DALLAS, Aug. 2 /PRNewswire-FirstCall/ -- Eagle Materials Inc.
(NYSE: EXP and EXP.B) today reported financial results for the first quarter
of fiscal 2006 ended June 30, 2005 and raised its annual earnings guidance.
Eagle produces and distributes Gypsum Wallboard, Cement, Recycled Paperboard
and Concrete and Aggregates. The following are highlights of our first
quarter results:
* Highest quarterly net earnings and diluted EPS in Company history
* Record high quarterly sales volume in Wallboard, Cement and Paperboard
* Gypsum Wallboard average net sales price increased 18% from last
year's first quarter
* Highest quarterly cement average net sales price in our history --
increased 15% from last year's first quarter
* Record first quarter sales volume and price in our concrete and
aggregates businesses
* Repurchased 415,000 shares of Eagle during this year's first quarter
at an average cost of approximately $88 per share
For the quarter ended June 30, 2005, revenues and net earnings were
$205 million and $35 million, respectively. Revenues increased 36% over the
prior year first quarter and net earnings increased 50% over the same period
last year. Diluted earnings per share for the first quarter of fiscal 2006
were $1.91 compared with $1.23 in the same period a year ago, a 55% increase.
The Company also raised its earnings guidance for fiscal 2006 to a range
of $7.30 to $7.60, and expects to report earnings ranging from $2.10 to $2.30
per diluted share for the second quarter of fiscal 2006 ending September 30,
2005.
EXP remains well positioned to continue to achieve outstanding results
given our strong operational position supplying building materials to a robust
construction industry. According to the U.S. Census Bureau, total
construction spending during May 2005 was estimated at a seasonally adjusted
annual rate of $1.1 trillion, 7% above the May 2004 estimate. The Gypsum
Association reported approximately 17.8 billion square feet of wallboard were
shipped in the first six months of calendar 2005, a 4.4% increase over the
prior record year. For calendar year 2005, we expect Wallboard demand to
remain strong and supply to be tight (with 95%+ industry capacity utilization)
as a result of continued high levels of activity in residential construction
and increasing repair/remodel and commercial construction activity. Wallboard
pricing remains strong and a 15% price increase was implemented on June 27,
2005 in all of our wallboard markets. Also, national demand for cement
remains at record levels outpacing last year's consumption by over 6% through
May 2005 according to the U.S. Geological Survey with imports projected to
fulfill over 25% of the U.S. construction industry demand this year. Low
inventories and strong demand continue to put upward pressure on cement
pricing. We implemented a $5.00 price increase on April 1, 2005, in most of
our cement markets.
GYPSUM WALLBOARD
Gypsum Wallboard revenues for the first quarter totaled $105 million, a
27% increase over the $82 million for the same quarter a year ago. Gypsum
Wallboard's first quarter operating earnings were $28 million, up 64% from the
$17 million for the same quarter last year. The revenue and earnings gain for
the quarter resulted from higher sales prices and record sales volume. The
average net sales price for this fiscal year's first quarter was $119 per
thousand square feet (MSF), 18% greater than the $101 per MSF for the same
quarter last year. Gypsum Wallboard sales volume of 697 million square feet
(MMSF) increased 9% from the prior year's first quarter due to increased
industry demand.
CEMENT
Operating earnings from Cement increased 23% to $16 million for the first
quarter this year from $13 million for the same quarter last year. The
earnings gain was due primarily to a record high average net sales price,
record high sales volumes and the resulting positive impact of the Illinois
Cement acquisition. Cement revenues for the first quarter totaled
$76 million, 34% greater than the $56 million for the same quarter a year ago.
$10 million of the revenue gain is attributable to Eagle's acquisition of our
partners' 50% interest in Illinois Cement Company, which closed in the fourth
quarter of fiscal 2005. Cement sales volume for the first quarter totaled
898,000 tons, 18% above the 758,000 tons for the same quarter last year.
Margins were negatively impacted by increased purchased cement sales volumes
of 164,000 tons for the first quarter, which were 72,000 tons greater than the
purchased cement sales volumes for the first quarter a year ago.
PAPERBOARD
EXP's Paperboard operation reported first quarter revenues (including
sales to EXP's Wallboard operations -- see Attachment 3 for a detail of
intersegment revenues) of $34 million, up 6% from revenues of $32 million for
last year's first quarter. Paperboard operating earnings of $6 million for
the first quarter this year were down 8% from last year's first quarter due to
increased sales of lower margin B grade paper. For this year's first quarter,
Paperboard sales volume was 73,000 tons, up 4% from last year's sales volume
of 70,000 tons. This year's first quarter average net sales price of $457.69
per ton was a first quarter record and was 3% above last year's first quarter
average net sales price of $445.52 per ton.
CONCRETE AND AGGREGATES
Revenues from Concrete and Aggregates were $23 million for this year's
first quarter, 32% greater than the $17 million for the first quarter a year
ago. Concrete and Aggregates reported a $3 million operating profit for this
year's first quarter, up 62% from the $2 million for the same quarter last
year, due to increased sales volume and pricing in both of our markets.
