*

Quarter Ended
March 31,

   

Fiscal Year Ended
March 31,

2015     2014     Change 2015     2014     Change
 
Gypsum Wallboard (MSF) $ 168.97 $ 162.67 +4 % $ 162.06 $ 148.33 +9 %
Cement (Ton) $ 100.03 $ 93.01 +8 % $ 92.91 $ 87.31 +6 %
Paperboard (Ton) $ 516.75 $ 503.62 +3 % $ 507.47 $ 504.41 +1 %
Concrete (Cubic Yard) $ 92.56 $ 84.72 +9 % $ 87.93 $ 82.55 +7 %
Aggregates (Ton) $ 7.34 $ 7.03 +4 % $ 7.50 $ 6.76 +11 %
 

* Net of freight and delivery costs billed to customers.

   
 
Intersegment and Cement Revenues

Quarter Ended
March 31,

   

Fiscal Year Ended
March 31,

2015     2014 2015     2014
Intersegment Revenues:
Cement $ 1,838 $ 1,449 $ 9,598 $ 8,952
Paperboard 12,415 11,264 55,060 52,119
Concrete and Aggregates   184   134   875   1,023
$ 14,437 $ 12,847 $ 65,533 $ 62,094
 
Cement Revenues:
Wholly Owned $ 61,365 $ 50,872 $ 352,826 $ 317,879
Joint Venture   27,596   29,421   126,220   111,393
$ 88,961 $ 80,293 $ 479,046 $ 429,272
   
 

Eagle Materials Inc.

Attachment 4
 
 
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
 
March 31,
2015   2014

ASSETS

Current Assets –
Cash and Cash Equivalents $ 7,514 $ 6,482
Accounts and Notes Receivable, net 113,577 102,917
Inventories 235,464 187,096
Federal Income Tax Receivable - -
Prepaid and Other Assets   10,080     10,465  
Total Current Assets   366,635     306,960  
Property, Plant and Equipment – 1,962,215 1,660,975
Less: Accumulated Depreciation   (740,396 )   (676,924 )
Property, Plant and Equipment, net 1,221,819 984,051
Investments in Joint Venture 47,614 43,008
Notes Receivable 2,847 3,063
Goodwill and Intangibles 211,167 160,690
Other Assets   32,509     13,757  
$ 1,882,591   $ 1,511,529  

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities –
Accounts Payable $ 77,749 $ 57,098
Accrued Liabilities 49,782 42,222
Current Portion of Senior Notes   57,045     9,500  
Total Current Liabilities   184,576     108,820  
Long-term Liabilities 69,055 53,678
Bank Credit Facility 330,000 189,000
Senior Notes 125,714 182,759
Deferred Income Taxes 162,653 145,773
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 50,245,364 and 50,053,738 Shares, respectively.

502 501
Capital in Excess of Par Value 272,441 253,524
Accumulated Other Comprehensive Losses (12,067 ) (5,483 )
Retained Earnings   749,717     582,957  
Total Stockholders’ Equity   1,010,593     831,499  
$ 1,882,591   $ 1,511,529  

Contacts

Eagle Materials Inc.
Steven R. Rowley, 214-432-2000
President and Chief Executive Officer
or
D. Craig Kesler, 214-432-2000
Executive Vice President and Chief Financial Officer
or
Robert S. Stewart, 214-432-2000
Executive Vice President, Strategy, Corporate Development and Communications

Contacts

Eagle Materials Inc.
Steven R. Rowley, 214-432-2000
President and Chief Executive Officer
or
D. Craig Kesler, 214-432-2000
Executive Vice President and Chief Financial Officer
or
Robert S. Stewart, 214-432-2000
Executive Vice President, Strategy, Corporate Development and Communications