Eagle Materials Inc. reported financial results for the third quarter of fiscal 2013 that ended December 31, 2012. Notable items for the quarter include (all comparisons, unless noted, are with the prior-year's third quarter):
- Revenues of $164.7 million, up 33 percent
- Segment operating earnings of $39.9 million, up 91 percent
- Earnings per diluted share of $0.37, up 429 percent
Adjusted earnings per diluted share of $0.43, up 115 percent
- Adjusted earnings per share is a non-GAAP financial measure calculated by excluding non-routine items in the manner described in Attachment 5
- Total after-tax impact of non-routine items, including costs related to the closing of our acquisition of the Lafarge Target Business, was $2.8 million, or $0.06 per diluted share. See Attachment 5.
Third quarter sales volumes improved across all business lines. In addition, sales prices improved in all business lines other than Paperboard. Gypsum Wallboard experienced the most significant improvement, with an increase in average net sales prices of 27 percent as compared with the prior year's third quarter.
On November 30, 2012, Eagle completed its previously announced acquisition of Lafarge North America’s Sugar Creek, Mo., and Tulsa, Okla., cement plants, as well as related assets, which included six distribution terminals, two aggregates quarries, eight ready-mix concrete plants and a fly ash business (the "Lafarge Target Business"). Eagle used cash proceeds from an equity offering completed on October 3, 2012, along with borrowings under its bank credit facility to fund the purchase. The results of operations of the Lafarge Target Business are included in the results disclosed in this press release for the period from November 30 through December 31, 2012. For information regarding the results of operations of the Lafarge Target Business for certain periods prior to November 30, 2012, including pro forma financial information that combines the results of operations of the Company and the Lafarge Target Business, please see our Form 8-K/A filed on January 23, 2013.
Cement, Concrete and Aggregates
Operating earnings from Cement for the third quarter were $16.6 million, a 7 percent increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $74.9 million, 22 percent greater than the same quarter last year. Cement sales volumes for the quarter were 818,000 tons, 17 percent above the same quarter a year ago. The average net sales price this quarter was $82.68 per ton, 3 percent higher than the same quarter last year.
Concrete and Aggregates reported a $1.3 million operating loss for the third quarter versus the $0.6 million operating loss for the same quarter a year ago, reflecting increased maintenance costs and a litigation settlement of approximately $0.4 million, pre-tax.
Gypsum Wallboard and Paperboard
Gypsum Wallboard and Paperboard's third quarter operating earnings of $24.8 million were up 362 percent compared to the same quarter last year. Higher wallboard average net sales prices, higher gypsum wallboard and gypsum paperboard sales volumes and lower recycled paper input costs were the primary driver of the quarterly earnings increase.
Gypsum Wallboard and Paperboard revenues for the third quarter totaled $100.3 million, a 37 percent increase from the same quarter a year ago. The revenue increase reflects primarily higher wallboard average net sales prices and sales volumes.
The average gypsum wallboard net sales price for the third quarter was $120.55 per MSF, 27 percent greater than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 519 million square feet (MMSF) represents a 23 percent increase from the same quarter last year. The average Paperboard net sales price for this quarter was $480.51 per ton, 9 percent lower than the same quarter a year ago. Paperboard sales volumes for the quarter were 65,000 tons, 14 percent higher than the same quarter a year ago.
Details of Financial Results
Current quarter Acquisition and Litigation Expense of $2.5 million consists of costs related to our acquisition of the Lafarge Target Business and legal fees related to our lawsuit against the IRS. In the prior year, we received an adverse ruling in an arbitration proceeding involving a contract dispute between one of our subsidiaries and another mining company. The award, along with our legal expenses, was approximately $9.1 million.
Texas Lehigh Cement Company LP, one of our cement plant operations, is conducted through a 50/50 joint venture (the "Joint Venture"). We utilize the equity method of accounting for our 50 percent interest in the Joint Venture. For segment reporting purposes we proportionately consolidate our 50 percent share of the Joint Venture's revenues and operating earnings, which is consistent with the way management organizes the segments in 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.