10-Q 1 exp-20220930.htm 10-Q 10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

September 30, 2022

Commission File Number 1-12984

 

img29523412_0.jpg 

EAGLE MATERIALS INC.

(Exact name of registrant as specified in its charter)

 

Delaware (State of Incorporation)

75-2520779 (I.R.S. Employer Identification No.)

5960 Berkshire Lane, Suite 900, Dallas, Texas 75225 (Address of principal executive offices)

(214) 432-2000 (Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value $.01 per share)

 

EXP

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes No

As of October 24, 2022, the number of outstanding shares of common stock was:

 

Class

 

Outstanding Shares

Common Stock, $.01 Par Value

 

36,844,662

 

 

 


TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION (unaudited)

 

 

 

 

 

Page

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three and Six Months Ended September 30, 2022 and 2021

 

1

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended September 30, 2022 and 2021

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2022, and March 31, 2022

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2022 and 2021

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended September 30, 2022 and 2021

 

5

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

37

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

38

 

 

 

 

 

Item 1a.

 

Risk Factors

 

38

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

 

 

 

 

Item 4.

 

Mine Safety Information

 

38

 

 

 

 

 

Item 6.

 

Exhibits

 

39

 

 

 

 

 

SIGNATURES

 

40

 

 

 

 


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(dollars in thousands, except share and per share data)

 

Revenue

 

$

605,068

 

 

$

509,694

 

 

$

1,166,455

 

 

$

985,464

 

Cost of Goods Sold

 

 

410,829

 

 

 

354,353

 

 

 

821,350

 

 

 

703,612

 

Gross Profit

 

 

194,239

 

 

 

155,341

 

 

 

345,105

 

 

 

281,852

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

7,156

 

 

 

8,260

 

 

 

12,254

 

 

 

16,230

 

Corporate General and Administrative Expense

 

 

(13,627

)

 

 

(10,667

)

 

 

(25,447

)

 

 

(20,135

)

Loss on Early Retirement of Senior Notes

 

 

 

 

 

(8,407

)

 

 

 

 

 

(8,407

)

Other Non-Operating Income (Loss)

 

 

(664

)

 

 

(944

)

 

 

(1,299

)

 

 

2,734

 

Interest Expense, net

 

 

(8,580

)

 

 

(12,268

)

 

 

(15,910

)

 

 

(19,240

)

Earnings before Income Taxes

 

 

178,524

 

 

 

131,315

 

 

 

314,703

 

 

 

253,034

 

Income Taxes

 

 

(39,529

)

 

 

(29,190

)

 

 

(70,703

)

 

 

(55,582

)

Net Earnings

 

 

138,995

 

 

 

102,125

 

 

 

244,000

 

 

 

197,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.74

 

 

$

2.48

 

 

$

6.50

 

 

$

4.74

 

Diluted

 

 

3.72

 

 

 

2.46

 

 

 

6.46

 

 

 

4.70

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

37,140,197

 

 

 

41,222,161

 

 

 

37,559,087

 

 

 

41,623,187

 

Diluted

 

 

37,366,879

 

 

 

41,594,733

 

 

 

37,792,613

 

 

 

42,013,847

 

CASH DIVIDENDS PER SHARE

 

$

0.25

 

 

$

0.25

 

 

$

0.50

 

 

$

0.25

 

See notes to unaudited consolidated financial statements.

 

 

1


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (unaudited)

 

 

 

 

For the Three Months Ended September 30,

 

 

For the Six Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(dollars in thousands)

 

Net Earnings

 

$

138,995

 

 

$

102,125

 

 

$

244,000

 

 

$

197,452

 

Net Actuarial Change in Defined Benefit Plans

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Net Actuarial Loss

 

 

30

 

 

 

36

 

 

 

60

 

 

 

72

 

Tax Expense

 

 

(6

)

 

 

(9

)

 

 

(13

)

 

 

(18

)

Comprehensive Earnings

 

$

139,019

 

 

$

102,152

 

 

$

244,047

 

 

$

197,506

 

See notes to unaudited consolidated financial statements.

 

 

2


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

September 30,

 

 

March 31,

 

 

 

2022

 

 

2022

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

84,140

 

 

$

19,416

 

Accounts and Notes Receivable, net

 

 

232,595

 

 

 

176,276

 

Inventories

 

 

225,835

 

 

 

236,661

 

Income Tax Receivable

 

 

4,371

 

 

 

7,202

 

Prepaid and Other Assets

 

 

5,933

 

 

 

3,172

 

Total Current Assets

 

 

552,874

 

 

 

442,727

 

Property, Plant, and Equipment, net

 

 

1,655,616

 

 

 

1,616,539

 

Notes Receivable

 

 

8,501

 

 

 

8,485

 

Investment in Joint Venture

 

 

85,391

 

 

 

80,637

 

Operating Lease Right-of-Use Assets

 

 

22,126

 

 

 

23,856

 

Goodwill and Intangible Assets, net

 

 

469,491

 

 

 

387,898

 

Other Assets

 

 

15,150

 

 

 

19,510

 

Total Assets

 

$

2,809,149

 

 

$

2,579,652

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts Payable

 

$

113,722

 

 

$

113,679

 

Accrued Liabilities

 

 

91,515

 

 

 

86,754

 

Operating Lease Liabilities

 

 

6,736

 

 

 

7,118

 

Income Taxes Payable

 

 

1,348

 

 

 

 

Current Portion of Long-term Debt

 

 

10,000

 

 

 

 

