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Eagle Materials Reports Third Quarter Results

February 4, 2020 GMT

DALLAS--(BUSINESS WIRE)--Feb 4, 2020--

Eagle Materials Inc. (NYSE: EXP) today reported financial results for the third quarter of fiscal 2020 ended December 31, 2019. 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 2020 Results

Commenting on the third quarter results, Michael Haack, President and CEO, said, “We are pleased that during the third quarter of fiscal 2020 we capitalized on robust underlying demand across our geographic footprint to achieve a 5% revenue improvement. Notably, our Cement sales volume was up 7% to a record 1.4 million tons. Market demand for our Wallboard also remained healthy, with shipments up 2%. Our operational cost-control initiatives and continued strong operational execution also contributed to the favorable third-quarter performance.”

Mr. Haack concluded, “The outlook for calendar 2020 is positive. We expect demand for our building materials and construction products will continue to be supported by several advantageous market dynamics, including ongoing growth in jobs, high consumer confidence and low interest rates.”

As previously announced, on November 25, 2019, Eagle entered into a definitive agreement with Kosmos Cement Company (a joint venture between CEMEX S.A.B. de C.V. and Buzzi Unicem S.p.A), to purchase the Kosmos cement plant in Louisville, Kentucky, as well as seven distribution terminals and substantial raw-material reserves. The plant has the capacity to produce nearly 1.7 million tons of cement annually. Eagle expects that the acquisition will increase its U.S. annual cement capacity by approximately 25% to more than 7.5 million tons. The purchase price is $665 million, subject to customary post-closing adjustments. Eagle expects the transaction to close in its fiscal 2020 fourth quarter following the receipt of required regulatory approvals and other typical closing conditions. Eagle intends to finance the acquisition through a combination of cash on hand and borrowings under a new syndicated term loan facility.

Segment Results

Heavy Materials: Cement, Concrete and Aggregates

Revenue in the Heavy Materials sector, which includes Cement, Concrete and Aggregates, and Joint Venture and intersegment Cement revenue, was $229.8 million, an 18% increase. Heavy Materials operating earnings increased 19% to $57.5 million primarily because of higher sales volume and net sales prices.

Cement revenue, including Joint Venture and intersegment revenue, was up 12% to $183.0 million, reflecting improved net sales prices and sales volume. The average net sales price for the quarter increased 2% to $110.09 per ton. Cement sales volume for the quarter was a record 1.4 million tons, up 7% versus the prior year.

Operating earnings from Cement were $54.2 million, 15% above the same quarter a year ago. The earnings improvement was primarily due to higher sales volume and net sales prices.

Concrete and Aggregates revenue for the third quarter was $46.8 million, an increase of 53%. Third quarter operating earnings were $3.3 million, a 222% increase, reflecting record Concrete sales volume, improved Concrete and Aggregates sales prices and the financial results of a small concrete and aggregates business that Eagle acquired in August 2019.

Light Materials: Gypsum Wallboard and Paperboard

Revenue in the Light Materials sector, which includes Gypsum Wallboard and Paperboard, declined 4% from the prior year, as improved sales volume was offset by lower pricing. Gypsum Wallboard sales volume was 669 million square feet (MMSF), up approximately 2%, while the average Gypsum Wallboard net sales price declined 8% to $146.46 per MSF.

Paperboard sales volume for the quarter was up 8%. The average Paperboard net sales price this quarter was $460.65 per ton, down 11%, primarily as a result of the pricing provisions in our long-term sales agreements.

Operating earnings were $47.5 million in the sector, a decline of 7%, due primarily to lower net sales prices and increased costs associated with the plant expansion partially offset by improved sales volume and lower operating costs. Operating costs during the quarter declined primarily due to lower energy and recycled fiber costs. In connection with the planned expansion of our papermill, we had an extended outage during the quarter to install new operating equipment. This outage reduced production and led to increased costs of approximately $1.5 million during the quarter.

