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Eagle Materials Reports Third Quarter Results


Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2022 ended December 31, 2021. 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 2022 Highlights

  • Revenue of $463 million, up 14%
  • Record diluted EPS from continuing operations of $2.53, up 30%
  • Repurchased 1.2 million shares of Eagle’s common stock for $188 million

Commenting on the third quarter results, Michael Haack, President and CEO, said, “Our record results this quarter reflect both continued strength in US construction activity and excellent execution by our team as supply chain challenges continued to dominate the broader industrial marketplace. We generated strong free cash flow during the quarter, and repurchased 1.2 million shares of our common stock for a total cash return to shareholders of nearly $200 million.”

“I’m also proud to share that, during the first nine months of our fiscal year, we achieved the best safety performance in our history, demonstrating our deep commitment to our people and their well-being. During the quarter, we also continued to make strides towards our environmental stewardship goals; we are now producing and selling our eco-friendly Portland Limestone Cement from four Eagle cement facilities.”

Mr. Haack concluded, “We continue to see positive demand trends across our geographic footprint, driven by increased residential construction activity and expanded infrastructure investment. These trends should support growing construction activity and contribute to attractive pricing across our heavy and light materials businesses. We enter the last quarter of our fiscal year in a position of strength, with an excellent balance sheet enabling us to continue to execute on our core strategies.”

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 9% to $303.5 million. Heavy Materials operating earnings increased 11% to $84.0 million, primarily because of improved Cement sales volume and net sales prices.

Cement revenue for the quarter, including Joint Venture and intersegment revenue, was up 12% to $261.2 million, and operating earnings were $79.8 million, up 13%. These increases reflect improved Cement sales volume and net sales prices.

The average net cement sales price for the quarter increased 6% to $118.44 per ton. Cement sales volume for the quarter was 2.0 million tons, up 7% versus the prior-year period.

Concrete and Aggregates revenue decreased 3% to $42.4 million. Operating earnings for Concrete and Aggregates decreased 19% to $4.1 million. These declines primarily reflect lower Concrete and Aggregates sales volume and higher fuel costs, partially offset by improved pricing.

Light Materials: Gypsum Wallboard and Paperboard

Revenue in the Light Materials sector, which includes Gypsum Wallboard and Paperboard, increased 21% to $192.1 million, reflecting higher Wallboard and Paperboard sales prices. Gypsum Wallboard sales volume was 695 million square feet (MMSF), down 4%, while the average Gypsum Wallboard net sales price increased 29% to $191.41 per MSF. The decline in our Wallboard sales volume was due to ongoing homebuilder supply chain difficulties; however, our order pace improved during the quarter.

Paperboard sales volume for the quarter increased 3% to 81,000 tons. The average Paperboard net sales price was $585.54 per ton, up 21% from the prior-year period, consistent with the pricing provisions in our long-term sales agreements.

Operating earnings were $63.2 million in the sector, up 32%, reflecting increased Wallboard sales pricing. This was partially offset by higher operating costs, primarily related to 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 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, January 27, 2022. 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 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,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

Revenue

$

462,941

 

 

$

404,667

 

 

$

1,448,405

 

 

$

1,279,340

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

324,355

 

 

 

291,288

 

 

 

1,027,967

 

 

 

940,815

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

138,586

 

 

 

113,379

 

 

 

420,438

 

 

 

338,525

 

 

 

 

 

 

 

 

 

 

 

Equity in Earnings of Unconsolidated JV

 

8,555

 

 

 

10,083

 

 

 

24,785

 

 

 

28,456

 

 

Corporate General and Administrative Expenses

 

(12,851

)

 

 

(11,327

)

 

 

(32,986

)

 

 

(40,225

)

 

Premium Paid on Early Retirement of Senior Notes

 

-

 

 

 

-

 

 

 

(8,407

)

 

 

-

 

 

Gain on Sale of Businesses

 

-

 

 

 

-

 

 

 

-

 

 

 

51,973

 

 

Other Non-Operating Income

 

