Eagle Materials Inc. (NYSE: EXP) today reported financial
results for the second quarter of fiscal 2022 ended September 30,
2021. Notable items for the quarter are highlighted below (unless
otherwise noted, all comparisons are with the prior year’s fiscal
second quarter):
Second Quarter Fiscal 2022 Highlights
- Record revenue of $510 million, up 14%
- Record net earnings per share of $2.46, up 6%
- Adjusted net earnings per share from continuing operations
(Adjusted EPS) of $2.73, up 26%
- Adjusted EPS is a non-GAAP financial measure calculated by
excluding non-routine items (including certain non-cash expenses)
in the manner described in Attachment 6
- Issued $750 million of 2.50% senior notes due July 2031
- Redeemed $350 million of 4.50% senior notes due August
2026
- Repurchased 1.3 million shares of Eagle’s common stock for $186
million
Commenting on the second quarter results, Michael Haack,
President and CEO, said, “Eagle achieved new quarterly records for
revenue and earnings per share during the quarter. Despite price
inflation in energy and recycled paper, our gross profit margins
improved 310 basis points from the prior year to 30.5%. These
results reflect continued strength in underlying market conditions
and strong execution by our team. Our recent pricing actions across
much of our footprint will continue to help offset increases in
certain input costs, as will our consistent focus on driving
operational efficiencies.”
Mr. Haack continued, “During the quarter, we completed the
refinancing of Eagle’s capital structure by issuing $750 million of
10-year senior notes with an interest rate of 2.50% and redeeming
previously issued debt with a higher interest rate. We also
returned nearly $200 million to shareholders through our quarterly
cash dividend and the repurchase of 1.3 million shares of our
common stock. We are well-positioned for a strong second half of
fiscal 2022 and remain committed to delivering sustainable growth
and superior shareholder value.”
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 $341.1 million, a 5% improvement. Heavy Materials
operating earnings increased 13% to $96.3 million primarily because
of improved Cement sales prices.
Cement revenue for the quarter, including Joint Venture and
intersegment revenue, was up 4% to $288.3 million, and operating
earnings were a record $88.8 million, up 11%. These increases
reflect improved Cement net sales prices and sales volume. The
average net sales price for the quarter was up 6% to $117.78 per
ton. Cement sales volume for the quarter was a record 2.2 million
tons, up 1%.
Concrete and Aggregates revenue increased 14% to $52.8 million,
and operating earnings increased 43% to $7.5 million. The
improvements reflect higher sales prices and sales volume.
Light Materials: Gypsum Wallboard and Paperboard
Revenue in the Light Materials sector, which includes Gypsum
Wallboard and Paperboard, increased 28% to $200.8 million,
reflecting higher Wallboard sales volume and prices. Gypsum
Wallboard sales volume increased 2% to 736 million square feet
(MMSF), while the average Gypsum Wallboard net sales price
increased 33% to $190.93 per MSF.
Paperboard sales volume for the quarter was flat from the prior
year at 87,000 tons. The average Paperboard net sales price was
$524.54 per ton, up 2%, consistent with the pricing provisions in
our long-term sales agreements.
Operating earnings were $67.3 million in the sector, an increase
of 39%, reflecting increased Wallboard sales volume and pricing,
partially offset by higher raw material costs, namely recycled
fiber and energy.
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 consolidated 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 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
Thursday, October 28, 2021. 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
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) and their effects 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) and the cost of our raw materials 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 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 1
Eagle Materials Inc.
Statement of Consolidated
Earnings
(dollars in thousands, except
per share data)
(unaudited)
Quarter Ended September
30,
Six Months Ended September
30,
2021
2020
2021
2020
Revenue
$
509,694
$
447,684
$
985,464
$
874,673
Cost of Goods Sold
354,353
324,835
703,612
649,527
Gross Profit
155,341
122,849
281,852
225,146
Equity in Earnings of Unconsolidated
JV
8,260
10,577
16,230
18,373
Corporate General and Administrative
Expenses
(10,667
)
(11,109
)
(20,135
)
(28,898
)
Premium Paid on Early Retirement of Senior
Notes
(8,407
)
-
(8,407
)
-
Gain on Sale of Businesses
-
-
-
51,973
Other Non-Operating (Loss) Income
(944
)
(90
)
2,734
(399
)
Earnings from Continuing Operations before
Interest and Income Taxes
143,583
122,227
272,274
266,195
Interest Expense, net
(12,268
)
(12,556
)
(19,240
)
(26,597
)
Earnings from Continuing Operations before
Income Taxes
131,315
109,671
253,034
239,598
Income Tax Expense
(29,190
)
(19,800
)
(55,582
)
(52,636
)
Earnings from Continuing Operations
$
102,125
$
89,871
$
197,452
$
186,962
Gain from Discontinued Operations, net of
tax
-
6,163
-
5,278
Net Earnings
$
102,125
$
96,034
$
197,452
$
192,240
BASIC EARNINGS PER SHARE
Continuing Operations
$
2.48
$
2.17
$
4.74
$
4.51
Discontinued Operations
$
-
$
0.15
$
-
$
0.13
Net Earnings
$
2.48
$
2.32
$
4.74
$
4.64
DILUTED EARNINGS PER SHARE
Continuing Operations
$
2.46
$
2.16
$
4.70
$
4.49
Discontinued Operations
$
-
$
0.15
$
-
$
0.13
Net Earnings
$
2.46
$
2.31
$
4.70
$
4.62
AVERAGE SHARES OUTSTANDING
Basic
41,222,161
41,450,013
41,623,187
41,430,511
Diluted
41,594,733
41,649,319
42,013,847
41,606,401
Attachment 2
Eagle Materials Inc.
