Exhibit 99.1
 | Contact at 214/432-2000 Steven R. Rowley President & CEO | |
| Arthur R. Zunker, Jr. Senior Vice President & CFO |
News For Immediate Release
EAGLE MATERIALS INC. REPORTS
HIGHEST THIRD QUARTER NET EARNINGS (UP 51%) AND DILUTED
EPS (UP 57%) IN COMPANY HISTORY AND
RAISES ANNUAL EARNINGS GUIDANCE
HIGHEST THIRD QUARTER NET EARNINGS (UP 51%) AND DILUTED
EPS (UP 57%) IN COMPANY HISTORY AND
RAISES ANNUAL EARNINGS GUIDANCE
(Dallas, TX January 25, 2006): Eagle Materials Inc. (NYSE: EXP and EXP.B) today reported financial results for the third quarter of fiscal 2006 ended December 31, 2005 and raised its fiscal 2006 earnings guidance. Eagle produces and distributes Gypsum Wallboard, Cement, Recycled Paperboard and Concrete and Aggregates. The following are highlights of our third quarter results:
| • | HIGHEST THIRD QUARTER OPERATING EARNINGS IN WALLBOARD AND CEMENT IN OUR HISTORY | |
| • | RECORD HIGH THIRD QUARTER SALES VOLUME IN WALLBOARD | |
| • | WALLBOARD AVERAGE NET SALES PRICE INCREASED 32% FROM LAST YEAR’S THIRD QUARTER | |
| • | RECORD HIGH THIRD QUARTER SALES VOLUME IN CEMENT | |
| • | HIGHEST QUARTERLY CEMENT AVERAGE NET SALES PRICE IN OUR HISTORY — INCREASED 16% FROM LAST YEAR’S THIRD QUARTER | |
| • | REPURCHASED NEARLY 1.0 MILLION SHARES OF OUR STOCK (5%) IN THE THIRD QUARTER |
For the quarter ended December 31, 2005, revenues and net earnings were $211.5 million and $39.0 million, respectively. Revenues increased 41% over the prior year third quarter and net earnings increased 51% over the same period last year. Diluted earnings per share for the third quarter of fiscal 2006 were $2.20 compared with $1.40 in the same period a year ago, a 57% increase.
The Company also raised its earnings guidance for fiscal 2006 to a range of $8.50 to $8.70 per diluted share, and expects to report earnings ranging from $2.00 to $2.20 per diluted share for the fourth quarter of fiscal 2006 ending March 31, 2006.
Eagle remains well positioned to continue to achieve outstanding financial results given our low cost operations, which supply building materials to a strong construction industry. According to the U.S. Census Bureau, total construction spending during November 2005 was estimated at a seasonally adjusted annual rate of $1.1 trillion, 8% above the November 2004 estimate. The Gypsum Association reported approximately 36.2 billion square feet of wallboard was shipped by U.S. manufacturers in calendar 2005, a 5.4% increase over the prior record year. For calendar year 2006, we expect Wallboard demand to remain strong and supply to be tight (with 95%+ industry capacity utilization). Wallboard pricing remains strong and an average $20 per thousand square feet (MSF) price increase was implemented in mid-December 2005 in all of
our wallboard markets. Also, national demand for cement remains at record levels outpacing last year’s consumption by approximately 5.7% through October 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 price increases ranging from $8 to $10 per ton on January 1st, in our Wyoming, Utah, Colorado and Texas cement markets. Price increases ranging from $5 to $10 per ton have been announced for our Illinois, Nevada and California cement markets for early Spring.
GYPSUM WALLBOARD
Gypsum Wallboard revenues for the third quarter totaled $122 million, a 40% increase over the $87 million for the same quarter a year ago. Gypsum Wallboard’s third quarter operating earnings were $39 million, up 93% from the $20 million for the same quarter last year. The revenue and earnings gain for the quarter resulted from higher sales prices and record third quarter sales volume. The average net sales price for this fiscal year’s third quarter was $144 per MSF, 32% greater than the $109 per MSF for the same quarter last year. Gypsum Wallboard sales volume of 699 million square feet (MMSF) for the quarter increased 11% from the prior year’s third quarter.
