Eagle Materials’ Concrete and Aggregates Business Down, Cement Up

Eagle Materials Inc. reported financial results for the second quarter of fiscal 2021 ended Sept. 30, including record second-quarter diluted earnings per share from continuing operations.

Revenue in the Heavy Materials sector as a whole, which includes Cement, Concrete and Aggregates as well as Joint Venture and intersegment Cement revenue, was $324.4 million, a 15% improvement. Heavy Materials operating earnings increased 15% to $85.2 million primarily because of improved Cement net sales prices and earnings from the recently acquired Kosmos Cement Business.

Concrete and Aggregates revenue decreased 17% to $46.3 million. The decline reflects the sale of its Northern California concrete and aggregates businesses during the first quarter of fiscal 2021. Excluding the results from the sold businesses, Concrete and Aggregates revenue was up 1%. 

Second quarter operating earnings for Concrete and Aggregates were down 28% to $5.3 million, primarily reflecting the sale of our northern California businesses. Excluding the results from the sold businesses, operating earnings decreased 8% reflecting lower concrete sales volume.

Cement revenue for the quarter, including Joint Venture and intersegment revenue, was up 22% to $278.1 million and operating earnings were a record $79.9 million, up 20%. These increases reflect improved Cement net sales prices and the contribution of the recently acquired Kosmos Cement Business, which accounted for approximately $50.0 million of revenue and $14.4 million of operating earnings during the quarter.

The average net sales price for the quarter increased 2% to $111.59 per ton. Excluding the impact from the Kosmos Cement Business, the average net sales price increased 4%. Cement sales volume for the quarter was a record 2.2 million tons, up 23% versus the prior year. Excluding sales volume from the recently acquired Kosmos Cement Business and the impact from selling our Northern California concrete business, our Cement sales volume would have been up 1%.

Commenting on the second quarter results, Michael Haack, president and CEO, said, “We are pleased to have delivered another quarter of record revenue and net earnings growth while further strengthening our balance sheet. Our end markets remain resilient as COVID-related uncertainty persists: the housing market continued its strong rebound, and cement demand remained robust, despite wet weather in the first half of September. Our wallboard shipments were up 6%, and we shipped an all-time record 2.2 million tons of cement during the quarter. We generated strong operating cash flow, which, combined with the receipt of the majority of our tax refund in the quarter, significantly improved our balance sheet and liquidity position.”

Haack continued, “We also achieved a major strategic goal of exiting a non-core business with the sale of our Oil and Gas Proppants business in September. We are very pleased with our second-quarter performance and the resilience of our markets, and we are closely monitoring the disruptions caused by the COVID-19 pandemic and their possible impact on our business in current and future periods. We continue to enforce strict health and safety protocols to protect our employees, customers and business partners, and we will continue to manage our cash flow prudently and protect our balance sheet.”

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