3,207

 

 

 

2,297

 

 

 

5,941

 

 

 

1,898

 

 

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations before Interest and Income Taxes

 

137,497

 

 

 

114,432

 

 

 

409,771

 

 

 

380,627

 

 

Interest Expense, net

 

(5,651

)

 

 

(9,360

)

 

 

(24,891

)

 

 

(35,957

)

 

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations before Income Taxes

 

131,846

 

 

 

105,072

 

 

 

384,880

 

 

 

344,670

 

 

 Income Tax Expense

 

(29,367

)

 

 

(23,879

)

 

 

(84,949

)

 

 

(76,515

)

 

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations

$

102,479

 

 

$

81,193

 

 

$

299,931

 

 

$

268,155

 

 

 

 

 

 

 

 

 

 

 

Gain from Discontinued Operations, net of tax

 

-

 

 

 

-

 

 

 

-

 

 

 

5,278

 

 

 

 

 

 

 

 

 

 

 

Net Earnings

$

102,479

 

 

$

81,193

 

 

$

299,931

 

 

$

273,433

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE

 

 

 

 

 

 

 

 

Continuing Operations

$

2.56

 

 

$

1.96

 

 

$

7.30

 

 

$

6.47

 

 

Discontinued Operations

$

-

 

 

$

-

 

 

$

-

 

 

$

0.13

 

 

Net Earnings

$

2.56

 

 

$

1.96

 

 

$

7.30

 

 

$

6.60

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE

 

 

 

 

 

 

 

 

Continuing Operations

$

2.53

 

 

$

1.94

 

 

$

7.23

 

 

$

6.43

 

 

Discontinued Operations

$

-

 

 

$

-

 

 

$

-

 

 

$

0.13

 

 

Net Earnings

$

2.53

 

 

$

1.94

 

 

$

7.23

 

 

$

6.56

 

 

 

 

 

 

 

 

 

 

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

 

40,049,456

 

 

 

41,494,149

 

 

 

41,096,702

 

 

41,451,801

 

Diluted

 

40,458,049

 

 

 

41,834,590

 

 

 

41,493,339

 

 

41,682,541

 

 
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,

 

2021

 

2020

 

2021

 

2020

Revenue*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

 

 

 

 

Cement (Wholly Owned)

$

228,448

 

 

$

201,741

 

 

$

724,354

 

 

$

676,423

 

Concrete and Aggregates

 

42,384

 

 

 

43,530

 

 

 

139,888

 

 

 

133,914

 

 

 

270,832

 

 

 

245,271

 

 

 

864,242

 

 

 

810,337

 

 

 

 

 

 

 

 

 

Light Materials:

 

 

 

 

 

 

 

Gypsum Wallboard

 

163,584

 

 

 

135,658

 

 

 

502,836

 

 

 

397,018

 

Gypsum Paperboard

 

28,525

 

 

 

23,738

 

 

 

81,327

 

 

 

71,985

 

 

 

192,109

 

 

 

159,396

 

 

 

584,163

 

 

 

469,003

 

 

 

 

 

 

 

 

 

Total Revenue

$

462,941

 

 

$

404,667

 

 

$

1,448,405

 

 

$

1,279,340

 

 

Segment Operating Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

 

 

 

 

Cement (Wholly Owned)

$

71,281

 

 

$

60,351

 

 

$

206,348

 

 

$

182,346

 

Cement (Joint Venture)

 

8,555

 

 

 

10,083

 

 

 

24,785

 

 

 

28,456

 

Concrete and Aggregates

 

4,115

 

 

 

5,075

 

 

 

16,998

 

 

 

15,748

 

 

 

83,951

 

 

 

75,509

 

 

 

248,131

 

 

 

226,550

 

 

 

 

 

 

 

 

 

Light Materials:

 

 

 

 

 

 

 

Gypsum Wallboard

 

60,841

 

 

 

40,792

 

 

 

190,425

 

 

 

119,723

 

Gypsum Paperboard

 

2,349

 

 

 