CEMENT
Operating earnings from Cement increased 38% to $20 million for the third quarter this year from $14 million for the same quarter last year. The earnings gain was due primarily to a record high average net sales price, record third quarter sales volumes and the positive impact of the Illinois Cement acquisition. Cement revenues, including joint venture and intersegment sales, for the third quarter totaled $67 million, 36% greater than the $49 million for the same quarter a year ago. Nearly $8 million of the revenue gain is attributable to the acquisition of our partner’s 50% interest in Illinois Cement Company, which closed in the fourth quarter of fiscal 2005. Cement sales volume for the third quarter totaled 746,000 tons, 19% above the 627,000 tons for the same quarter last year. To meet these strong market requirements, Eagle increased its lower margin purchased cement sales volumes for the quarter to approximately 165,000 tons, up 69% over last year’s quarter.
PAPERBOARD
Eagle’s Paperboard operation reported third quarter revenues (including sales to Eagle’s Wallboard operations — see Attachment 4 for a detail of intersegment revenues) of $31 million which is nearly even with last year’s third quarter. Paperboard operating earnings of $4 million for the third quarter this year were down 29% from last year’s third quarter operating earnings due primarily to increased energy costs and sales of lower margin containerboard grade paper. For this year’s third quarter, Paperboard sales volume was 67,000 tons, down 3% from last year’s sales volume of 69,000 tons. This year’s third quarter average net sales price of $463 per ton was a third quarter record and was 2% above last year’s third quarter average net sales price of $454 per ton.
CONCRETE AND AGGREGATES
Revenues from Concrete and Aggregates were $22 million for this year’s third quarter, 36% greater than the $16 million for the third quarter a year ago. Concrete and Aggregates reported a $1.3 million operating profit for this year’s third quarter, up 41% from the $0.9 million operating profit for the same quarter last year, due to increased pricing and volume in both of our markets.
2
Concrete sales volume increased 21% for the third quarter this year to 210,000 cubic yards from 173,000 cubic yards for the same quarter last year. Our Concrete quarterly average net sales price of $64.32 per cubic yard for the third quarter of fiscal 2006 was a record and was 18% higher than the $54.36 per cubic yard for the third quarter a year ago. Our Aggregates operation reported sales volume of 1.4 million tons for the current quarter, 13% greater than the 1.2 million tons reported in the third quarter last year. Our Aggregates quarterly average net sales price was a record high $5.91 per ton during the third quarter and was 14% above last year’s third 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 LP (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 third quarter of fiscal 2006 include 100% of Illinois Cement Company. During the third 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 4 for a reconciliation of the amounts referred to above.
3
Eagle is holding an investor conference on January 26, 2006 at 8:30 a.m. Eastern Time (7:30 a.m. Central Time). During that investor conference, Eagle’s senior management will discuss the financial results, forward looking information and other matters. The investor conference will be webcast simultaneously on the EXP Web sitehttp://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) or transportation 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 onForm 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 athttp://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.
For additional information, contact at 214/432-2000.
Steven R. Rowley
President and Chief Executive Officer
President and Chief Executive Officer
Arthur R. Zunker, Jr.
Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Financial Officer
(1) Summary of Consolidated Earnings
(2) Revenues and Earnings by Lines of Business (Quarter)
(3) Revenues and Earnings by Lines of Business (Nine Months)
(4) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(5) Consolidated Balance Sheets
(2) Revenues and Earnings by Lines of Business (Quarter)
(3) Revenues and Earnings by Lines of Business (Nine Months)
(4) Sales Volume, Net Sales Prices and Intersegment and Cement Revenues
(5) Consolidated Balance Sheets
4
Eagle Materials Inc.
Attachment 1
Attachment 1
Eagle Materials Inc.
