Eagle Materials Inc. reported record second quarter revenue of $381.5 million, up 1 percent, despite serious weather-related issues impacting its Heavy Materials sector.
Commenting on the second quarter results, Dave Powers, chief executive officer, said, “We are happy to have delivered strong second quarter results despite unusually wet weather that limited our sales opportunities in many markets. Our Texas cement market experienced one of the wettest Septembers on record, while our southeastern wallboard markets dealt with the impact of Hurricane Florence. Fortunately, our employees and our facilities were unharmed. And we continued to generate meaningful cash flow which was used primarily to repurchase our shares. Looking ahead, we continue to believe the prospects for our businesses remain favorable, and we anticipate a good second half.”
Revenue in the company’s Heavy Materials sector, which includes Cement, Concrete and Aggregates and Joint Venture and intersegment Cement revenue, was $232.4 million, a 1 percent decline from the second quarter of fiscal 2018. Heavy Materials operating earnings decreased 4 percent to $61.6 million primarily because of lower profits at its Texas cement facility and its Concrete and Aggregates business, both of which were affected by the unusually wet weather during the quarter.
Cement revenue for the quarter, including Joint Venture and intersegment revenue, was up 1 percent to $193.2 million, reflecting improved net sales prices partially offset by lower sales volume. The average net sales price for the quarter improved 1 percent to $107.56 per ton. Higher freight costs affected net cement prices by approximately $1.50 per ton during the quarter. Cement sales volume for the quarter was 1.6 million tons, down 1 percent versus the prior year.
Operating earnings from Cement for the second quarter were $57.5 million, 2 percent below the same quarter a year ago. The earnings decline was primarily due to lower sales volume at our Texas cement facility and higher freight costs.
Concrete and Aggregates revenue for the second quarter was $39.2 million, a decrease of 9 percent. Second quarter operating earnings were $4.1 million, a 27 percent decline, reflecting lower sales volume partially offset by improved pricing. Its primary concrete and aggregates markets experienced heavier rainfall than typical during the quarter which hampered its ability to move product.
Revenue in the Oil and Gas Proppants segment was $19.1 million, a decline of 13 percent, reflecting lower net sales prices partially offset by a 2 percent increase in frac sandsales volume.
“Our improved sales volume reflected sales activity from our new drying plant in Illinois, which was operational for the full quarter,” the company noted. “During the quarter, pricing for our frac sand came under pressure as overall frac sand demand declined, primarily in the Permian Basin, where oil pipeline capacity limitations have reduced completion activity leading to excess frac sand in the marketplace. It is unclear how long these market conditions will persist. The second quarter’s operating loss of $7.9 million included $9.4 million of depreciation, depletion and amortization.”
Revenue in the Light Materials sector, which includes Gypsum Wallboard and Paperboard, increased 3 percent to $155.2 million.