Total Current Liabilities

 

 

223,321

 

 

 

207,551

 

Long-term Debt

 

 

1,126,398

 

 

 

938,265

 

Noncurrent Operating Lease Liabilities

 

 

26,736

 

 

 

29,212

 

Other Long-term Liabilities

 

 

37,423

 

 

 

38,699

 

Deferred Income Taxes

 

 

238,567

 

 

 

232,369

 

Total Liabilities

 

 

1,652,445

 

 

 

1,446,096

 

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
37,064,662 and 38,710,929 Shares, respectively

 

 

371

 

 

 

387

 

Capital in Excess of Par Value

 

 

 

 

 

 

Accumulated Other Comprehensive Losses

 

 

(3,128

)

 

 

(3,175

)

Retained Earnings

 

 

1,159,461

 

 

 

1,136,344

 

Total Stockholders’ Equity

 

 

1,156,704

 

 

 

1,133,556

 

Total Liabilities and Stockholders’ Equity

 

$

2,809,149

 

 

$

2,579,652

 

See notes to the unaudited consolidated financial statements.

 

3


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

For the Six Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

 

(dollars in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Earnings

 

$

244,000

 

 

$

197,452

 

Adjustments to Reconcile Net Earnings to Net Cash Provided
by Operating Activities, Net of Effect of Non-Cash Activity

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

68,874

 

 

 

64,284

 

Write-off of Debt Issuance Costs

 

 

 

 

 

6,101

 

Deferred Income Tax Provision

 

 

6,198

 

 

 

8,295

 

Stock Compensation Expense

 

 

9,548

 

 

 

6,376

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

(12,254

)

 

 

(16,230

)

Distributions from Joint Venture

 

 

7,500

 

 

 

14,000

 

Changes in Operating Assets and Liabilities

 

 

 

 

 

 

Accounts and Notes Receivable

 

 

(50,697

)

 

 

(49,597

)

Inventories

 

 

18,101

 

 

 

32,004

 

Accounts Payable and Accrued Liabilities

 

 

1,634

 

 

 

16,776

 

Other Assets

 

 

4,589

 

 

 

(2,883

)

Income Taxes Payable (Receivable)

 

 

2,952

 

 

 

(15,116

)

Net Cash Provided by Operating Activities

 

 

300,445

 

 

 

261,462

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Additions to Property, Plant, and Equipment

 

 

(43,249

)

 

 

(26,777

)

Acquisition Spending

 

 

(158,451

)

 

 

 

Net Cash Used in Investing Activities

 

 

(201,700

)

 

 

(26,777

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Increase in Credit Facility

 

 

200,000

 

 

 

75,000

 

Proceeds from 2.500% Senior Unsecured Notes

 

 

 

 

 

743,692

 

Repayment of 4.500% Senior Unsecured Notes

 

 

 

 

 

(350,000

)

Repayment of Term Loan and Term Loan Credit Agreement

 

 

(2,500

)

 

 

(665,000

)

Dividends Paid to Stockholders

 

 

(19,149

)

 

 

(10,547

)

Purchase and Retirement of Common Stock

 

 

(210,398

)

 

 

(247,845

)

Proceeds from Stock Option Exercises

 

 

735

 

 

 

14,460

 

Loss on Early Retirement of Senior Notes

 

 

 

 

 

(8,407

)

Payment of Debt Issuance Costs

 

 

(903

)

 

 

(7,985

)

Shares Redeemed to Settle Employee Taxes on Stock Compensation

 

 

(1,806

)

 

 

(1,359

)

Net Cash Used in Financing Activities

 

 

(34,021

)

 

 

(457,991

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

 

64,724

 

 

 

(223,306

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

19,416

 

 

 

268,520

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

84,140

 

 

$

45,214

 

See notes to the unaudited consolidated financial statements.

 

 

4


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

 

 

Common
Stock

 

 

Capital in
Excess of
Par Value

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2021

 

$

424

 

 

$

62,497

 

 

$

1,299,509

 

 

$

(3,440

)

 

$

1,358,990

 

Net Earnings

 

 

 

 

 

 

 

 

95,327

 

 

 

 

 

 

95,327

 

Stock Compensation Expense

 

 

1

 

 

 

2,455

 

 

 

 

 

 

 

 

 

2,456

 

Stock Option Exercises and Restricted Share Issuances

 

 

 

 

 

8,222

 

 

 

 

 

 

 

 

 

8,222

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(1,214

)

 

 

 

 

 

 

 

 

(1,214

)

Purchase and Retirement of Common Stock

 

 

(4

)

 

 

(61,925

)

 

 

 

 

 

 

 

 

(61,929

)

Dividends to Shareholders

 

 

 

 

 

 

 

 

(10,547

)

 

 

 

 

 

(10,547

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

27

 

 

 

27

 

Balance at June 30, 2021

 

$

421

 

 

$

10,035

 

 

$

1,384,289

 

 

$

(3,413

)

 

$

1,391,332

 

Net Earnings

 

 

 

 

 

 

 

 

102,125

 

 

 

 

 

 

102,125

 

Stock Compensation Expense

 

 

 

 

 

3,920

 

 

 

 

 

 

 

 

 

3,920

 

Stock Option Exercise and Restricted Share Issuances

 

 

 

 

 

6,238

 

 

 

 

 

 

 

 

 

6,238

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(145

)

 

 

 

 

 

 

 

 

(145

)

Purchase and Retirement of Common Stock

 

 

(12

)

 

 

(20,048

)

 

 

(165,856

)