Eagle Materials Inc. (NYSE: EXP) today reported financial
results for the second quarter of fiscal 2024 ended September 30,
2023. 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 2024 Highlights
- Record Revenue of $622.2 million, up 3%
- Record Net Earnings of $150.6 million, up 8%
- Record Net Earnings per diluted share of $4.26, up 15%
- Adjusted net earnings per share (Adjusted EPS) of $4.28, up 14%
- Adjusted EPS is a non-GAAP financial measure calculated by
excluding non-routine items in the manner described in Attachment
6
- Adjusted EBITDA of $247.2 million, up 9%
- 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 432,500 shares of Eagle’s common stock for $77
million
Commenting on the second quarter results, Michael Haack,
President and CEO, said, “Market conditions for our construction
materials remained resilient during the quarter, even as the Fed
continued to raise interest rates and tighten money supply to
contain inflation. Several factors helped offset the higher rates
and supported demand for wallboard and cement, including limited
housing supply, strong homebuyer demand, increasing infrastructure
awards and significant investment in domestic manufacturing
facilities.
Against this backdrop, our businesses performed well. We
generated record revenue of $622 million and record EPS of $4.26,
and we expanded gross margins by 150 bps to 33.6%. Cash flow from
operations was $172.4 million. We returned $86 million of cash to
shareholders through share repurchases and dividends, while using
our strong cashflow to strengthen our balance sheet: at September
30, 2023, Eagle’s net debt was $1.1 billion, and our net adjusted
leverage ratio (net debt to Adjusted EBITDA) was 1.3x. We also made
progress on our strategic initiatives. We increased production and
sales of Portland Limestone Cement, to more than 60% across our
system, and we continued the integration of our recently acquired
cement import terminal in Stockton, California.
Mr. Haack continued, “In our Heavy Materials business, as demand
remained strong and our operations remained nearly sold-out, we
implemented a second round of cement price increases in early July
across half our markets and announced the next round of price
increases for early January 2024. In our Light Materials sector,
the backlog of housing construction supported resilient wallboard
shipments and orders, but we recognize the significant increase in
interest rates may have an impact on residential construction
activity in the future. Nonetheless, we expect that our portfolio
of businesses will remain well-positioned for the second half of
fiscal 2024.”
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 $426.9 million, a 10% increase. Heavy Materials
operating earnings were up 19% to $126.1 million. Both the increase
in revenue and operating earnings were primarily attributable to
higher Cement sales prices.
Cement revenue for the quarter, including Joint Venture and
intersegment revenue, was up 13% to $360.8 million, and operating
earnings were a record $121.4 million, up 23%. These increases
reflect higher Cement net sales prices and the contribution of
approximately $13 million of revenue from the recently acquired
Stockton Terminal, which helped mitigate an overall decrease in
sales volume. The increase in operating earnings was partially
offset by the impact of the step-up in inventory values related to
the acquisition of the Stockton Terminal. The average net sales
price for the quarter was up 15% to $151.99 per ton, reflecting
Cement price increases implemented in January 2023 and a second
round of price increases implemented in early July 2023. Cement
sales volume decreased 1% to 2.1 million tons. Excluding the
recently acquired Stockton Terminal, Cement sales volume declined
5%, because of wet weather in several markets and extreme heat in
our southern markets throughout the quarter.
Concrete and Aggregates revenue decreased 5% to $66.1 million,
reflecting lower Concrete sales volume partially offset by higher
Concrete pricing. Second quarter operating earnings declined 36% to
$4.6 million, primarily reflecting lower Concrete sales volume and
higher cost of materials.
Light Materials: Gypsum Wallboard and Paperboard
Revenue in the Light Materials sector, which includes Gypsum
Wallboard and Paperboard, decreased 8% to $233.5 million,
reflecting lower Wallboard and Paperboard sales volume and lower
Paperboard sales prices. Gypsum Wallboard sales volume declined 6%
to 733 million square feet (MMSF), while the average Gypsum
Wallboard net sales price was flat with the prior year at $233.69
per MSF.
Paperboard sales volume for the quarter was down 6% from the
prior year at 80,000 tons, in line with overall gypsum wallboard
shipments. The average Paperboard net sales price was $542.28 per
ton, down 10%, consistent with the pricing provisions in our
long-term sales agreements that factor in changes to input
costs.
Operating earnings in the sector were $93.3 million, a decrease
of 2%, reflecting lower Wallboard sales volume, partially offset by
lower 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.