7,161

 

 

 

6,667

 

 

 

20,708

 

 

 

63,190

 

 

 

47,953

 

 

 

197,092

 

 

 

140,431

 

 

 

 

 

 

 

 

 

Sub-total

 

147,141

 

 

 

123,462

 

 

 

445,223

 

 

 

366,981

 

 

 

 

 

 

 

 

 

Corporate General and Administrative Expense

 

(12,851

)

 

 

(11,327

)

 

 

(32,986

)

 

 

(40,225

)

Gain on Sale of Businesses

 

-

 

 

 

-

 

 

 

-

 

 

 

51,973

 

Premium Paid on Early Retirement of Senior Notes

 

-

 

 

 

-

 

 

 

(8,407

)

 

 

-

 

Other Non-Operating Income

 

3,207

 

 

 

2,297

 

 

 

5,941

 

 

 

1,898

 

 

 

 

 

 

 

 

 

Earnings from Continuing Operations before Interest and Income Taxes

$

137,497

 

 

$

114,432

 

 

$

409,771

 

 

$

380,627

 

 

* 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,

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Cement (M Tons):

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned

1,748

 

1,616

 

+8%

 

5,583

 

5,429

 

+3%

Joint Venture

215

 

226

 

-5%

 

614

 

678

 

-9%

 

1,963

 

1,842

 

+7%

 

6,197

 

6,107

 

+1%

 

 

 

 

 

 

 

 

 

 

 

 

Concrete (M Cubic Yards)

317

 

327

 

-3%

 

1,063

 

1,032

 

+3%

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates (M Tons)

341

 

583

 

-42%

 

1,183

 

1,533

 

-23%

 

 

 

 

 

 

 

 

 

 

 

 

Gypsum Wallboard (MMSFs)

695

 

727

 

-4%

 

2,194

 

2,151

 

+2%

 

 

 

 

 

 

 

 

 

 

 

 

Paperboard (M Tons):

 

 

 

 

 

 

 

 

 

 

 

Internal

36

 

32

 

+13%

 

109

 

101

 

+8%

External

45

 

47

 

-4%

 

143

 

142

 

+1%

 

81

 

79

 

+3%

 

252

 

243

 

+4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Net Sales Price*

 

Quarter Ended
December 31,

 

Nine Months Ended
December 31,

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Cement (Ton)

$

118.44

 

$

111.91

 

+6%

 

$

117.49

 

$

110.84

 

+6%

Concrete (Cubic Yard)

$

122.36

 

$

116.88

 

+5%

 

$

120.17

 

$

115.66

 

+4%

Aggregates (Ton)

$

10.38

 

$

8.96

 

+16%

 

$

10.25

 

$

9.54

 

+7%

Gypsum Wallboard (MSF)

$

191.41

 

$

147.87

 

+29%

 

$

186.16

 

$

145.86

 

+28%

Paperboard (Ton)

$

585.54

 

$

484.92

 

+21%

 

$

535.55

 

$

487.76

 

+10%

 

*Net of freight and delivery costs billed to customers.

 

Intersegment and Cement Revenue

 

Quarter Ended
December 31,

 

Nine Months Ended
December 31,

 

2021

 

2020

 

2021

 

2020

Intersegment Revenue:

 

 

 

 

 

 

 

Cement

$

5,301

 

$

5,241

 

$

18,357

 

$

17,539

Concrete and Aggregates

 

-

 

 

-

 

 

-

 

 

106

Paperboard

 

21,238

 

 

15,864

 

 

59,501

 

 

50,432

 

$

26,539

 

$

21,105

 

$

77,858

 

$

68,077

 

 

 

 

 

 

 

 

Cement Revenue:

 

 

 

 

 

 

 

Wholly Owned

$

228,448

 

$

201,741

 

$

724,354

 

$

676,423

Joint Venture

 

27,406

 

 

27,110

 

 

77,023

 

 

79,603

 

$

255,854

 

$

228,851

 

$

801,377

 

$

756,026

 
Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

 