Concrete sales volume increased 24% for the first quarter this year to
233,000 cubic yards from 188,000 cubic yards for the same quarter last year.
Our Concrete quarterly average net sales price of $58.37 per cubic yard for
the first quarter of fiscal 2006 was a record and was 6% higher than the
$54.85 per cubic yard for the first quarter a year ago. Our Aggregates
operation reported sales volume of 1.6 million tons for the current quarter,
30% greater than the 1.2 million tons reported in the first quarter last year.
Our Aggregates quarterly average net sales price was a record high $5.69
during the first quarter and was 2% above last year's first quarter Aggregates
average net sales price.
DETAILS OF FINANCIAL RESULTS
We conduct one of our cement plant operations through a 50/50 joint
venture, Texas Lehigh Cement Company L.P. (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 the Company
for making operating decisions and assessing performance.
Our results for the first quarter of fiscal 2006 include 100% of Illinois
Cement Company. During the first quarter of fiscal 2005, Illinois Cement
Company was a 50% owned joint venture and was accounted for utilizing the
equity method of accounting.
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 the amounts referred to above.
CORPORATE
In the first quarter of fiscal 2006, we early adopted Statement of
Financial Accounting Standards No. 123R, "Share-Based Payment." Under the
revised standard, companies may no longer account for share-based compensation
transactions, such as stock options and restricted stock, using the intrinsic
value method as defined in APB Opinion No. 25. Instead, companies are
required to account for such equity transactions using an approach in which
the fair value of an award is estimated at the date of grant and recognized as
an expense over the requisite service period. We early adopted the new
standard using the modified prospective method and beginning with the first
quarter of fiscal 2006 we reflected compensation expense in accordance with
SFAS 123R transition provisions. Under the modified prospective method, the
effect of the standard is recognized in the period of adoption and in future
periods. Prior periods are not restated to reflect the impact of adopting the
new standard at earlier dates. First quarter fiscal 2006 compensation expense
related to share-based incentive plans was approximately $1.0 million, or
$0.04 per share after tax, compared to $0.3 million in the first quarter of
fiscal 2005. The incremental impact of adopting SFAS 123R was approximately
$0.8 million, or $0.03 per share after tax.
Our effective tax rate was impacted by the deduction of qualified
production activities income (the "manufacturer's deduction") of 1.0% and
$1.8 million of adjustments to previously accrued tax reserves relating to
depletion. Our fiscal 2006 effective annual tax rate is expected to be
approximately 33%, including the impact of the adjustments.
EXP's senior management will conduct a conference call to discuss the
financial results, forward looking information and other matters at 3:00 p.m.
Eastern Time (2:00 p.m. Central Time) on Tuesday, August 2, 2005. 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. For more information, contact EXP
at 214-432-2000.
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 beliefs at the time the statements were made regarding
future events which are subject to significant 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; availability of raw materials;
changes in energy costs including without limitation increases in the cost of
natural gas; changes in the cost and availability of transportation;
unexpected operational difficulties; governmental regulation and changes in
governmental and public policy; 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; 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 natural gas) could affect the revenues or operating earnings
of our operations. In addition, changes in national and regional economic
conditions and levels of infrastructure and construction spending could also
adversely affect the Company's results of operations. These and other factors
are described in the Annual Report on Form 10-K for the Company for the fiscal
year ended March 31, 2005. This report is filed with the Securities and
Exchange Commission and may be obtained free of charge through the website
maintained by the SEC at http://www.sec.gov . All forward-looking statements
made in this press release are made as of the date hereof, and the risk that
actual results will differ materially from expectations expressed in this
press release 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) Summary of Consolidated Earnings
(2) Revenues and Earnings by Lines of Business (Quarter)
(3) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(4) Consolidated Balance Sheets
Eagle Materials Inc.
Attachment 1
Eagle Materials Inc.
Summary of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
Quarter Ended June 30,
2005 2004 Change
Revenues * $204,798 $150,291 +36%
Earnings Before Income Taxes $ 50,182 $ 35,434 +42%
Net Earnings $ 34,908 $ 23,213 +50%
Earnings Per Share:
- Basic $ 1.93 $ 1.25 +54%
- Diluted $ 1.91 $ 1.23 +55%
Average Shares Outstanding: **
- Basic 18,105,313 18,631,714 -3%
- Diluted 18,321,832 18,839,135 -3%
* Net of Intersegment and Joint Venture Revenues listed on Attachment 3.
** We purchased approximately 415,000 shares during the quarter ended
June 30, 2005.
Eagle Materials Inc.
