Eagle materials announces record fourth quarter and fiscal year 2023 results
Dallas--(business wire)--eagle materials inc. (nyse: exp) today reported financial results for fiscal year 2023 and the fiscal fourth quarter ended march 31, 2023. notable items for the fiscal year and quarter are highlighted below. (unless otherwise noted, all comparisons are with the prior fiscal year or prior year’s fiscal fourth quarter, as applicable.) full year fiscal 2023 highlights record revenue of $2.1 billion, up 15% net earnings of $461.5 million, up 23% record diluted earnings per share of $12.46, up 36% adjusted ebitda of $781.5 million, up 19% adjusted ebitda is a non-gaap financial measure calculated by excluding non-routine items and certain non-cash expenses in the manner described in attachment 6 adjusted ebitda is a non-gaap financial measure calculated by excluding non-routine items and certain non-cash expenses in the manner described in attachment 6 repurchased 3.1 million shares of eagle’s common stock for $388 million fourth quarter fiscal 2023 highlights record revenue of $470.1 million, up 14% net earnings of $100.4 million, up 35% record diluted earnings per share of $2.79, up 47% adjusted ebitda of $171.7 million, up 30% adjusted ebitda is a non-gaap financial measure calculated by excluding non-routine items and certain non-cash expenses in the manner described in attachment 6 adjusted ebitda is a non-gaap financial measure calculated by excluding non-routine items and certain non-cash expenses in the manner described in attachment 6 repurchased 528,000 shares of eagle’s common stock for $74 million commenting on the annual results, michael haack, president and ceo, said, “we are pleased to announce another exceptional quarter and year at eagle. we achieved record financial results and made strong progress on all strategic priorities. during the fiscal year, we expanded gross margins by 190 bps to 29.8%, reported record earnings per share of $12.46, generated operating cash flow of $542 million, and repurchased 3.1 million shares of our common stock for $388 million. we also increased production of our eco-friendly portland limestone cement product and integrated several acquisitions which should improve our already enviable low-cost producer position. at the end of the fiscal year, debt was $1.1 billion, and our net leverage ratio (net debt to adjusted ebitda) was 1.4x, giving us substantial financial flexibility for disciplined capital allocation.” “employee health, safety and environmental stewardship remain core objectives, and we demonstrated meaningful progress in all areas over the year. we released our updated environmental and social disclosure report, which is available on our website. in fiscal 2023, our safety performance continued to outpace the industry average, and we achieved the lowest recordable injury rate in the company’s history. we also made significant progress in reducing our carbon footprint with the increased production and sale of our portland limestone cement product, which has a lower carbon intensity than standard cement with similar performance attributes.” mr. haack concluded, “looking ahead, we anticipate continued attractive fundamentals in our markets, despite headwinds relating to higher interest rates and affordability constraints in single-family residential construction. among the favorable demand factors we expect will affect our results in future periods are projected funding increases for infrastructure projects and healthy demand for heavy industrial projects and multi-family residential construction. we remain well-positioned to capitalize on these conditions given our geographical footprint across the us heartland and fast-growing sunbelt and our financial strength and flexibility.” capital allocation priorities eagle remains dedicated to a disciplined capital allocation process to enhance shareholder value. consistent with our track record, our allocation priorities remain unchanged, as follows: 1. investing in growth opportunities that meet our strict financial return standards and are consistent with our strategic focus; 2. operating capital investments to maintain and strengthen our low-cost producer positions; and 3. returning excess cash to shareholders, primarily through our share repurchase program. in the past five fiscal years, we have invested nearly $858 million in acquisitions, $478 million in organic capital expenditures, and $1.7 billion in share repurchases and dividends. segment financial results heavy materials: cement, concrete and aggregates fiscal 2023 revenue in the heavy materials sector, which includes cement, concrete and aggregates, as well as joint venture and intersegment cement revenue, was $1.3 billion, an 11% increase. heavy materials annual operating earnings increased 7% to $297.0 million, primarily because of higher cement net sales prices. fiscal 2023 cement revenue, including joint venture and intersegment revenue, was up 7% to $1.1 billion, and cement operating