December 31,

 

March 31,

 

2021

 

2020

 

2021*

ASSETS

 

 

 

 

 

 

Current Assets –

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

17,392

 

 

$

142,784

 

 

$

263,520

 

Restricted Cash

 

 

-

 

 

 

5,000

 

 

 

5,000

 

Accounts and Notes Receivable, net

 

 

170,661

 

 

 

142,467

 

 

 

147,133

 

Inventories

 

 

211,978

 

 

 

228,667

 

 

 

235,749

 

Federal Income Tax Receivable

 

 

8,890

 

 

 

1,900

 

 

 

2,838

 

Prepaid and Other Assets

 

 

6,426

 

 

 

7,740

 

 

 

7,449

 

Total Current Assets

 

 

415,347

 

 

 

528,558

 

 

 

661,689

 

 

 

 

 

 

 

 

Property, Plant and Equipment, net

 

 

1,626,990

 

 

 

1,680,646

 

 

 

1,659,100

 

Investments in Joint Venture

 

 

79,434

 

 

 

74,914

 

 

 

75,399

 

Operating Lease Right of Use Asset

 

 

23,923

 

 

 

26,927

 

 

 

25,811

 

Notes Receivable

 

 

8,486

 

 

 

8,353

 

 

 

8,419

 

Goodwill and Intangibles

 

 

389,002

 

 

 

393,454

 

 

 

392,315

 

Other Assets

 

 

16,939

 

 

 

12,186

 

 

 

15,948

 

 

 

$

2,560,121

 

 

$

2,725,038

 

 

$

2,838,681

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities –

 

 

 

 

 

 

Accounts Payable and Accrued Liabilities

 

$

186,671

 

 

$

156,510

 

 

$

163,011

 

Operating Lease Liabilities

 

 

7,004

 

 

 

6,551

 

 

 

6,343

 

Total Current Liabilities

 

 

193,675

 

 

 

163,061

 

 

 

169,354

 

 

 

 

 

 

 

 

Long-term Liabilities

 

 

67,578

 

 

 

77,391

 

 

 

75,735

 

Bank Credit Facility

 

 

100,000

 

 

 

-

 

 

 

-

 

Bank Term Loan

 

 

-

 

 

 

662,082

 

 

 

662,186

 

2.500% Senior Unsecured Notes due 2031

 

 

737,949

 

 

 

-

 

 

 

-

 

4.500% Senior Unsecured Notes due 2026

 

 

-

 

 

 

346,263

 

 

 

346,430

 

Deferred Income Taxes

 

 

238,671

 

 

 

215,059

 

 

 

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 39,766,043; 41,939,310 and

42,370,878 Shares, respectively

 

 

398

 

 

 

419

 

 

 

424

 

Capital in Excess of Par Value

 

 

-

 

 

 

30,516

 

 

 

62,497

 

Accumulated Other Comprehensive Losses

 

 

(3,359

)

 

 

(3,251

)

 

 

(3,440

)

Retained Earnings

 

 

1,225,209

 

 

 

1,233,498

 

 

 

1,299,509

 

Total Stockholders’ Equity

 

 

1,222,248

 

 

 

1,261,182

 

 

 

1,358,990

 

 

 

$

2,560,121

 

 

$

2,725,038

 

 

$

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 December 31, 2021 and 2020:

 

 

Depreciation, Depletion and Amortization

 

Quarter Ended
December 31,

 

 

2021

 

2020

 

 

 

 

 

 

Cement

$

19,933

 

$

19,337

 

Concrete and Aggregates

 

2,294

 

 

2,691

 

Gypsum Wallboard

 

5,598

 

 

5,340

 

Paperboard

 

3,685

 

 

3,509

 

Corporate and Other

 

684

 

 

1,203

 

 

$

32,194

 

$

32,080

 

 

 

 

 

 

 

Eagle Materials Inc. Stock

€127.00
1.600%
There is an upward development for Eagle Materials Inc. compared to yesterday, with an increase of €2.00 (1.600%).

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