Eagle Materials Reports Record Third Quarter EPS up 78% on Record Revenues
Jan 31, 2018
DALLAS--(BUSINESS WIRE)--Jan. 31, 2018-- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2018 ended December 31, 2017. Notable items for the quarter include (all comparisons, unless otherwise noted, are with the prior year’s third quarter):
Company Third Quarter Results
Record Revenues of $359.4 million, up 19%
Record Net Earnings per diluted share of $2.08, up 78%
Eagle’s third quarter financial results include a tax benefit of approximately $61 million, or $1.25 per share, primarily due to the remeasurement of our deferred tax liabilities to lower statutory rates as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017
Eagle’s third quarter financial results also include a $39 million pre-tax charge related to the settlement of its class action wallboard antitrust litigation
Third quarter gross profit improved 8%, reflecting the financial results of the recently acquired cement plant in Fairborn, Ohio and related assets (the Fairborn Business) and improved net sales prices across most businesses.
Cement, Concrete and Aggregates
Cement revenues for the third quarter, including joint venture and intersegment revenues, totaled $161.6 million, which was 17% higher than the same quarter last year. The average net sales price for this quarter was $106.83 per ton, 6% higher than the same quarter last year. Total Cement sales volumes for the quarter were 1.3 million tons, 12% greater than the same quarter a year ago. Like-for-like average net cement sales prices increased 4% and sales volumes declined 2%, respectively, versus the third quarter of fiscal 2017 (comparison excludes cement sales from the Fairborn Business since its acquisition date).
Operating earnings from Cement for the third quarter were a record $52.5 million and 16% greater than the same quarter a year ago. The earnings improvement was driven primarily by earnings from the Fairborn Business and improved average net cement sales prices offset by lower sales volumes from our legacy facilities.
Concrete and Aggregates reported revenues for the third quarter of $38.5 million, a decline of 5%. Third quarter operating earnings were $3.4 million, 26% below the same quarter a year ago, reflecting lower concrete and aggregates sales volumes partially offset by record third quarter concrete and aggregates sales prices. Sales volumes in our Austin concrete and aggregates business were impacted by wet weather in the latter portion of the quarter.
Gypsum Wallboard and Paperboard
Gypsum Wallboard and Paperboard revenues for the third quarter totaled $162.6 million, which were 11% greater than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $151.13 per MSF, 1% less than the same quarter a year ago. Gypsum Wallboard sales volumes were a third quarter record 709 million square feet (MMSF), a 10% increase from the same quarter last year. Paperboard sales volumes for the quarter were also a record and 7% greater than the same quarter a year ago. The average Paperboard net sales price this quarter was $581.95 per ton, 11% greater than the same quarter a year ago.
Gypsum Wallboard and Paperboard reported third quarter operating earnings of $50.7 million, up 1% from the same quarter last year. The earnings improvement primarily reflects improved Gypsum Wallboard and Paperboard sales volumes and higher average Paperboard net sales prices.
During the third quarter, Eagle and its subsidiary, American Gypsum, entered into settlement agreements with counsel representing the direct and indirect purchaser classes to settle all claims made against the Company and American Gypsum. Pursuant to the settlement agreements, which remain subject to court approval, the Company and American agreed to make payments totaling approximately $39 million. Eagle and American Gypsum continue to deny all wrongdoing but settled to avoid further litigation expense, distraction of management, and the risk of litigation. We expect to make this cash payment in the next twelve months.
Oil and Gas Proppants
Oil and Gas Proppants reported third quarter revenues of $21.9 million, a 208% increase from the prior year reflecting improved frac sand sales volumes and net sales prices. The third quarter’s operating loss of $1.0 million includes depreciation, depletion and amortization of $5.8 million.
Details of Financial Results
We conduct one of our cement plant operations, Texas Lehigh Cement Company LP, through a 50/50 joint venture (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.
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.
About Eagle Materials Inc.
Eagle Materials Inc. manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, Concrete and Aggregates, and Oil and Gas Proppants from over 75 facilities across the US. Eagle is headquartered in Dallas, Texas.
Eagle Materials Reports Record Third Quarter EPS up 78% on Record Revenues | Eagle Materials Inc.
