Eagle Materials has posted a 19 per cent YoY increase in revenue to a record US$605m in the second quarter of fiscal year 2023 ended 30 September. Record net earnings of US$139m were also seen over the same period, up 36 per cent YoY. Adjusted EBITDA advanced 21 per cent to US$227m.
Commenting on the results, Michael Haack, president and CEO of Eagle Materials, said, “At this unique time in the US markets, we are pleased to report second quarter results that once again exceeded our expectations and set quarterly records, with price increases across each business line more than offsetting cost inflation pressures. We generated record revenue of US$605m and record EPS of US$3.72, and we expanded gross margins by 160bps to 32.1 per cent. Construction activity remained healthy across our markets, and utilisation rates remained high across our network. Cashflow from operations increased 18 per cent to US$175.6m.
“During the quarter, we continued to drive shareholder value by prudently investing in strategic growth and returning capital to shareholders. We completed two investments: a cement distribution terminal in Nashville, Tennessee, which expands and improves the resilience of our cement geographic footprint in a strong and growing southeastern market, and an aggregates asset contiguous with our existing northern Nevada operation. We also returned US$110m of cash to shareholders through share repurchases and dividends, bringing total cash returned to shareholders to US$230m in the first half of the year.”
Revenue in the heavy materials sector, which includes cement, concrete and aggregates, joint venture and intersegment cement revenue, came in at US$389.1m in the 2QFY23, marking a 14 per cent YoY increase. Heavy materials operating earnings were up 10 per cent to US$106.1m, primarily due to higher cement sales prices.
Cement revenue for the quarter, including joint venture and intersegment revenue, was up 11 per cent to US$319.5m, and operating earnings were a record US$98.8m, also up 11 per cent. These increases reflect higher cement net sales prices partially offset by lower sales volume. The average net sales price for the quarter was up 12 per cent to US$132.50/t. Cement sales volume fell two per cent YoY to 2.1Mt. Cement sales volume and operating earnings at the company’s joint venture both declined during the quarter primarily because of extended equipment downtime, which reduced cement production. While these equipment issues were mostly resolved during the quarter, they may continue to have an impact on the joint venture’s results during the third quarter.
Concrete and aggregates revenue increased 32 per cent YoY to US$69.6m, reflecting higher sales volume and concrete pricing as well as the contribution of approximately US$14m from a recently acquired business in northern Colorado. Second quarter operating earnings declined three per cent to US$7.3m, reflecting higher input costs.
Revenue in the light materials sector, which includes gypsum wallboard and paperboard, increased 26 per cent to US$253.5m, reflecting higher wallboard sales volume and prices. Gypsum wallboard sales volume increased six per cent to 783Mft2, while the average gypsum wallboard net sales price increased 22 per cent to US$233.70/Mft2.
Paperboard sales volume for the quarter was down two per cent from the prior year at 85,000t. The average paperboard net sales price was US$603.62/t, up 15 per cent, consistent with the pricing provisions in Eagle’s long-term sales agreements. Operating earnings in the sector were US$95.3m, a YoY increase of 42 per cent, reflecting increased wallboard sales volume and pricing, partially offset by higher raw material costs, namely recycled fibre and energy.
