Nearly two years to the date from its spinoff by Centex Corp., Dallas-based Eagle Materials outlined a plan to combine its Common Stock and Class B Common
Nearly two years to the date from its spinoff by Centex Corp., Dallas-based Eagle Materials outlined a plan to combine its Common Stock and Class B Common Stock on a one-to-one basis, then effect a three-for-one split in the form of a 200 percent stock dividend to be distributed this month. The plan was announced the morning of Jan. 25; later that day, after New York Stock Exchange trading had closed, the company reported that its fiscal third-quarter profit had increased 51 percent, while its fiscal 2007 outlook was much brighter than previously expected. The rosy projection prompted a trading surge the following day, with the stock climbing from $128.97 to $163.51/share. The stock gained an additional $7 to close at $170.40 by month’s end, although shares were quoted in the $159-165 range during February. The stock has risen upwards of 35 percent in 2006, and has gained about 100 percent since January 2005. Trading at the beginning of March in the $50-55/share range reflected the three-for-one split that took place in mid February.
Along with the stock split and strong 2006 projections, Eagle Materials announced plans to invest $320 million to expand its Mountain Cement (Laramie, Wyo.) and Nevada Cement (Fernley) plants to 1.1 million tons each, representing capacity increases of 60 percent and 100 percent, respectively. The expansions are scheduled to be operational by fall 2008, and occur on the heels of a capacity upgrade at Eagle’s Illinois Cement plant (LaSalle), pacing a December 2006 completion. The projects will bring the company’s annual milling capability to 4 million tons/year, up from a current 2.65 million tpy. In addition to the Illinois, Mountain, Nevada properties, Eagle is a partner in Texas Lehigh Cement (Buda). The company has ready mixed operations strategic to the Texas Lehigh and Nevada plants.