Oil and Gas Proppants

Revenue in the Oil and Gas Proppants segment was $7.3 million, down 48%, primarily reflecting a 45% decrease in Frac Sand sales volume. The operating loss of $6.8 million during the quarter included $3.4 million of depreciation, depletion and amortization.

During the second half of calendar year 2019, our Frac Sand business has been increasingly affected by a combination of reduced drilling and completion activity and increased use of local in-basin sand by oil field service companies and other customers instead of northern white frac sand. These trends are expected to continue in the near term. Consequently, in connection with the preparation of our financial statements for the third quarter of fiscal 2020, we recorded impairments of $217 million for long-lived assets and $7 million of other assets.

Planned Separation of Heavy Materials and Light Materials Businesses

As previously announced on May 30, 2019, the Company plans to separate its Heavy Materials and Light Materials businesses into two independent, publicly traded corporations by means of a tax-free spin-off to Eagle shareholders. We anticipate that the separation will be completed in the summer of calendar 2020. The Company also continues to pursue alternatives for its Oil and Gas Proppants business.

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 Eagle 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 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 and Recycled Gypsum Paperboard, and Concrete, Sand and Aggregates from more than 75 facilities across the US. Eagle’s corporate headquarters is in Dallas, Texas.

EXP’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 Tuesday, February 4, 2020. The conference call will be webcast simultaneously on the EXP 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 business; 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 energy costs including, without limitation, natural gas, coal and oil; 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, including fluctuations in the level of fracturing activities and the demand for frac sand and changes in processes or substitutions in materials used in well fracturing; 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 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; competition; a cyber-attack or data security breach; announced increases in capacity in the gypsum wallboard, cement and frac sand industries; changes in the demand for residential housing construction or commercial construction; risks related to pursuit of acquisitions, joint ventures and other transactions; 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) 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. With respect to our proposed acquisition of certain assets from Kosmos Cement Company as described in this press release, factors, risks and uncertainties that may cause actual events and developments to vary materially from those anticipated in such forward-looking statements include, but are not limited to, the inability to complete the acquisition within the expected time frame, or at all, failure to realize expected synergies from or other benefits of the transaction, possible negative effects resulting from consummation of the transaction, significant transaction or ownership transition costs, unknown liabilities or other adverse developments affecting the assets to be acquired and the target business, including the effect on the target business of the same or similar factors discussed above to which our Heavy Materials business is subject. Finally, the proposed separation of our Heavy Materials and Light Materials businesses into two independent, publicly traded corporations is subject to various risks and uncertainties, and may not be completed on the terms or timeline currently contemplated, or at all. These and other factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 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

 

Eagle Materials Inc.

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,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Revenue

$

350,249

 

 

$

333,285

 

 

$

1,135,372

 

 

$

1,108,540

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

262,735

 

 

 

252,864

 

 

 

868,023

 

 

 

838,554

 

 

 

 

 

 

 

 

 

Gross Profit

 

87,514

 

 

 

80,421

 

 

 

267,349

 

 

 

269,986

 

 

 

 

 

 

 

 

 

Equity in Earnings of Unconsolidated JV

 

10,700

 

 

 

9,507

 

 

 

32,489

 

 

 

28,931

 

Corporate General and Administrative Expenses

 

(13,794

)

 

 

(9,408

)

 

 

(48,506

)

 

 

(27,333

)

Litigation Settlements and Losses

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,800

)

Impairment Losses

 

(224,267

)

 

 

-

 

 

 

(224,267

)

 

 

-

 

Other Non-Operating Income

 

825

 

 

 

1,292

 

 

 

1,967

 

 

 

2,291

 

 

 

 

 

 

 

 

 

(Loss) Earnings before Interest and Income Taxes

 

(139,022

)

 

 

81,812

 

 

 

29,032

 

 

 

272,075

 

 

Interest Expense, net

 

(9,543

)

 

 

(7,294

)

 

 