Summary of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
Summary of Consolidated Earnings
(dollars in thousands, except per share data)
(unaudited)
| Quarter Ended December 31, | ||||||||||||
| 2005 | 2004 | Change | ||||||||||
| Revenues | $ | 211,515 | $ | 149,802 | 41 | % | ||||||
| Earnings Before Income Taxes | $ | 58,866 | $ | 37,935 | 55 | % | ||||||
| Net Earnings | $ | 38,987 | $ | 25,867 | 51 | % | ||||||
| Earnings Per Share: | ||||||||||||
| — Basic | $ | 2.23 | $ | 1.41 | 58 | % | ||||||
| — Diluted | $ | 2.20 | $ | 1.40 | 57 | % | ||||||
| Average Shares Outstanding: | ||||||||||||
| — Basic | 17,518,921 | 18,314,248 | -4 | % | ||||||||
| — Diluted | 17,746,156 | 18,529,155 | -4 | % | ||||||||
| Nine Months Ended December 31, | ||||||||||||
| 2005 | 2004 | Change | ||||||||||
| Revenues | $ | 638,098 | $ | 463,205 | 38 | % | ||||||
| Earnings Before Income Taxes | $ | 174,777 | $ | 119,346 | 46 | % | ||||||
| Net Earnings | $ | 117,217 | $ | 79,199 | 48 | % | ||||||
| Earnings Per Share: | ||||||||||||
| — Basic | $ | 6.59 | $ | 4.29 | 54 | % | ||||||
| — Diluted | $ | 6.50 | $ | 4.24 | 53 | % | ||||||
| Average Shares Outstanding: | ||||||||||||
| — Basic | 17,789,951 | 18,450,206 | -4 | % | ||||||||
| — Diluted | 18,022,828 | 18,660,612 | -3 | % | ||||||||
5
Eagle Materials Inc.
Attachment 2
Attachment 2
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
| Quarter Ended December 31, | ||||||||||||
| 2005 | 2004 | Change | ||||||||||
Revenues* | ||||||||||||
| Gypsum Wallboard | $ | 122,450 | $ | 87,199 | 40 | % | ||||||
| 58 | % | 58 | % | |||||||||
| Cement (Wholly Owned) ** | 50,311 | 27,891 | 80 | % | ||||||||
| 24 | % | 19 | % | |||||||||
| Paperboard | 17,156 | 18,885 | -9 | % | ||||||||
| 8 | % | 13 | % | |||||||||
| Concrete & Aggregates | 21,598 | 15,827 | 36 | % | ||||||||
| 10 | % | 10 | % | |||||||||
| Other, net | — | — | — | % | ||||||||
| 0 | % | 0 | % | |||||||||
| Total | $ | 211,515 | $ | 149,802 | 41 | % | ||||||
| 100 | % | 100 | % | |||||||||
Operating Earnings | ||||||||||||
| Gypsum Wallboard | $ | 38,856 | $ | 20,121 | 93 | % | ||||||
| 61 | % | 49 | % | |||||||||
| Cement: | ||||||||||||
| Wholly Owned ** | 14,005 | 6,788 | 106 | % | ||||||||
| Joint Venture ** | 6,052 | 7,708 | -21 | % | ||||||||
| 20,057 | 14,496 | 38 | % | |||||||||
| 31 | % | 35 | % | |||||||||
| Paperboard | 4,195 | 5,903 | -29 | % | ||||||||
| 7 | % | 14 | % | |||||||||
| Concrete & Aggregates | 1,321 | 937 | 41 | % | ||||||||
| 2 | % | 2 | % | |||||||||
| Other, net | (348 | ) | (137 | ) | -154 | % | ||||||
| -1 | % | 0 | % | |||||||||
| Total Operating Earnings | 64,081 | 41,320 | 55 | % | ||||||||
| 100 | % | 100 | % | |||||||||
| Corporate General Expenses | (3,835 | ) | (2,810 | ) | ||||||||
| Interest Expense, net | (1,380 | ) | (575 | ) | ||||||||
| Earnings Before Income Taxes | $ | 58,866 | $ | 37,935 | 55 | % | ||||||
| * | Net of Intersegment and Joint Venture Revenues listed on Attachment 4. | |
| ** | Reflects purchase of the other 50% interest in Illinois Cement Company. |
6
Eagle Materials Inc.
Attachment 3
Attachment 3
Eagle Materials Inc.
