Eagle Materials moving ahead with separation plan

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Eagle Materials moving ahead with separation plan

By HBSDealer Staff - 04/13/2020
Despite the COVID-19 pandemic disrupting business across the country, Eagle Materials reported that it is continuing to move forward with its plan to split the company into two separate businesses.

The plan calls for Eagle to separate its heavy business – including cement, aggregates and concrete –from its light-side business of gypsum wallboard and paperboard. No timetable has been given, however.

In a prepared statement, the company said, “Eagle Materials remains committed to the separation and reaffirms that the strategic rationale for the separation is unchanged, although the timing for the expected completion of the separation has become uncertain.”

As of  March 31, the Dallas, Texas-based company had total liquidity of approximately $295 million ($115 million of cash on hand plus $180 million of bank revolver availability) with no near-term debt maturities.

The company said that its liquidity position will be further enhanced by the recently enacted CARES Act, which will enable the manufacturer to utilize the tax asset generated by the Kosmos acquisition and carry it back to recover taxes paid in prior years at higher tax rates. According to Eagle, the company will realize a tax refund of approximately $100 million.

Regarding business conditions, Eagle said that market for its construction materials “have been robust in this environment.”

"As our nation reacts to COVID-19 and the large-scale effort to contain it, we remain focused on navigating the crisis, keeping our employees and their families healthy, serving our customers as an essential business, and protecting the financial stability of Eagle during these uncertain times,” said Michael Haack, president and CEO of Eagle Materials.

“Just as we entered this environment in a strong financial position, we are taking immediate actions to reduce expenses and manage liquidity so we can maintain strong financial footing as we move forward beyond it,” he added.

Eagle Materials manufactures and distributes Portland cement, gypsum wallboard and recycled gypsum paperboard, along with concrete, sand and aggregates from more than 75 facilities across the country.

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