SEGMENT INFORMATION

9 Months Ended

Dec. 31, 2018

(M) SEGMENT INFORMATION

Operating segments are defined as components of an enterprise that engage in business activities that earn revenue, incur expenses, and prepare separate financial information that is evaluated regularly by our chief operating decision maker in order to allocate resources and assess performance. During the quarter ended December 31, 2018, we changed our segment presentation to reflect the reorganization of our Oil and Gas Proppants and frac sand distribution businesses. Under this reorganization, the distribution business became a division of the Oil and Gas Proppants business. The operations of the frac sand distribution business have been reported in the Other segment since we acquired the business in fiscal 2018. We have adjusted the prior period segment presentation to reflect this change for comparative purposes.

We are a leading supplier of heavy construction materials, light building materials, and materials used for oil and natural gas extraction in the United States. Our products are commodities that are essential in commercial and residential construction; public construction projects; projects to build, expand, and repair roads and highways; and in oil and natural gas extraction.

Our business is organized into three sectors within which there are five reportable business segments. The Heavy Materials sector includes the Cement and Concrete and Aggregates segments. The Light Materials sector includes the Gypsum Wallboard and Recycled Paperboard segments. The Oil and Gas Proppants segment produces and distributes frac sand used in oil and gas exploration and extraction.

Our operations are conducted in the U.S. and include the mining of limestone for the manufacture, production, distribution, and sale of portland cement (a basic construction material that is the essential binding ingredient in concrete); the grinding and sale of slag; the mining of gypsum for the manufacture and sale of gypsum wallboard; the manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; the mining and sale of aggregates (crushed stone, sand, and gravel); and the mining, sale and distribution of sand used in hydraulic fracturing (frac sand).

We operate seven cement plants, one slag grinding facility, 18 cement distribution terminals, five gypsum wallboard plants, a gypsum wallboard distribution center, a recycled paperboard mill, 17 readymix concrete batch plants, four aggregates processing plants, two frac sand processing facilities, three frac sand drying facilities, and 14 frac sand distribution terminals. The principal markets for our cement products are Texas, Illinois, the central plains, Michigan, Iowa, the Rocky Mountains, northern Nevada, southern Ohio, and northern California. We distribute gypsum wallboard and recycled paperboard throughout the continental U.S., with the exception of the Northeast. Concrete and aggregates are sold to local readymix producers and paving contractors in the Austin, Texas area; the region north of Sacramento, California; and the greater Kansas City, Missouri area. Frac sand is currently sold into shale deposits across the United States.

We conduct one of our seven cement plant operations, Texas Lehigh Cement Company LP, in Buda, Texas, through a Joint Venture. For segment reporting purposes only, we proportionately consolidate our 50% share of the Joint Venture’s Revenue and Operating Earnings, consistent with the way management reports the segments within the Company for making operating decisions and assessing performance.

We account for intersegment sales at market prices. The following table sets forth certain financial information relating to our operations by segment:

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2018			2017			2018			2017
	(dollars in thousands)
Revenue -
Cement	$	163,732		$	161,601		$	543,681		$	536,186
Concrete and Aggregates		30,841			38,742			111,425			126,092
Gypsum Wallboard		130,954			133,348			402,978			383,229
Paperboard		39,638			48,389			126,048			138,161
Oil and Gas Proppants		14,100			26,392			65,266			67,324
		379,265			408,472			1,249,398			1,250,992
Less: Intersegment Revenue		(20,611	)		(23,575	)		(62,746	)		(69,489	)
Less: Joint Venture Revenue		(25,369	)		(25,526	)		(78,112	)		(79,696	)
	$	333,285		$	359,371		$	1,108,540		$	1,101,807

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2018		2017		2018		2017
	(dollars in thousands)
Intersegment Revenue -
Cement	$	3,518	$	4,160	$	11,769	$	13,743
Concrete and Aggregates		346		288		1,178		1,103
Paperboard		16,747		19,127		49,799		54,643
	$	20,611	$	23,575	$	62,746	$	69,489
Cement Sales Volume (M tons) -
Wholly Owned		1,126		1,123		3,740		3,734
Joint Venture		218		216		672		686
		1,344		1,339		4,412		4,420