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
Revenues and Earnings by Lines of Business
(dollars in thousands)
(unaudited)
| Nine Months Ended December 31, | ||||||||||||
| 2005 | 2004 | Change | ||||||||||
Revenues* | ||||||||||||
| Gypsum Wallboard | $ | 344,394 | $ | 261,295 | 32 | % | ||||||
| 54 | % | 56 | % | |||||||||
| Cement (Wholly Owned) ** | 168,105 | 92,247 | 82 | % | ||||||||
| 26 | % | 20 | % | |||||||||
| Paperboard | 55,153 | 55,753 | -1 | % | ||||||||
| 9 | % | 12 | % | |||||||||
| Concrete & Aggregates | 68,167 | 53,717 | 27 | % | ||||||||
| 11 | % | 12 | % | |||||||||
| Other, net | 2,279 | 193 | 1,081 | % | ||||||||
| 0 | % | 0 | % | |||||||||
| Total | $ | 638,098 | $ | 463,205 | 38 | % | ||||||
| 100 | % | 100 | % | |||||||||
Operating Earnings | ||||||||||||
| Gypsum Wallboard | $ | 103,782 | $ | 59,983 | 73 | % | ||||||
| 55 | % | 47 | % | |||||||||
| Cement: | ||||||||||||
| Wholly Owned ** | 40,266 | 22,885 | 76 | % | ||||||||
| Joint Venture ** | 18,461 | 21,421 | -14 | % | ||||||||
| 58,727 | 44,306 | 33 | % | |||||||||
| 31 | % | 34 | % | |||||||||
| Paperboard | 17,447 | 19,845 | -12 | % | ||||||||
| 9 | % | 16 | % | |||||||||
| Concrete & Aggregates | 7,999 | 5,550 | 44 | % | ||||||||
| 4 | % | 4 | % | |||||||||
| Other, net | 1,932 | (776 | ) | 349 | % | |||||||
| 1 | % | -1 | % | |||||||||
| Total Operating Earnings | 189,887 | 128,908 | 47 | % | ||||||||
| 100 | % | 100 | % | |||||||||
| Corporate General Expenses | (10,900 | ) | (7,408 | ) | ||||||||
| Interest Expense, net | (4,210 | ) | (2,154 | ) | ||||||||
| Earnings Before Income Taxes | $ | 174,777 | $ | 119,346 | 46 | % | ||||||
| * | Net of Intersegment and Joint Venture Revenues listed on Attachment 4. | |
| ** | Reflects purchase of the other 50% interest in Illinois Cement Company. |
7
Eagle Materials Inc.
Attachment 4
Attachment 4
Eagle Materials Inc.
Sales Volume, Net Sales Prices and Intersegment and Joint Venture Revenues
(unaudited)
Sales Volume, Net Sales Prices and Intersegment and Joint Venture Revenues
(unaudited)
| Sales Volume | ||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2005 | 2004 | Change | 2005 | 2004 | Change | |||||||||||||||||||
| Gypsum Wallboard (MMSF’s) | 699 | 628 | 11 | % | 2,108 | 1,933 | 9 | % | ||||||||||||||||
| Cement (M Tons): | ||||||||||||||||||||||||
| Wholly Owned | 556 | 340 | 64 | % | 1,908 | 1,151 | 66 | % | ||||||||||||||||
| Joint Venture | 190 | 287 | -34 | % | 623 | 976 | -36 | % | ||||||||||||||||
| 746 | 627 | 19 | % | 2,531 | 2,127 | 19 | % | |||||||||||||||||
| Paperboard (M Tons): | ||||||||||||||||||||||||
| Internal | 28 | 27 | 4 | % | 86 | 83 | 4 | % | ||||||||||||||||
| External | 39 | 42 | -7 | % | 123 | 126 | -2 | % | ||||||||||||||||
| 67 | 69 | -3 | % | 209 | 209 | 0 | % | |||||||||||||||||
| Concrete (M Cubic Yards) | 210 | 173 | 21 | % | 683 | 590 | 16 | % | ||||||||||||||||
| Aggregates (M Tons) | 1,396 | 1,230 | 13 | % | 4,584 | 4,114 | 11 | % | ||||||||||||||||
| Average Net Sales Price* | ||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2005 | 2004 | Change | 2005 | 2004 | Change | |||||||||||||||||||
| Gypsum Wallboard (MSF) | $ | 143.98 | $ | 108.95 | 32 | % | $ | 131.85 | $ | 106.68 | 24 | % | ||||||||||||