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 26, 2023. 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
September 30,
Six Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
622,236
$
605,068
$
1,223,757
$
1,166,455
Cost of Goods Sold
413,218
410,829
838,744
821,350
Gross Profit
209,018
194,239
385,013
345,105
Equity in Earnings of Unconsolidated
JV
10,346
7,156
13,505
12,254
Corporate General and Administrative
Expenses
(16,576
)
(13,627
)
(28,255
)
(25,447
)
Other Non-Operating (Loss) Income
1,605
(664
)
1,818
(1,299
)
Earnings before Interest and Income
Taxes
204,393
187,104
372,081
330,613
Interest Expense, net
(10,204
)
(8,580
)
(22,443
)
(15,910
)
Earnings before Income Taxes
194,189
178,524
349,638
314,703
Income Tax Expense
(43,636
)
(39,529
)
(78,236
)
(70,703
)
Net Earnings
$
150,553
$
138,995
$
271,402
$
244,000
NET EARNINGS PER SHARE
Basic
$
4.29
$
3.74
$
7.72
$
6.50
Diluted
$
4.26
$
3.72
$
7.66
$
6.46
AVERAGE SHARES OUTSTANDING
Basic
35,056,973
37,140,197
35,165,268
37,559,087
Diluted
35,336,966
37,366,879
35,433,837
37,792,613
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,
2023
2022
2023
2022
Revenue*
Heavy Materials:
Cement (Wholly Owned)
$
322,593
$
281,969
$
614,365
$
533,879
Concrete and Aggregates
66,104
69,613
133,519
131,231
388,697
351,582
747,884
665,110
Light Materials:
Gypsum Wallboard
209,233
224,638
428,330
440,965
Recycled Paperboard
24,306
28,848
47,543
60,380
233,539
253,486
475,873
501,345
Total Revenue
$
622,236
$
605,068
$
1,223,757
$
1,166,455
Segment Operating Earnings
Heavy Materials:
Cement (Wholly Owned)
$
111,083
$
91,623
$
181,985
$
148,873
Cement (Joint Venture)
10,346
7,156
13,505
12,254
Concrete and Aggregates
4,640
7,276
11,674
13,008
126,069
106,055
207,164
174,135
Light Materials:
Gypsum Wallboard
85,705
89,761
176,562
173,829
Recycled Paperboard
7,590
5,579
14,792
9,395
93,295
95,340
191,354
183,224
Sub-total
219,364
201,395
398,518
357,359
Corporate General and Administrative
Expense
(16,576
)
(13,627
)
(28,255
)
(25,447
)
Other Non-Operating (Loss) Income
1,605
(664
)
1,818
(1,299
)
Earnings before Interest and Income
Taxes
$
204,393
$
187,104
$
372,081
$
330,613
* 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
(dollars in thousands, except
per unit data)
(unaudited)
Sales Volume
Quarter Ended
September 30,
Six Months Ended
September 30,
2023
2022
Change
2023
2022
Change
Cement (M Tons):
Wholly Owned
1,959
1,981
-1
%
3,807
3,786
+1
%
Joint Venture
170
164
+4
%
335
352
-5
%
2,129
2,145
-1
%
4,142
4,138
0
%
Concrete (M Cubic Yards)
362
451
-20
%
747
857
-13
%
Aggregates (M Tons)
1,171
912
+28
%
2,328
1,707
+36
%
Gypsum Wallboard (MMSFs)
733
783
-6
%
1,496
1,581
-5
%
Recycled Paperboard (M Tons):
Internal
33
40
-18
%
73
76
-4
%
External
47
45
+4
%
90
93
-3
%
80
85
-6
%
163
169
-4
%
Average Net Sales
Price*
Quarter Ended
September 30,
Six Months Ended
September 30,
2023
2022
Change
2023
2022
Change
Cement (Ton)
$
151.99
$
132.50
+15
%
$
149.70
$
130.24
+15
%
Concrete (Cubic Yard)
$
145.39
$
134.28
+8
%
$
143.55
$
131.65
+9
%
Aggregates (Ton)
$
11.15
$
10.87
+3
%
$
11.21
$
11.05
+1
%
Gypsum Wallboard (MSF)
$
233.69
$
233.70
0
%
$
235.20
$
226.07
+4
%
Recycled Paperboard (Ton)
$
542.28
$
603.62
-10
%
$
539.35
$
607.73
-11
%
*Net of freight and delivery costs billed
to customers.
Intersegment and Cement
Revenue
Quarter Ended
September 30,
Six Months Ended
September 30,
2023
2022
2023
2022
Intersegment Revenue:
Cement
$
9,251
$
12,361
$
19,388
$
18,652
Concrete and Aggregates
3,783
-
6,821
-
Recycled Paperboard
18,710
24,825
40,801
47,366
$
31,744
$
37,186
$
67,010
$
66,018
Cement Revenue:
Wholly Owned
$
322,593
$
281,969
$
614,365
$
533,879
Joint Venture
28,907
25,130
56,030
51,445
$
351,500
$
307,099
$
670,395
$
585,324
Attachment 4
Eagle Materials Inc.
