10-K annual report · filed May 23, 2019

Eagle Materials Inc (EXP) FY2019 10-K Annual Report

Short answer

Eagle Materials Inc (EXP) filed its fiscal 2019 10-K annual report with the SEC on May 23, 2019. It reported revenue of $1.4B (+0.5% year over year) and net income of $69M.

  • Top risk flagged: EPA ozone standards: 10 of 16 operating states contain 2015 NAAQS nonattainment areas, potentially requiring significant compliance capital

FY2019 key financial metrics · XBRL

Revenue
$1.4B
+0.5% YoY
Net income
$69M
−73.2% YoY
Operating margin
26.2%
−1.4 pp YoY
Gross margin
23.4%
−1.0 pp YoY
EPS (diluted)
$1.47
−72.2% YoY
ROE
5.7%
−12.4 pp YoY
Operating cash flow
$350M
+3.7% YoY

Source: XBRL data from the Eagle Materials Inc (EXP) FY2019 10-K on SEC EDGAR. USD.

Eagle Materials Inc FY2019 10-K analysis

AI summary of each section, grounded in the filing text

Business Overview

  • U.S. supplier of commodity construction materials and frac sand, organized across Heavy Materials, Light Materials, and Oil and Gas Proppants
  • New $70.0 million recycled-paperboard mill expansion, expected to add approximately 70,000 tons of capacity by late spring 2020
  • Strategic portfolio review announced April 18, 2019, including potential business separation, third-party transactions, or other alternatives
  • Approximately 2,300 employees, including approximately 800 under collective bargaining agreements
  • Oil and Gas Proppants impairment: $220.3 million loss following declining prices, demand, and operating results

Management Discussion & Analysis

  • Revenue $1,393.2M, up $6.7M YoY, driven by higher pricing of $4.5M
  • Gross margin 23% vs 24%; net earnings $68.9M vs $256.6M
  • Best segment: Gypsum Wallboard revenue $532.7M, operating earnings $180.8M, margin 34% vs 32%
  • Worst segment: Oil and Gas Proppants revenue $83.0M, operating loss $28.7M, plus $220.3M impairment
  • Operating cash flow $350.3M; capex $168.9M; buybacks $272.0M; dividends $18.9M
  • Outlook: calendar 2019 demand positive; fiscal 2020 capex guidance $140.0M-$155.0M, while frac sand weakness may trigger further impairments

Risk Factors

  • EPA ozone standards: 10 of 16 operating states contain 2015 NAAQS nonattainment areas, potentially requiring significant compliance capital
  • Oil and gas exposure: frac-sand demand tied to volatile drilling activity, including continued lower-cost in-basin sand in Permian and Eagle Ford
  • Synthetic gypsum vulnerability: third-party suppliers may cease or reduce by-product production, forcing costly or unavailable alternatives
  • Market disruption: ceramic proppants, improved proppant placement, or alternatives to hydraulic fracturing could reduce frac-sand demand
  • Debt structure: covenant breaches could accelerate indebtedness and terminate further credit commitments

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