earnings increased 7% to $278.8 million. the annual revenue and earnings increases reflect higher net sales prices, the effect of which was partially offset by a decrease in the volume of cement sold. the average annual net cement sales price for the year increased 13% to $134.36 per ton. cement sales volume for the year was down 5% to 7.1 million tons. fourth quarter cement revenue, including joint venture and intersegment revenue, was up 14% to $213.8 million. operating earnings increased 59% to $45.3 million, reflecting higher net sales prices, partially offset by higher operating costs, namely energy. the average net cement sales price for the quarter increased 16% to $147.50 per ton. cement sales volume for the quarter was down 3% to 1.3 million tons. fiscal 2023 revenue from concrete and aggregates increased 35% to $239.5 million, reflecting higher sales prices and concrete volume as well as the contribution of approximately $44.5 million from the acquired business in northern colorado. concrete and aggregates reported fiscal 2023 operating earnings of $18.3 million, down 1%, reflecting higher operating costs primarily related to diesel fuel. fourth quarter concrete and aggregates revenue was $53.1 million, an increase of 43%, due to higher pricing and concrete sales volume as well as the contribution of approximately $10 million from the acquired business in northern colorado. fourth quarter operating earnings were $2.6 million, a 74% increase, reflecting higher pricing and sales volume. light materials: gypsum wallboard and paperboard fiscal 2023 revenue in the light materials sector, which includes gypsum wallboard and paperboard, increased 22% to $980.9 million, reflecting improved wallboard sales volume and pricing. gypsum wallboard annual sales volume was a record 3.1 billion square feet (bsf), up 4%, and the average gypsum wallboard net sales price increased 22% to $232.31 per msf. paperboard annual sales volume was down 2% to 326,000 tons. fiscal 2023 light materials operating earnings were $377.7 million, an increase of 38%, driven principally by higher wallboard pricing, the effects of which were partially offset by increased operating costs primarily related to energy. fourth quarter light materials revenue increased 11% to $244.2 million, reflecting higher wallboard pricing and a small increase in wallboard sales volume. gypsum wallboard sales volume increased 1% to 756 million square feet (mmsf), while the average gypsum wallboard net sales price increased 17% to $239.39 per msf. paperboard sales volume for the quarter was down 2% to 80,000 tons. the average paperboard net sales price for the fourth quarter was $550.52 per ton, down 12%, consistent with the pricing provisions in our long-term sales agreements. fourth quarter operating earnings in the sector were $99.4 million, an increase of 29%, reflecting higher wallboard sales volume and pricing as well as lower costs for recycled paper. 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 consolidated statement of earnings. refer to attachment 3 for a reconciliation of these amounts. about eagle materials inc. eagle materials inc. manufactures and distributes portland cement, gypsum wallboard, recycled gypsum paperboard, and concrete and aggregates from more than 70 facilities across the us. eagle’s corporate headquarters is in dallas, texas. eagle’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 thursday, may 18, 2023. the conference call will be webcast on the eagle website, eaglematerials.com. a replay of the webcast and the presentation will be archived on the site 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 statements and generally arise when the company is discussing its beliefs, estimates or expectations as to future events. 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 businesses; fluctuations in 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; the availability and fluctuations in the cost of raw materials; changes in the costs of energy, including, without limitation, natural gas, coal and oil (including diesel), and the nature of our obligations to counterparties under energy supply contracts, such as those related to market conditions (for example, spot market prices), governmental orders and other matters; 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; 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 and other environmental regulation); possible outcomes of pending or future litigation or arbitration proceedings; changes in economic conditions or the nature or level of activity in any one or more of the markets or industries in which the company or its customers are engaged; severe weather conditions (such as winter storms, tornados and hurricanes) and their effects on our facilities, operations and contractual arrangements with third parties; competition; cyber-attacks or data security breaches; increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction or construction projects undertaken by state or local governments; the availability of acquisitions or other growth opportunities that meet our financial return standards and fit our strategic focus; risks related to pursuit of acquisitions, joint ventures and other transactions or the execution or implementation of such transactions, including the integration of operations acquired by the company; general economic conditions, including inflation and recessionary conditions; and changes in interest rates and the resulting effects on the company and demand for our products. 