Eagle Materials Inc's first quarter of FY23-24 ended 30 June 2023 saw revenue in the heavy materials sector joint venture (JV) and intersegment cement revenue reach US$396m, a 15 per cent improvement. Heavy Materials (cement, concrete and aggregates) operating earnings increased 19 per cent to US$81m primarily because of higher cement sales prices and sales volume partially offset by increased maintenance costs and the effects of an extended maintenance outage at the joint venture.
Cement revenue, including JV and intersegment revenue, was up 16 per cent to US$329m. Operating earnings increased 19 per cent to US$74m, reflecting higher cement sales prices and sales volume partially offset by increased maintenance costs and the impact from the step-up in inventory values related to the Stockton Terminal Acquisition.
Profitability at the JV was negatively affected by an extended outage during the quarter to address ongoing equipment issues at this facility over the past year. The extended outage resulted in increased maintenance costs and reduced production. Equipment reliability has improved in July, but additional work will need to be completed during our planned maintenance outage in fiscal 2025, which will again increase the outage timeline at the joint venture facility. The average net cement sales price for the quarter increased 15 per cent to US$147.27/t. Cement sales volume for the quarter increased one per cent to 2Mt. Sales volume in the quarter was affected by wet weather in the western part of the US.
Concrete and aggregates revenue was up nine per cent to US$67m, reflecting increased concrete and aggregates prices and higher aggregates sales volume. First quarter operating earnings increased 23 per cent to US$7m. The increase reflects higher concrete and aggregates net sales prices and approximately US$1.2m of additional costs incurred in the first quarter of fiscal 2023 from the step-up in inventory values related to the acquisition of an aggregates business in northern Colorado.
Commenting on the first quarter results, Michael Haack, president and CEO, said, “Fiscal 2024 is off to a solid start for Eagle, with record revenue of US$602m, adjusted EPS of US$3.55, and gross margins of 29.3per cent, an increase of 240 basis points. Our portfolio of businesses continued to perform well, and we made progress on our strategic priorities. During the quarter, we reached an important milestone in the production of Portland Limestone Cement, surpassing 50 per cent across our system. We completed the acquisition of a cement import terminal in northern California that further strengthens our competitive position in that market.”
Mr Haack continued, “Looking ahead to the balance of the year, we expect demand for cement to remain steady driven by infrastructure and heavy industrial projects. Residential construction activity remains resilient as the market balances interest rate-related affordability challenges with chronic supply shortages and strong demand.”