(28,526

)

 

 

(20,743

)

 

 

 

 

 

 

 

 

(Loss) Earnings before Income Taxes

 

(148,565

)

 

 

74,518

 

 

 

506

 

 

 

251,332

 

 

Income Tax Benefit (Expense)

 

33,933

 

 

 

(16,803

)

 

 

(2,041

)

 

 

(54,675

)

 

 

 

 

 

 

 

 

Net (Loss) Earnings

$

(114,632

)

 

$

57,715

 

 

$

(1,535

)

 

$

196,657

 

 

 

 

 

 

 

 

 

 
 

(LOSS) EARNINGS PER SHARE

 

 

 

 

 

 

 

Basic

$

(2.77

)

 

$

1.25

 

 

$

(0.04

)

 

$

4.18

 

Diluted

$

(2.77

)

 

$

1.24

 

 

$

(0.04

)

 

$

4.15

 

 

 

 

 

 

 

 

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

 

41,314,289

 

 

 

46,275,198

 

 

 

42,246,329

 

 

 

47,059,408

 

Diluted

 

41,314,289

 

 

 

46,495,994

 

 

 

42,246,329

 

 

 

47,403,271

 

 

 

 

 

 

 

 

 

 

Eagle Materials Inc.

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,

 

2019

2018

2019

2018

Revenue *

 

 

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

 

Cement (Wholly Owned)

$

148,475

 

$

134,845

 

$

502,452

 

$

453,800

 

Concrete and Aggregates

 

46,797

 

 

30,495

 

 

141,762

 

 

110,247

 

 

 

195,272

 

 

165,340

 

 

644,214

 

 

564,047

 

 

 

 

 

 

Light Materials:

 

 

 

 

Gypsum Wallboard

 

125,070

 

 

130,954

 

 

380,454

 

 

402,978

 

Gypsum Paperboard

 

22,562

 

 

22,891

 

 

74,170

 

 

76,249

 

 

 

147,632

 

 

153,845

 

 

454,624

 

 

479,227

 

 

 

 

 

 

Oil and Gas Proppants

 

7,345

 

 

14,100

 

 

36,534

 

 

65,266

 

 

 

 

 

 

Total Revenue

$

350,249

 

$

333,285

 

$

1,135,372

 

$

1,108,540

 

 

 

Segment Operating Earnings

 

 

 

 

 

 

 

 

 

Heavy Materials:

 

 

 

 

Cement (Wholly Owned)

$

43,480

 

$

37,690

 

$

124,338

 

$

113,147

 

Cement (Joint Venture)

 

10,700

 

 

9,507

 

 

32,489

 

 

28,931

 

Concrete and Aggregates

 

3,334

 

 

1,037

 

 

15,023

 

 

10,621

 

 

 

57,514

 

 

48,234

 

 

171,850

 

 

152,699

 

 

 

 

 

 

Light Materials:

 

 

 

 

Gypsum Wallboard

 

38,484

 

 

43,543

 

 

114,872

 

 

139,694

 

Gypsum Paperboard

 

9,021

 

 

7,475

 

 

29,060

 

 

26,078

 

 

 

47,505

 

 

51,018

 

 

143,932

 

 

165,772

 

 

 

 

 

 

Oil and Gas Proppants

 

(6,805

)

 

(9,324

)

 

(15,944

)

 

(19,554

)

 

 

 

 

 

Sub-total

 

98,214

 

 

89,928

 

 

299,838

 

 

298,917

 

 

 

 

 

 

Corporate General and Administrative Expense

 

(13,794

)

 

(9,408

)

 

(48,506

)

 

(27,333

)

Litigation Settlements and Losses

 

-

 

 

-

 

 

-

 

 

(1,800

)

Impairment Losses

 

(224,267

)

 

 

(224,267

)

 

Other Non-Operating Income

 

825

 

 

1,292

 

 

1,967

 

 

2,291

 

 

 

 

 

 

(Loss) Earnings before Interest and Income Taxes

$

(139,022

)

$

81,812

 

$

29,032

 

$

272,075

 


*Net of Intersegment and Joint Venture Revenue listed on Attachment 3

 
 

Eagle Materials Inc.