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) or the cost of our raw materials 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. finally, any forward-looking statements made by the company are subject to the risks and impacts associated with natural disasters, pandemics or other unforeseen events, including, without limitation, the covid-19 pandemic and responses thereto designed to contain its spread and mitigate its public health effects, as well as their impact on economic conditions, capital and financial markets. these and other factors are described in the company’s annual report on form 10-k for the fiscal year ended march 31, 2022 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 consolidated statement of earnings attachment 2 revenue and earnings by lines of business attachment 3 sales volume, 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 ebitda and adjusted ebitda attachment 7 reconciliation of net debt to adjusted ebitda eagle materials inc. consolidated statement of earnings (dollars in thousands, except per share data) (unaudited) quarter ended march 31, fiscal year ended march 31, 2023 2022 2023 2022 revenue $ 470,127 $ 413,117 $ 2,148,069 $ 1,861,522 cost of goods sold 334,736 313,941 1,508,803 1,341,908 gross profit 135,391 99,176 639,266 519,614 equity in earnings of unconsolidated jv 11,843 7,703 35,474 32,488 corporate general and administrative expenses (15,686) (13,815) (53,630) (46,801) loss on early retirement of senior notes - - - (8,407) other non-operating income 1,743 3,132 2,654 9,073 earnings before interest and income taxes 133,291 96,196 623,764 505,967 interest expense, net (10,329) (5,982) (35,171) (30,873) earnings before income taxes 122,962 90,214 588,593 475,094 income tax expense (22,606) (15,898) (127,053) (100,847) net earnings $ 100,356 $ 74,316 $ 461,540 $ 374,247 net earnings per share basic $ 2.81 $ 1.91 $ 12.54 $ 9.23 diluted $ 2.79 $ 1.90 $ 12.46 $ 9.14 average shares outstanding basic 35,724,101 38,867,550 36,798,354 40,547,048 diluted 36,012,770 39,208,296 37,052,942 40,929,712 eagle materials inc. revenue and earnings by lines of business (dollars in thousands) (unaudited) quarter ended march 31, fiscal year ended march 31, 2023 2022 2023 2022 revenue* heavy materials: cement (wholly owned) $ 172,784 $ 155,926 $ 927,637 $ 880,280 concrete and aggregates 53,109 37,234 239,516 177,122 225,893 193,160 1,167,153 1,057,402 light materials: gypsum wallboard 219,490 189,316 872,471 692,152 gypsum paperboard 24,744 30,641 108,445 111,968 244,234 219,957 980,916 804,120 total revenue $ 470,127 $ 413,117 $ 2,148,069 $ 1,861,522 segment operating earnings heavy materials: cement (wholly owned) $ 33,477 $ 20,720 $ 243,288 $ 227,068 cement (joint venture) 11,843 7,703 35,474 32,488 concrete and aggregates 2,559 1,469 18,259 18,467 47,879 29,892 297,021 278,023 light materials: gypsum wallboard 91,335 71,051 352,499 261,476 gypsum paperboard 8,020 5,936 25,220 12,603 99,355 76,987 377,719 274,079 sub-total 147,234 106,879 674,740 552,102 corporate general and administrative expense (15,686) (13,815) (53,630) (46,801) loss on early retirement of senior notes - - - (8,407) other non-operating income 1,743 3,132 2,654 9,073 earnings before interest and income taxes $ 133,291 $ 96,196 $ 623,764 $ 505,967 *excluding intersegment and joint venture revenue listed on attachment 3 attachment 3 eagle materials inc. sales volume, net sales prices and intersegment and cement revenue (unaudited) sales volume quarter ended march 31, fiscal year ended march 31, 2023 2022 change 2023 2022 change cement (m tons): wholly owned 1,086 1,128 -4% 6,399 6,711 -5% joint venture 210 209 0% 734 823 -11% 1,296 1,337 -3% 7,133 7,534 -5% concrete (m cubic yards) 335 270 +24% 1,545 1,333 +16% aggregates (m tons) 576 342 +68% 2,909 1,525 +91% gypsum wallboard (mmsfs) 756 750 +1% 3,065 2,944 +4% paperboard (m tons): internal 37 35 +6% 152 144 +6% external 43 47 -9% 174 190 -8% 80 82 -2% 326 334 -2% average net sales price* quarter ended march 31, fiscal year ended march 31, 2023 2022 change 2023 2022 change cement (ton) $ 147.50 $ 126.71 +16% $ 134.36 $ 119.13 +13% concrete (cubic yard) $ 136.51 $ 124.13 +10% $ 133.34 $ 120.97 +10% aggregates (ton) $ 13.07 $ 11.12 +18% $ 11.53 $ 10.45 +10% gypsum wallboard (msf) $ 239.39 $ 204.20 +17% $ 232.31 $ 190.76 +22% paperboard (ton) $ 550.52 $ 628.96 -12% $ 590.67 $ 558.28 +6% *net of freight and delivery costs billed to customers intersegment and cement revenue (dollars