Eagle Materials Inc. reported its financial results for the third quarter of fiscal 2024 ended 31 December 2023.
Notable items for the quarter are highlighted below (unless otherwise noted, all comparisons are with the prior year’s fiscal third quarter):
Third quarter fiscal 2024 highlights
- Record Revenue of US$558.8 million, up 9%.
- Record Net Earnings of US$129.1 million, up 10%.
- Net Earnings per share of US$3.72, up 16%.
- Adjusted EBITDA of US$218.6 million, up 10%.
- 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 558 500 shares of Eagle’s common stock for US$98 million.
Commenting on the results, Michael Haack, President and CEO of Eagle, said, “We are pleased to announce another exceptional quarter against the backdrop of shifting, albeit constructive, market conditions as interest rates moved materially lower during the latter half of the quarter. In the third quarter, we achieved record revenue of US$559 million, produced record EPS of US$3.72 and expanded gross margins by 130 bps to 32.3%. We generated strong free cash flow, repurchased 558 500 shares of our common stock and returned US$106 million of cash to shareholders, bringing total cash returned to US$276 million in the first nine months of the fiscal year.”
“We continued making progress on our environmental stewardship goals, expanding the production and sale of our eco-friendly Portland Limestone Cement and other blended cement products. In December, we announced an agreement with Terra CO2 granting us exclusive rights to use Terra’s technology to build and operate plants that would produce low-carbon supplementary cementitious material in three of our core cement markets. Once fully developed, this technology has the potential to not only reduce the carbon intensity of the cementitious products we sell, but also to fulfill the needs of our customers and meet the expected increase in demand for cement and supplementary cementitious materials.”
Mr. Haack concluded, “Eagle’s heartland geographic footprint remains well-positioned for long-term growth, supported by trends in population growth, well-documented housing production deficits and supply shortages, and a multi-year federal highway bill further enhanced by state-level infrastructure spending. We expect that our portfolio of businesses will continue to deliver leading financial results, and our capital allocation strategies will continue to generate superior shareholder value for the foreseeable future.”
Segment financial results
Heavy materials: cement, concrete and aggregates
Revenue in the heavy materials sector, which includes cement, concrete and aggregates, as well as Joint Venture and intersegment cement revenue, was up 18% to US$366.4 million. Heavy materials operating earnings increased 43% to US$107.3 million, primarily because of higher cement net sales prices and sales volume.
Cement revenue for the quarter, including Joint Venture and intersegment revenue, was up 20% to US$308.7 million, and operating earnings were a record US$105.6 million, up 46%. These increases reflect higher cement sales volume and net sales prices as well as the contribution of approximately US$11 million of revenue from the recently acquired Stockton Terminal. The average net sales price for the quarter was up 13% to US$151.32 per ton, reflecting cement price increases implemented in January 2023 and again in July 2023. Cement sales volume increased 7% to 1.8 million t. Excluding the recently acquired Stockton Terminal, cement sales volume increased 3%.
Concrete and aggregates revenue increased 5% to US$57.8 million, reflecting higher aggregates sales volume and record concrete pricing. Operating earnings for concrete and aggregates decreased 35% to US$1.8 million, primarily because of higher input costs.
Light Materials: Gypsum Wallboard and Recycled Paperboard
Revenue in the light materials sector, which includes gypsum wallboard and recycled paperboard, decreased 4% to US$226.9 million, reflecting lower wallboard and paperboard sales prices and slightly lower wallboard sales volume, partially offset by increased paperboard sales volume. Gypsum wallboard sales volume decreased 1% to 722 million square feet (MMSF), while the average gypsum wallboard net sales price declined 4% to US$227.78 per MSF.
Paperboard sales volume for the quarter was up 9% to a record 84 000 t. The average paperboard net sales price was US$559.49 per ton, down 6%, consistent with the pricing provisions in our long-term sales agreements that factor in changes to input costs.
Operating earnings in the sector were US$82.6 million, down 13%, primarily related to lower wallboard sales volume and pricing.
Details of Financial Results
Eagle Materials conducts one of its cement plant operations through a 50/50 joint venture with Texas Lehigh Cement Company LP (the Joint Venture). The equity method of accounting for the company's 50% interest in the Joint Venture is used. For segment reporting purposes only, it proportionately consolidates its 50% share of the Joint Venture’s revenue and operating earnings, which is consistent with the way its management organises the segments within the company for making operating decisions and assessing performance.
In addition, for segment reporting purposes, the company reports intersegment revenue as part of a segment’s total revenue. Intersegment sales are eliminated on the consolidated income statement. Refer to Attachment 3 for a reconciliation of these amounts.
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