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,

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Cement (M Tons):

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned

1,199

 

1,126

 

+6

%

 

4,046

 

3,740

 

+8

%

Joint Venture

240

 

218

 

+10

%

 

721

 

672

 

+7

%

 

1,439

 

1,344

 

+7

%

 

4,767

 

4,412

 

+8

%

 

 

 

 

 

 

 

 

 

 

 

 

Concrete (M Cubic Yards)

357

 

237

 

+51

%

 

1,095

 

846

 

+29

%

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates (M Tons)

749

 

747

 

0

%

 

2,608

 

2,616

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

Gypsum Wallboard (MMSF)

669

 

653

 

+2

%

 

2,010

 

1,992

 

+1

%

 

 

 

 

 

 

 

 

 

 

 

 

Paperboard (M Tons):

 

 

 

 

 

 

 

 

 

 

 

Internal

33

 

32

 

+3

%

 

99

 

95

 

+4

%

External

47

 

42

 

+12

%

 

148

 

140

 

+6

%

 

80

 

74

 

+8

%

 

247

 

235

 

+5

%

 

 

 

 

 

 

 

 

 

 

 

 

Frac Sand (M Tons)

200

 

365

 

-45

%

 

963

 

1,129

 

-15

%

 

 

Average Net Sales Price*

 

Quarter Ended

December 31,

 

Nine Months Ended

December 31,

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Cement (Ton)

$

110.09

 

$

107.54

 

+2

%

 

$

109.69

 

$

107.94

 

+2

%

Concrete (Cubic Yard)

$

112.96

 

$

102.94

 

+10

%

 

$

108.17

 

$

102.72

 

+5

%

Aggregates (Ton)

$

9.20

 

$

8.68

 

+6

%

 

$

9.36

 

$

9.30

 

+1

%

Gypsum Wallboard (MSF)

$

146.46

 

$

159.38

 

-8

%

 

$

148.51

 

$

161.63

 

-8

%

Paperboard (Ton)

$

460.65

 

$

519.29

 

-11

%

 

$

482.34

 

$

520.02

 

-7

%

 


*Net of freight and delivery costs billed to customers.

 

 

Intersegment and Cement Revenue

 

Quarter Ended

December 31,

 

Nine Months Ended

December 31,

 

2019

 

2018

 

2019

 

2018

Intersegment Revenue:

 

 

 

 

 

 

 

Cement

$

6,174

 

$

3,518

 

$

17,130

 

$

11,769

Concrete and Aggregates

 

350

 

 

346

 

 

1,134

 

 

1,178

Paperboard

 

15,251

 

 

16,747

 

 

48,190

 

 

49,799

 

$

21,775

 

$

20,611

 

$

66,454

 

$

62,746

 

 

 

 

 

 

 

 

Cement Revenue:

 

 

 

 

 

 

 

Wholly Owned

$

148,475

 

$

134,845

 

$

502,452

 

$

453,800

Joint Venture

 

28,382

 

 

25,369

 

 

85,775

 

 

78,112

 

$

176,857

 

$

160,214

 

$

588,227

 

$

531,912

 
 

Eagle Materials Inc.

Attachment 4

Eagle Materials Inc.