in thousands) quarter ended march 31, fiscal year ended march 31, 2023 2022 2023 2022 intersegment revenue: cement $ 6,544 $ 4,558 $ 32,915 $ 22,915 paperboard 21,016 22,585 92,835 82,086 $ 27,560 $ 27,143 $ 125,750 $ 105,001 cement revenue: wholly owned $ 172,784 $ 155,926 $ 927,637 $ 880,280 joint venture 34,453 26,876 113,518 103,899 $ 207,237 $ 182,802 $ 1,041,155 $ 984,179 attachment 4 eagle materials inc. consolidated balance sheets (dollars in thousands) (unaudited) march 31, 2023 2022 assets current assets – cash and cash equivalents $ 15,242 $ 19,416 accounts and notes receivable, net 195,052 176,276 inventories 291,882 236,661 federal income tax receivable 16,267 7,202 prepaid and other assets 3,060 3,172 total current assets 521,503 442,727 property, plant and equipment, net 1,662,061 1,616,539 investments in joint venture 89,111 80,637 operating lease right of use asset 20,759 23,856 notes receivable 7,382 8,485 goodwill and intangibles 466,043 387,898 other assets 14,143 19,510 $ 2,781,002 $ 2,579,652 liabilities and stockholders’ equity current liabilities – accounts payable $ 110,408 $ 113,679 accrued liabilities 86,472 86,754 current portion of long-term debt 10,000 - operating lease liabilities 6,009 7,118 total current liabilities 212,889 207,551 long-term liabilities 66,543 67,911 bank credit facility 157,000 200,000 bank term loan 182,500 - 2.500% senior unsecured notes due 2031 739,532 738,265 deferred income taxes 236,844 232,369 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 35,768,376 and 38,710,929 shares, respectively. 358 387 capital in excess of par value - - accumulated other comprehensive losses (3,547) (3,175) retained earnings 1,188,883 1,136,344 total stockholders’ equity 1,185,694 1,133,556 $ 2,781,002 $ 2,579,652 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 quarters and fiscal years ended march 31, 2023 and 2022: depreciation, depletion and amortization quarter ended march 31, fiscal year ended march 31, 2023 2022 2023 2022 cement $ 20,750 $ 20,077 $ 81,643 $ 79,560 concrete and aggregates 4,459 2,314 17,413 9,656 gypsum wallboard 5,205 5,546 21,744 22,024 paperboard 3,745 3,705 14,942 14,721 corporate and other 706 691 2,812 2,850 $ 34,865 $ 32,333 $ 138,554 $ 128,811 attachment 6 eagle materials inc. reconciliation of non-gaap financial measures (unaudited) (dollars in thousands) ebitda and adjusted ebitda 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 impact from non-routine items, such as purchase accounting on inventory costs and losses on early retirement of senior notes (non-routine items) and stock-based compensation. management uses ebitda and adjusted ebitda as alternative bases for comparing the operating performance of eagle from period to period and for purposes of its budgeting and planning processes. 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 or liquidity in accordance with gaap. the following shows the calculations of ebitda and adjusted ebitda and reconciles them to net earnings in accordance with gaap for the quarters and fiscal years ended march 31, 2023 and 2022: quarter ended march 31, fiscal year ended march 31, 2023 2022 2023 2022 net earnings, as reported $ 100,356 $ 74,316 $ 461,540 $ 374,247 income tax expense 22,606 15,898 127,053 100,847 interest expense 10,329 5,982 35,171 30,873 depreciation, depletion and amortization 34,865 32,333 138,554 128,811 ebitda $ 168,156 $ 128,529 $ 762,318 $ 634,778 northern colorado purchase accounting 1 - - 2,067 - loss on early retirement of senior notes - - - 8,407 stock-based compensation 2 3,519 3,627 17,155 14,264 adjusted ebitda $ 171,675 $ 132,156 $ 781,540 $ 657,449 1 represents the cost impact of the fair value markup of acquired inventory. 2 the increase in stock-based compensation is due to the retirement of two senior executives during the first quarter of fiscal 2023. attachment 7 eagle materials inc. reconciliation of net debt to adjusted ebitda (unaudited) (dollars in thousands) gaap does not define “net debt” and it should not be considered as an alternative to cash flow or liquidity measures defined by gaap. we define net debt as total debt minus cash and cash equivalents to indicate the amount of total debt that would remain if the company applied the cash and cash equivalents held by it to the payment of outstanding debt. the company also uses “net debt to adjusted ebitda,” which it defines as net debt divided by adjusted ebitda for the trailing twelve months, as a metric of its current leverage position. we present this metric for the convenience of the investment community and rating agencies who use such metrics in their analysis, and for investors who need to understand the metrics we use to assess performance and monitor our cash and liquidity positions. fiscal year ended march 31, 2023 2022 total debt, excluding debt issuance costs $ 1,099,500 $ 950,000 cash and cash equivalents 15,242 19,416 net debt $ 1,084,258 $ 930,584 adjusted ebitda 781,540 657,449 net debt to adjusted ebitda 1.4x 1.4x