Revenue and Earnings by Lines
of Business
(dollars in thousands)
(unaudited)
Quarter Ended September
30,
Six Months Ended September
30,
2021
2020
2021
2020
Revenue*
Heavy Materials:
Cement (Wholly Owned)
$
256,175
$
244,602
$
495,906
$
474,682
Concrete and Aggregates
52,750
46,300
97,504
90,384
308,925
290,902
593,410
565,066
Light Materials:
Gypsum Wallboard
172,985
131,210
339,252
261,360
Gypsum Paperboard
27,784
25,572
52,802
48,247
200,769
156,782
392,054
309,607
Total Revenue
$
509,694
$
447,684
$
985,464
$
874,673
Segment Operating Earnings
Heavy Materials:
Cement (Wholly Owned)
$
80,490
$
69,336
$
135,067
$
121,995
Cement (Joint Venture)
8,260
10,577
16,230
18,373
Concrete and Aggregates
7,539
5,255
12,883
10,673
96,289
85,168
164,180
151,041
Light Materials:
Gypsum Wallboard
66,331
37,606
129,584
78,931
Gypsum Paperboard
981
10,652
4,318
13,547
67,312
48,258
133,902
92,478
Other Operations
-
-
-
-
Sub-total
163,601
133,426
298,082
243,519
Corporate General and Administrative
Expense
(10,667
)
(11,109
)
(20,135
)
(28,898
)
Premium Paid on Early Retirement of Senior
Notes
(8,407
)
-
(8,407
)
-
Gain on Sale of Businesses
-
-
-
51,973
Other Non-Operating (Loss) Income
(944
)
(90
)
2,734
(399
)
Earnings from Continuing Operations before
Interest and Income Taxes
$
143,583
$
122,227
$
272,274
$
266,195
* 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 September 30,
Six Months Ended September
30,
2021
2020
Change
2021
2020
Change
Cement (M Tons):
Wholly Owned
1,983
1,947
+2%
3,835
3,813
+1%
Joint Venture
215
233
-8%
399
452
-12%
2,198
2,180
+1%
4,234
4,265
-1%
Concrete (M Cubic Yards)
398
357
+11%
746
705
+6%
Aggregates (M Tons)
481
475
+1%
842
950
-11%
Gypsum Wallboard (MMSFs)
736
720
+2%
1,499
1,424
+5%
Paperboard (M Tons):
Internal
37
39
-5%
73
69
+6%
External
50
48
+4%
98
95
+3%
87
87
0%
171
164
+4%
Average Net Sales
Price*
Quarter Ended September 30,
Six Months Ended September
30,
2021
2020
Change
2021
2020
Change
Cement (Ton)
$
117.78
$
111.59
+6%
$
117.09
$
110.38
+6%
Concrete (Cubic Yard)
$
120.15
$
116.55
+3%
$
119.23
$
115.10
+4%
Aggregates (Ton)
$
10.40
$
10.02
+4%
$
10.20
$
9.90
+3%
Gypsum Wallboard (MSF)
$
190.93
$
143.41
+33%
$
183.73
$
144.83
+27%
Paperboard (Ton)
$
524.54
$
513.11
+2%
$
511.76
$
489.13
+5%
*Net of freight and delivery costs billed to customers.
Intersegment and Cement
Revenue
Quarter Ended September 30,
Six Months Ended September
30,
2021
2020
2021
2020
Intersegment Revenue:
Cement
$
5,223
$
6,267
$
13,056
$
12,298
Concrete and Aggregates
-
-
-
106
Paperboard
20,014
20,499
38,263
34,568
$
25,237
$
26,766
$
51,319
$
46,972
Cement Revenue:
Wholly Owned
$
256,175
$
244,602
$
495,906
$
474,682
Joint Venture
26,926
27,193
49,617
52,493
$
283,101
$
271,795
$
545,523
$
527,175
Attachment 4
Eagle Materials Inc.