Consolidated Balance Sheets

(dollars in thousands)

(unaudited )

 
 

 

 

December 31,

 

March 31,

 

 

2019

 

2018

 

2019*

ASSETS

 

 

 

 

 

 

Current Assets –

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

126,255

 

 

$

17,060

 

 

$

8,601

 

Accounts and Notes Receivable, net

 

 

140,283

 

 

 

133,873

 

 

 

128,722

 

Inventories

 

 

234,264

 

 

 

251,260

 

 

 

275,194

 

Federal Income Tax Receivable

 

 

-

 

 

 

314

 

 

 

5,480

 

Prepaid and Other Assets

 

 

6,997

 

 

 

6,966

 

 

 

9,624

 

Total Current Assets

 

 

507,799

 

 

 

409,473

 

 

 

427,621

 

 

 

 

 

 

 

 

Property, Plant and Equipment, net

 

 

1,269,733

 

 

 

1,627,152

 

 

 

1,426,939

 

 

 

 

 

 

 

 

Investments in Joint Venture

 

 

71,862

 

 

 

61,988

 

 

 

64,873

 

Operating Lease Right of Use Asset

 

 

29,346

 

 

 

-

 

 

 

-

 

Notes Receivable

 

 

9,192

 

 

 

3,022

 

 

 

2,898

 

Goodwill and Intangibles

 

 

230,099

 

 

 

236,936

 

 

 

229,115

 

Other Assets

 

 

12,194

 

 

 

16,845

 

 

 

17,717

 

 

 

$

2,130,225

 

 

$

2,355,416

 

 

$

2,169,163

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities –

 

 

 

 

 

 

Accounts Payable

 

$

65,035

 

 

$

77,611

 

 

$

80,884

 

Accrued Liabilities

 

 

87,690

 

 

 

66,921

 

 

 

61,949

 

Operating Lease Liabilities

 

 

10,601

 

 

 

-

 

 

 

-

 

Current Portion of Senior Notes

 

 

-

 

 

 

36,500

 

 

 

36,500

 

Total Current Liabilities

 

 

163,326

 

 

 

181,032

 

 

 

179,333

 

Long-term Liabilities

 

 

36,648

 

 

 

30,554

 

 

 

34,492

 

Non-current Lease Liabilities

 

 

51,939

 

 

 

-

 

 

 

-

 

Bank Credit Facility

 

 

585,000

 

 

 

245,000

 

 

 

310,000

 

4.500% Senior Unsecured Notes due 2026

 

 

345,594

 

 

 

344,924

 

 

 

345,092

 

Deferred Income Taxes

 

 

50,391

 

 

 

133,569

 

 

 

90,759

 

Stockholders’ Equity –

 

 

 

 

 

 

Preferred Stock, Par Value $0.01; None issued

 

 

-

 

 

 

-

 

 

 

-

 

Common Stock, Par Value $0.01; Authorized 100,000,000 Shares; Issued and Outstanding 41,643,970; 46,238,591 and 45,117,393 Shares, respectively

 

 

416

 

 

 

462

 

 

 

451

 

Capital in Excess of Par Value

 

 

8,325

 

 

 

-

 

 

 

-

 

Accumulated Other Comprehensive Losses

 

 

(3,215

)

 

 

(3,844

)

 

 

(3,316

)

Retained Earnings

 

 

891,801

 

 

 

1,423,719

 

 

 

1,212,352

 

Total Stockholders’ Equity

 

 

897,327

 

 

 

1,420,337

 

 

 

1,209,487

 

 

 

$

2,130,225

 

 

$

2,355,416

 

 

$

2,169,163

 


*From audited financial statements

 

Eagle Materials Inc.

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 quarter and nine months ended December 31, 2019 and 2018:

 
 

 

Depreciation, Depletion and Amortization

 

Quarter Ended

December 31,

 

Nine Months Ended

December 31,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Cement

$

14,189

 

$

13,242

 

$

42,275

 

$

38,909

Concrete and Aggregates

 

3,105

 

 

2,049

 

 

8,050

 

 

6,154

Gypsum Wallboard

 

5,050

 

 

4,978

 

 

15,149

 

 

15,009

Paperboard

 

2,244

 

 

2,150

 

 

6,610

 

 

6,387

Oil and Gas Proppants

 

3,445

 

 

6,964

 

 

11,087

 

 

24,403

Corporate and Other

 

578

 

 

402

 

 

1,773

 

 

1,099

 

$

28,611

 

$

29,785

 

$

84,944

 

$

91,961

 
 

Eagle Materials Inc.