| Cement (Ton) | $ | 83.24 | $ | 71.75 | 16 | % | $ | 81.34 | $ | 69.94 | 16 | % | ||||||||||||
| Paperboard (Ton) | $ | 462.95 | $ | 453.50 | 2 | % | $ | 463.93 | $ | 452.64 | 2 | % | ||||||||||||
| Concrete (Cubic Yard) | $ | 64.32 | $ | 54.36 | 18 | % | $ | 61.32 | $ | 54.19 | 13 | % | ||||||||||||
| Aggregates (Ton) | $ | 5.91 | $ | 5.19 | 14 | % | $ | 5.83 | $ | 5.28 | 10 | % | ||||||||||||
| * | Net of freight and delivery costs billed to customers. |
| Intersegment and Cement Revenues | ||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| Intersegment Revenues: | ||||||||||||||||
| Cement | $ | 1,345 | $ | 791 | $ | 4,622 | $ | 2,569 | ||||||||
| Paperboard | 14,322 | 13,133 | 43,722 | 40,819 | ||||||||||||
| Concrete and Aggregates | 306 | 210 | 1,164 | 832 | ||||||||||||
| $ | 15,973 | $ | 14,134 | $ | 49,508 | $ | 44,220 | |||||||||
| Cement Revenues: | ||||||||||||||||
| Wholly Owned | $ | 50,311 | $ | 27,891 | $ | 168,105 | $ | 92,247 | ||||||||
| Joint Venture | 14,893 | 20,147 | 47,719 | 66,927 | ||||||||||||
| $ | 65,204 | $ | 48,038 | $ | 215,824 | $ | 159,174 | |||||||||
8
Eagle Materials Inc.
Attachment 5
Attachment 5
Eagle Materials Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
| December 31, | March 31, | |||||||||||
| 2005 | 2004 | 2005* | ||||||||||
ASSETS | ||||||||||||
| Current Assets — | ||||||||||||
| Cash and Cash Equivalents | $ | 60,174 | $ | 18,539 | $ | 7,221 | ||||||
| Accounts and Notes Receivable, net | 80,231 | 59,164 | 70,952 | |||||||||
| Inventories | 67,111 | 46,609 | 63,482 | |||||||||
| Total Current Assets | 207,516 | 124,312 | 141,655 | |||||||||
| Property, Plant and Equipment — | 837,423 | 725,694 | 788,447 | |||||||||
| Less: Accumulated Depreciation | (290,902 | ) | (255,555 | ) | (264,088 | ) | ||||||
| Property, Plant and Equipment, net | 546,521 | 470,139 | 524,359 | |||||||||
| Investments in Joint Ventures | 25,642 | 47,323 | 28,181 | |||||||||
| Goodwill | 68,013 | 40,290 | 66,960 | |||||||||
| Other Assets | 15,992 | 15,599 | 18,846 | |||||||||
| $ | 863,684 | $ | 697,663 | $ | 780,001 | |||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||||||
| Current Liabilities — | ||||||||||||
| Note Payable | $ | — | $ | 30,100 | $ | 30,800 | ||||||
| Accounts Payable and Accrued Liabilities | 114,773 | 86,654 | 91,069 | |||||||||
| Current Portion of Long-term Debt | — | 80 | — | |||||||||
| Total Current Liabilities | 114,773 | 116,834 | 121,869 | |||||||||
| Long-term Debt | 200,000 | — | 54,000 | |||||||||
| Deferred Income Taxes | 115,828 | 107,228 | 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 8,686,786, 9,680,124 and 9,726,009 Shares, respectively. Class B Common Stock, Par Value $0.01; Authorized 50,000,000 Shares; Issued and Outstanding, 8,111,884, 8,655,769 and 8,499,269 Shares, respectively. | 168 | 183 | 182 | |||||||||
| Capital in Excess of Par Value | — | 143 | — | |||||||||
| Accumulated Other Comprehensive Losses | (1,842 | ) | (1,877 | ) | (1,842 | ) | ||||||
| Unamortized Restricted Stock | (481 | ) | (565 | ) | (557 | ) | ||||||
| Retained Earnings | 435,238 | 475,717 | 487,585 | |||||||||
| Total Stockholders’ Equity | 433,083 | 473,601 | 485,368 | |||||||||
| $ | 863,684 | $ | 697,663 | $ | 780,001 | |||||||
| * | From audited financial statements. |
9