Eagle Materials' 2Q EPS up 5% on record revenues

Despite adverse weather conditions, underlying demand remained strong.

The American manufacturer has reported financial results for the second quarter of fiscal 2018 ended September 30, 2017. Compared to the same period last year, revenues hit a record $376.3 million, up 13 percent, earnings before income taxes totaled $92.3 million, up three percent, and net earnings per diluted share increased five percent, reaching $1.31.

Second quarter earnings before interest and income taxes increased five percent, reflecting the financial results of the recently acquired cement plant in Fairborn, Ohio, and related assets (the Fairborn Business) and improved net sales prices across most businesses.

"Eagle Materials' quarterly results reflect hurricane and other weather-related operational and demand interruptions. We were more fortunate than many as our employees remained safe and our operations incurred no damage. Eagle is poised to serve our customers' additional needs as they meet the challenges of rebuilding over the coming quarters," commented Dave Powers, President and CEO.

Meanwhile, cement wholly-owned volumes were up 12 percent, including the Fairborn Business, while the company's Texas Lehigh cement joint venture volumes were down six percent; cement prices were up seven percent overall. Gypsum wallboard volumes and prices were essentially flat.

Cement, Concrete and Aggregates

Cement revenues for the second quarter, including joint venture and intersegment revenues, totaled $191.7 million, which was 15 percent higher than the same quarter last year. The average net sales price for this quarter was $106.96 per ton, seven percent higher than the same quarter last year. Total Cement sales volumes for the quarter were 1.6 million tons, nine percent higher than the same quarter a year ago. Like-for-like average net cement sales prices increased five percent and sales volumes declined five percent, respectively, versus the second quarter of fiscal 2017 (comparison excludes cement sales from the Fairborn Business since its acquisition date). Eagle MaterialsÔÇÖ cement shipments during the quarter were negatively impacted by wet weather across its Midwest markets and its Texas cement shipments were impacted by the hurricane flooding that occurred along the Texas Gulf Coast.

During the quarter, the company's Nevada cement plant successfully completed the installation of certain pollution control equipment in connection with its plans to burn solid-waste fuels, which will lower energy costs in the future. To complete the project the plant reduced production output, which negatively affected the absorption of operating costs at the cement plant during the quarter. The impact to the quarter was approximately $2 million, and the plant is currently up and operational.

Operating earnings from cement for the second quarter were a record $58.8 million and 16 percent greater than the same quarter a year ago. The earnings improvement was driven primarily by earnings from the Fairborn Business and improved average net cement sales prices offset by lower sales volumes from the manufacturer's legacy facilities and the project at its Nevada cement plant.

Concrete and aggregates reported revenues for the second quarter of $43.0 million, an increase of 11 percent. Second quarter operating earnings were $5.6 million, a 17 percent improvement from the same quarter a year ago, reflecting improved concrete and aggregates sales volumes and net sales prices.

Gypsum Wallboard and Paperboard

Gypsum wallboard and paperboard revenues for the second quarter totaled $150.3 million, which were one percent less than the same quarter a year ago. The average Gypsum Wallboard net sales price this quarter was $153.71 per MSF, slightly below the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 651 million square feet (MMSF) were slightly greater than the same quarter last year; however, the company's wallboard shipments during the second quarter were negatively impacted by Hurricanes Harvey and Irma, which required the shutdown of the South Carolina facility to protect employees and impacted the customers' ability to receive product. The South Carolina facility was restarted without issue and shipping lanes have reopened.

Paperboard sales volumes for the quarter were 79,000 tons, eight percent less than the same quarter a year ago. As the papermill has reached full utilization and demand for gypsum facing paper grows, Eagle Materials is transitioning sales to customers under contract, which has negatively impacted sales to non-contractual customers. The average Paperboard net sales price this quarter was $561.26 per ton, 12 percent greater than the same quarter a year ago, reflecting the delayed pass-through of higher recycled-fiber costs.

Gypsum Wallboard and Paperboard reported second quarter operating earnings of $46.1 million, down 11 percent from the same quarter last year. The earnings decline primarily reflects increased operating costs at the company's papermill due to higher recycled fiber costs, lower paperboard shipments and approximately $2.5 million related to the start-up of the Bernalillo wallboard plant.

Oil and Gas Proppants

Oil and Gas Proppants reported second quarter revenues of $22.0 million, a 232 percent increase from the prior year reflecting improved frac sand sales volumes and net sales prices. The second quarter's operating loss of $1.8 million includes depreciation, depletion and amortization of $8.5 million.