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 millions)

 

Adjusted Earnings per Diluted Share (Adjusted EPS)


Adjusted EPS is a non-GAAP financial measure and represents earnings per diluted share excluding the impacts from non-routine items, such as impairment losses and business development costs (Non-routine Items). Management uses measures of earnings excluding the impact of Non-routine Items as a basis for comparing 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 three months ended December 31, 2019:

 
 

 

Three Months Ended

December 31, 2019

 

 

Impairment Losses 1

$

224,267

 

Business Development Costs 2

 

3,367

 

Plant Expansion Costs 3

 

1,500

 

Non-routine Items

$

229,134

 

Tax Impact

 

(50,868

)

After-tax Impact of Non-routine Items

 

178,266

 

Diluted average shares outstanding 4

 

41.6

 

Diluted earnings per share impact from Non-routine Items

$

4.28

 

1 Represents asset impairment losses related to the Frac Sand business

2 Represents non-routine charges associated with acquisitions and separation costs

3 Represents the impact of an outage at the Republic Paperboard papermill associated with the planned expansion

4 As reported diluted average shares outstanding for the three months ended December 31, 2019 excludes approximately 300,000 equity instruments to purchase share of common stock as their impact would be antidilutive because Eagle’s reported income was in a loss position during the period. When adjusting income to the company in the period for the adjustments described above, these shares become dilutive.

 

 

 

Three Months
Ended
December 31, 2019

 

 

Diluted EPS in accordance with generally accepted accounting principles

$

(2.77

)

Add back: Earnings per diluted share impact from Non-routine Items

$

4.28

 

Adjusted EPS

$

1.51

 

 

Eagle Materials Inc.

Attachment 6 (Continued)

 

EBITDA and Adjusted EBITDA


Similar to the presentation of Adjusted EPS, we present Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA to provide 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 same non-routine items excluded in the calculation of Adjusted Earnings per Diluted Share as described above. Management uses EBITDA and Adjusted EBITDA as alternative bases for comparing the operating performance of Eagle from period to period, for purposes of its budgeting and planning processes, and for purposes of monitoring compliance with specific requirements of its credit agreement and other debt instruments. 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 in accordance with GAAP.

 

The following shows the calculation of EBITDA and Adjusted EBITDA and reconciles them to net (loss) earnings in accordance with GAAP for the three months ended December 31, 2019 and 2018.

 
 

 

Three Months Ended

December 31,

 

2019

 

2018

 

 

 

 

Net (Loss) Earnings

$

(114,632

)

 

$

57,715

Income Tax (Benefit) Expense

 

(33,933

)

 

 

16,803

Interest Expense

 

9,543

 

 

 

7,294

Depreciation, Depletion and Amortization

 

28,611

 

 

 

29,785

EBITDA

 

(110,411

)

 

 

111,597

Impairment Losses

 

224,267

 

 

 

-

Business Development Costs

 

3,367

 

 

 

-

Plant Expansion Costs

 

1,500

 

 

 

-

Adjusted EBITDA

$

118,723

 

 

$

111,597

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200204005115/en/

CONTACT: For additional information, contact at 214-432-2000

Michael R. Haack

Chief Executive Officer D. Craig Kesler

Executive Vice President and Chief Financial OfficerRobert S. Stewart

Executive Vice President, Strategy, Corporate Development and Communications

KEYWORD: TEXAS UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: OTHER CONSTRUCTION & PROPERTY CONSTRUCTION & PROPERTY OTHER MANUFACTURING MANUFACTURING

SOURCE: Eagle Materials Inc.

Copyright Business Wire 2020.

PUB: 02/04/2020 06:30 AM/DISC: 02/04/2020 06:30 AM

http://www.businesswire.com/news/home/20200204005115/en