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2018			2017			2018			2017
	(dollars in thousands)
Operating Earnings -
Cement	$	47,197		$	52,523		$	142,078		$	154,456
Concrete and Aggregates		1,037			3,414			10,621			15,054
Gypsum Wallboard		43,543			39,841			139,694			123,237
Paperboard		7,475			10,903			26,078			22,358
Oil and Gas Proppants		(9,324	)		(743	)		(19,554	)		(4,523	)
Sub-Total		89,928			105,938			298,917			310,582
Corporate General and Administrative Expense		(9,408	)		(9,883	)		(27,333	)		(29,383	)
Litigation Settlements and Losses		—			(39,098	)		(1,800	)		(39,098	)
Other Non-Operating Income		1,292			1,084			2,291			2,728
Earnings Before Interest and Income Taxes		81,812			58,041			272,075			244,829
Interest Expense, net		(7,294	)		(6,653	)		(20,743	)		(21,592	)
Earnings Before Income Taxes	$	74,518		$	51,388		$	251,332		$	223,237
Cement Operating Earnings -
Wholly Owned	$	37,690		$	41,151		$	113,147		$	121,253
Joint Ventures		9,507			11,372			28,931			33,203
	$	47,197		$	52,523		$	142,078		$	154,456
Capital Expenditures -
Cement	$	17,691		$	11,012		$	51,524		$	31,744
Concrete and Aggregates		2,263			2,446			4,786			4,976
Gypsum Wallboard		2,054			4,616			8,533			15,477
Paperboard		1,486			1,490			7,896			2,913
Oil and Gas Proppants		5,818			13,993			48,684			28,353
Other, net		3,690			50			5,023			235
	$	33,002		$	33,607		$	126,446		$	83,698
Depreciation, Depletion and Amortization -
Cement	$	13,242		$	13,117		$	38,909		$	38,258
Concrete and Aggregates		2,049			2,007			6,154			5,851
Gypsum Wallboard		4,978			4,599			15,009			13,514
Paperboard		2,150			2,204			6,387			6,513
Oil and Gas Proppants		6,964			6,370			24,403			22,682
Corporate and Other		402			353			1,099			1,085
	$	29,785		$	28,650		$	91,961		$	87,903

	December 31,		March 31,
	2018		2018
	(dollars in thousands)
Identifiable Assets
Cement	$	1,262,380	$	1,247,504
Concrete and Aggregates		98,552		104,851
Gypsum Wallboard		370,633		386,041
Paperboard		129,366		123,819
Oil and Gas Proppants		462,327		444,826
Other, net		32,158		60,962
	$	2,355,416	$	2,368,003

Segment operating earnings, including the proportionately consolidated 50% interest in the revenue and expenses of the Joint Venture, represent Revenue, less direct operating expenses, segment Depreciation, and segment Selling, General and Administrative expenses. We account for intersegment sales at market prices. Corporate assets consist primarily of cash and cash equivalents, general office assets, and miscellaneous other assets.

The basis used to disclose Identifiable Assets; Capital Expenditures; and Depreciation, Depletion and Amortization conforms with the equity method, and is similar to how we disclose these accounts in our Unaudited Consolidated Balance Sheets and Unaudited Consolidated Statements of Earnings.

The segment breakdown of Goodwill is as follows:

	December 31,		March 31,
	2018		2018
	(dollars in thousands)
Cement	$	74,214	$	74,214
Gypsum Wallboard		116,618		116,618
Paperboard		7,538		7,538
Oil and Gas Proppants		6,841		6,841
	$	205,211	$	205,211

Summarized financial information for the Joint Venture that is not consolidated is set out below (this summarized financial information includes the total amount for the Joint Venture and not our 50% interest in those amounts):

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2018		2017		2018		2017
	(dollars in thousands)
Revenue	$	51,411	$	51,311	$	158,922	$	163,128
Gross Margin	$	20,178	$	23,421	$	62,196	$	69,672
Earnings Before Income Taxes	$	19,013	$	22,745	$	57,862	$	66,407

	December 31,		March 31,
	2018		2018
	(dollars in thousands)
Current Assets	$	71,385	$	71,089
Non-Current Assets	$	69,773	$	66,856
Current Liabilities	$	20,070	$	20,671