Eagle Materials sees 18% rise in 3Q revenues
US-based Eagle Materials Inc has reported revenues of US$404.7m in the third quarter of 2020, representing a YoY increase of 18 per cent.
Commenting on the third quarter results, Michael Haack, Eagle Materials president and CEO, said, “Our third quarter results demonstrate the overall resilience of our portfolio. Despite continued pandemic-related economic uncertainty, our wallboard shipments were up nine per cent, a third quarter record for American Gypsum, and our cement shipments were up 28 per cent, reflecting the strong performance of the recently acquired Kosmos Cement Business and the strength of our core markets. We continued to generate strong operating cash flow, which significantly improved our balance sheet and liquidity position providing us with increased financial flexibility.”
Heavy materials segment
In the Heavy Materials segment (cement, concrete, aggregates, joint venture and intersegment cement) advanced 28 per cent YoY to US$234.1m and operating earnings were up 30 per cent to US$70.4m. The increases were attributed to improved cement net sales prices and the significant contribution by the recently-acquired Kosmos Cement business, which accounted for around US$45m of revenue and US$13m of operating revenue during the quarter. The average net sales price for the 3Q20 edged up by two per cent YoY to US$111.91/t (excluding Kosmos Cement, the increase was four per cent). Cement sales volume was up 28 per cent YoY to 1.8Mt, however, excluding Kosmos Cement, sales volumes were flat.
Concrete and aggregates revenue fell seven per cent to US$43.5m YoY as the company sold its northern California concrete and aggregates businesses in the 1QFY21. Excluding the results from the sold businesses, segment revenue increased 13 per cent YoY.
The segment’s 3Q operating earnings increased 52per cent to US$5.1m, primarily reflecting improvements in organic concrete sales volume, concrete sales prices, and operating efficiencies, as well as lower diesel fuel costs.
Light materials segment
Revenue in the Light Materials sector, which includes gypsum wallboard and paperboard, increased eight per cent YoY, reflecting improved wallboard sales volume and pricing. Gypsum wallboard sales volume was a 3Q record of 727Mft2, up nine per cent, while the average gypsum wallboard net sales price increased one per cent to US$147.87/Mft2. Given the improved demand outlook for single-family construction activity in the US and increasing demand for our products, the company’s American Gypsum wallboard business implemented a wallboard price increase during the quarter and another increase in early January.
Paperboard sales volume for the quarter declined one per cent to 79,000t. The average paperboard net sales price was US$484.92/t , up five per cent from the prior year, consistent with the pricing provisions in our long-term sales agreements.
Operating earnings were US$48m in the sector, an increase of one per cent, reflecting improved wallboard sales volume and pricing, partially offset by higher operating costs, primarily due to higher recycled fibre costs.
Planned separation of Heavy Materials and Light Materials businesses
As previously announced on 30 May 2019, Eagle Materials plans to separate its Heavy Materials and Light Materials businesses into two independent, publicly-traded corporations by means of a tax-free spin-off to Eagle shareholders. In its press statement, the company confirmed its commitment to the separation and continues to make preparations to ensure that the two businesses are well-positioned for the separation, although the timing of the separation remains uncertain given the effects of the COVID-19 pandemic.