Attachment 2
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Quarter Ended June 30,
2005 2004 Change
Revenues*
Cement (Wholly Owned) (A) $57,335 $32,956 +74%
28% 22%
Gypsum Wallboard 104,838 82,256 +27%
51% 55%
Paperboard 19,089 18,125 +5%
9% 12%
Concrete & Aggregates 22,412 16,954 +32%
11% 11%
Other, net 1,124 --- +100%
1% 0%
Total $204,798 $150,291 +36%
100% 100%
Operating Earnings
Cement:
Wholly Owned (A) $10,502 $8,072 +30%
Joint Venture (A) 5,527 4,924 +12%
16,029 12,996 +23%
30% 34%
Gypsum Wallboard 27,851 17,000 +64%
51% 45%
Paperboard 6,164 6,726 -8%
11% 18%
Concrete & Aggregates 3,452 2,131 +62%
6% 5%
Other, net 1,124 (832) +235%
2% (2)%
Total Operating Earnings 54,620 38,021 +44%
100% 100%
Corporate General Expenses (3,102) (1,879)
Interest Expense, net (1,336) (708)
Earnings Before Income Taxes $50,182 $35,434 +42%
* Net of Intersegment and Joint Venture Revenues listed on Attachment 3.
(A) Fiscal 2006 results include 100% of Illinois Cement Company. During
the first quarter of fiscal 2005, Illinois Cement Company was a 50%
owned JV accounted for utilizing the equity method of accounting.
Eagle Materials Inc.
Attachment 3
Eagle Materials Inc.
Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(unaudited)
Sales Volume
Quarter Ended
June 30,
2005 2004 Change
Cement (M Tons):
Wholly Owned (A) 671 417 +61%
Joint Venture (A) 227 341 -33%
898 758 +18%
Gypsum Wallboard (MMSF's) 697 641 +9%
Paperboard (M Tons):
Internal 29 28 +4%
External 44 42 +5%
73 70 +4%
Concrete (M Cubic Yards) 233 188 +24%
Aggregates (M Tons) 1,572 1,211 +30%
Average Net Sales Price*
Quarter Ended
June 30,
2005 2004 Change
Cement (Ton) (A) $ 78.55 $ 68.34 +15%
Gypsum Wallboard (MSF) $119.18 $101.39 +18%
Paperboard (Ton) $457.69 $445.52 +3%
Concrete (Cubic Yard) $ 58.37 $ 54.85 +6%
Aggregates (Ton) $ 5.69 $ 5.56 +2%
* Net of freight and delivery costs billed to customers.
Intersegment and Cement
Revenues
($ in thousands)
Quarter Ended
June 30,
2005 2004
Intersegment Revenues:
Cement $ 1,598 $ 781
Paperboard 14,862 13,668
Concrete and Aggregates 447 299
$16,907 $14,748
Cement Revenues:
Wholly Owned (A) $57,335 $32,956
Joint Venture (A) 16,856 22,730
$74,191 $55,686
(A) Fiscal 2006 results include 100% of Illinois Cement Company. During
the first quarter of fiscal 2005, Illinois Cement Company was a 50%
owned JV accounted for utilizing the equity method of accounting.
Eagle Materials Inc.
Attachment 4
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
June 30, March 31,
2005 2004 2005*
ASSETS
Current Assets -
Cash and Cash Equivalents $ 14,578 $ 5,023 $ 7,221
Accounts and Notes Receivable, net 85,865 64,624 70,952
Inventories 55,981 44,606 63,482
Total Current Assets 156,424 114,253 141,655
Property, Plant and Equipment - 804,542 719,789 788,447
Less: Accumulated Depreciation (273,231) (242,699) (264,088)
Property, Plant and Equipment, net 531,311 477,090 524,359
Investments in Joint Ventures 26,707 50,677 28,181
Goodwill and Intangibles 66,879 40,290 66,960
Other Assets 16,752 14,914 18,846
$798,073 $697,224 $780,001
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities -
Note Payable $ 39,400 $ 35,400 $ 30,800
Accounts Payable and Accrued
Liabilities 106,356 76,391 91,069
Current Portion of Long-term Debt --- 80 ---
Total Current Liabilities 145,756 111,871 121,869
Long-term Debt 55,000 39,000 54,000
Deferred Income Taxes 115,404 104,046 118,764
Stockholders' Equity -
Preferred Stock, Par Value $0.01;
Authorized 5,000,000
Shares None Issued --- --- ---
Common Stock, Par Value $0.01;
Authorized 50,000,000 Shares;
Issued and Outstanding 9,559,806,
9,635,231 and 9,726,009 Shares,
respectively. Class B Common Stock,
Par Value $0.01; Authorized
50,000,000 Shares; Issued and
Outstanding, 8,279,272, 8,905,769
and 8,499,269 Shares, respectively. 178 185 182
Capital in Excess of Par Value --- 13,849 ---
Accumulated Other Comprehensive Losses (1,842) (1,877) (1,842)
Retained Earnings 483,577 430,150 487,028
Total Stockholders' Equity 481,913 442,307 485,368
$798,073 $697,224 $780,001
*From audited financial statements.
SOURCE Eagle Materials Inc.
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Related links:
http://www.eaglematerials.com
CONTACT:
Steven R. Rowley, President & CEO, or Arthur
R. Zunker, Jr., Senior Vice President & CFO, both of Eagle
Materials Inc., +1-214-432-2000
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