Consolidated Balance
Sheets
(dollars in thousands)
(unaudited)
September 30,
March 31,
2023
2022
2023*
ASSETS
Current Assets –
Cash and Cash Equivalents
$
47,321
$
84,140
$
15,242
Accounts and Notes Receivable, net
244,832
232,595
195,052
Inventories
301,374
225,835
291,882
Federal Income Tax Receivable
8,144
4,371
16,267
Prepaid and Other Assets
10,135
5,933
3,060
Total Current Assets
611,806
552,874
521,503
Property, Plant and Equipment, net
1,676,738
1,655,616
1,662,061
Investments in Joint Venture
100,115
85,391
89,111
Operating Lease Right of Use Asset
22,068
22,126
20,759
Notes Receivable
-
8,501
7,382
Goodwill and Intangibles
490,180
469,491
466,043
Other Assets
16,187
15,150
14,143
$
2,917,094
$
2,809,149
$
2,781,002
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current Liabilities –
Accounts Payable
$
113,737
$
113,722
$
110,408
Accrued Liabilities
90,815
92,863
86,472
Income Taxes Payable
1,778
-
-
Current Portion of Long-Term Debt
10,000
10,000
10,000
Operating Lease Liabilities
8,205
6,736
6,009
Total Current Liabilities
224,535
223,321
212,889
Long-term Liabilities
62,590
64,159
66,543
Bank Credit Facility
162,000
200,000
157,000
Bank Term Loan
177,500
187,500
182,500
2.500% Senior Unsecured Notes due 2031
740,165
738,898
739,532
Deferred Income Taxes
243,670
238,567
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 35,031,889; 37,064,662
and 35,768,376 Shares, respectively
350
371
358
Capital in Excess of Par Value
-
-
-
Accumulated Other Comprehensive Losses
(3,451
)
(3,128
)
(3,547
)
Retained Earnings
1,309,735
1,159,461
1,188,883
Total Stockholders’ Equity
1,306,634
1,156,704
1,185,694
$
2,917,094
$
2,809,149
$
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 September 30, 2023 and 2022:
Depreciation, Depletion and
Amortization
Quarter Ended
September 30,
2023
2022
Cement
$
22,187
$
20,258
Concrete and Aggregates
4,962
4,351
Gypsum Wallboard
5,548
5,589
Recycled Paperboard
3,708
3,742
Corporate and Other
792
705
$
37,197
$
34,645
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 net earnings per diluted share excluding the
impacts from non-routine items, such as purchase accounting
(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 net
earnings per diluted share in accordance with GAAP for the quarters
ended September 30, 2023 and 2022:
Quarter Ended
September 30,
2023
2022
Net Earnings, as reported
$
150,553
$
138,995
Non-routine Items:
Purchase accounting 1
$
1,107
$
867
Total Non-routine Items before Taxes
$
1,107
$
867
Tax Impact on Non-routine Items
(249
)
(192
)
After-tax Impact of Non-routine Items
$
858
$
675
Adjusted Net Earnings
$
151,411
$
139,670
Diluted Average Shares Outstanding
35,337
37,367
Net earnings per diluted share, as
reported
$
4.26
$
3.72
Adjusted net earnings per diluted share
(Adjusted EPS)
$
4.28
$
3.74
1 Represents the impact of purchase
accounting on inventory costs and related business development
costs
Attachment 6, continued
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 ended
September 30, 2023 and 2022, and the trailing twelve months ended
September 30, 2023 and March 31, 2023:
Quarter Ended
Six Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net Earnings, as reported
$
150,553
$
138,995
$
271,402
$
244,000
Income Tax Expense
43,636
39,529
78,236
70,703
Interest Expense
10,204
8,580
22,443
15,910
Depreciation, Depletion and
Amortization
37,197
34,645
73,879
68,874
EBITDA
$
241,590
$
221,749
$
445,960
$
399,487
Purchase accounting 1
1,107
867
4,568
2,067
Stock-based Compensation
4,542
4,402
10,999
9,548
Adjusted EBITDA
$
247,239
$
227,018
$
461,527
$
411,102
Twelve Months Ended
September 30,
March 31,
2023
2023
Net Earnings, as reported
$
488,942
$
461,540
Income Tax Expense
134,586
127,053
Interest Expense
41,704
35,171
Depreciation, Depletion and
Amortization
143,559
138,554
EBITDA
$
808,791
$
762,318
Purchase accounting 1
4,568
2,067
Stock-based Compensation
18,606
17,155
Adjusted EBITDA
$
831,965
$
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
September 30, 2023
March 31, 2023
Total debt, excluding debt issuance
costs
$
1,099,500
$
1,099,500
Cash and cash equivalents
47,321
15,242
Net Debt
$
1,052,179
$
1,084,258
Trailing Twelve Months Adjusted EBITDA
$
831,965
$
781,540
Net Debt to Adjusted EBITDA
1.3x
1.4x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026732832/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
Eagle Materials (NYSE:EXP)
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