Consolidated Balance
Sheets
(dollars in thousands)
(unaudited)
September 30,
March 31,
2021
2020
2021*
ASSETS
Current Assets –
Cash and Cash Equivalents
$
45,214
$
200,858
$
263,520
Restricted Cash
-
5,000
5,000
Accounts and Notes Receivable, net
196,664
177,138
147,133
Inventories
203,745
227,106
235,749
Federal Income Tax Receivable
17,954
28,671
2,838
Prepaid and Other Assets
8,534
9,634
7,449
Total Current Assets
472,111
648,407
661,689
Property, Plant and Equipment, net
1,629,133
1,706,200
1,659,100
Investments in Joint Venture
77,628
74,331
75,399
Operating Lease Right of Use Asset
25,127
28,139
25,811
Notes Receivable
8,485
8,287
8,419
Goodwill and Intangibles
390,107
394,524
392,315
Other Assets
17,237
11,395
15,948
$
2,619,828
$
2,871,283
$
2,838,681
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current Liabilities –
Accounts Payable and Accrued
Liabilities
$
181,617
$
156,275
$
163,011
Operating Lease Liabilities
7,028
6,810
6,343
Total Current Liabilities
188,645
163,085
169,354
Long-term Liabilities
76,961
79,005
75,735
Bank Credit Facility
75,000
245,000
-
Bank Term Loan
-
661,621
662,186
2.500% Senior Unsecured Notes due 2031
737,632
-
-
4.500% Senior Unsecured Notes due 2026
-
346,095
346,430
Deferred Income Taxes
234,281
208,446
225,986
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 40,913,931; 41,816,942
and 42,370,878 Shares, respectively
409
418
424
Capital in Excess of Par Value
-
18,584
62,497
Accumulated Other Comprehensive Losses
(3,386
)
(3,276
)
(3,440
)
Retained Earnings
1,310,286
1,152,305
1,299,509
Total Stockholders’ Equity
1,307,309
1,168,031
1,358,990
$
2,619,828
$
2,871,283
$
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 September 30, 2021 and 2020:
Depreciation, Depletion and
Amortization
Quarter Ended September 30,
2021
2020
Cement
$
20,019
$
19,258
Concrete and Aggregates
2,470
2,698
Gypsum Wallboard
5,484
5,661
Paperboard
3,663
3,344
Corporate and Other
704
1,201
$
32,340
$
32,162
Attachment 6
Eagle Materials Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited)
(Dollars in thousands, other
than earnings per share amounts, and number of shares in
thousands)
Adjusted Earnings per Diluted Share
(Adjusted EPS)
Adjusted EPS is a non-GAAP financial
measure and represents earnings from continuing operations per
diluted share excluding the impacts from non-routine items, such as
the loss on redemption of bonds, the write-off of debt issuance
costs and other items described further below (Non-routine Items).
Management uses measures of earnings excluding the impact of
Non-routine Items as a performance measure in order to compare
operating results of the Company from period to period and for
purposes of its budgeting and planning processes. Although
management believes that Adjusted EPS is useful in evaluating the
Company’s business, this information should be considered as
supplemental in nature and is not meant to be considered in
isolation, or as a substitute for, earnings per diluted share and
the related financial information prepared in accordance with GAAP.
In addition, our presentation of Adjusted EPS may not be the same
as similarly titled measures reported by other companies, limiting
its usefulness as a comparative measure. The following shows the
calculation of Adjusted EPS and reconciles Adjusted EPS to earnings
per diluted share in accordance with GAAP for the quarters ended
September 30, 2021 and 2020:
Quarter Ended September 30,
2021
2020
Net Earnings, as reported
$
102,125
$
96,034
Non-routine Items:
Premium Paid on Early Retirement of Senior
Notes 1
$
8,407
$
-
Write-off of Debt Issuance Costs 2
6,101
-
Gain from Discontinued Operations 3
-
(8,223
)
Total Non-routine Items before Taxes
$
14,508
$
(8,223
)
Tax Impact on Non-routine Items
(3,221
)
2,060
After-tax Impact of Non-routine Items
$
11,287
$
(6,163
)
Adjusted Net Earnings from Continuing
Operations
$
113,412
$
89,871
Diluted Average Shares Outstanding
41,595
41,649
Net earnings per diluted share, as
reported
$
2.46
$
2.31
Adjusted net earnings per diluted share
from Continuing Operations
$
2.73
$
2.16
1 Represents the loss on the early
redemption of our 4.50% senior notes due 2026
2 Represents the write-off of debt
issuance costs associated with the debt instruments retired during
the quarter, including the 4.50% senior notes due 2026 and the bank
term loan recorded in Interest Expense, net
3 Represents the earnings from the Oil and
Gas Proppants business sold in September 2020
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028005055/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
Eagle Materials (NYSE:EXP)
Historical Stock Chart
From Apr 2024 to May 2024
Eagle Materials (NYSE:EXP)
Historical Stock Chart
From May 2023 to May 2024