Eagle Materials (EXP 1.04%) started off its fiscal 2018 with strong first-quarter results. The company set a record for revenue thanks in part to its recent acquisition of the Fairborn cement plant from Cemex (CX 2.62%). That said, all its segments performed well during the quarter due to improving economic trends.

Eagle Materials results: The raw numbers


Fiscal Q1 2018

Fiscal Q1 2017

Year-Over-Year Change


$366.1 million

$297.5 million


Net earnings

$54.9 million

$45.3 million






Data source: Eagle Materials Inc.

Pouring a slab of cement.

Image source: Getty Images.

What happened with Eagle Materials this quarter? 

The Cemex deal took results up another level:

  • Cement revenues surged 26% versus last year's fiscal first quarter to $182.9 million while operating earnings rose 37% to $43.2 million due to a 6% increase in prices and 21% higher volumes. That said, the Cemex deal drove the bulk of those gains since prices and volumes would have only risen 4% and 7%, respectively, without that acquisition.
  • Concrete and aggregate sales jumped 26% to $43.5 million while operating profit came in at $6 million, which was 63% higher than the year-ago period thanks to improving volumes and prices.
  • Gypsum wallboard and paperboard sales rose 9% to $153.9 million thanks to rising gypsum wallboard sales prices and volumes as well as higher paperboard sales prices. That said, operating earnings slid 4% to $48.8 million due to lower paperboard volumes as well as increased costs in running its paper mill as a result of an annual maintenance outage and higher recycled fiber costs.
  • The oil and gas proppants segment continues to recover due to the uptick in oil and gas activities this year. Overall, sales rocketed 271% to $18.9 million thanks to higher volumes and prices. That said, the segment did report an operating loss of $2 million, though that was an improvement from last quarter's $2.9 million loss and mainly due to $7.6 million of depreciation, depletion, and amortization expenses.

What management had to say 

On the company's fiscal first-quarter conference call, CEO Dave Powers offered his comments on the business conditions that drove its results. He said:

Let me begin with a few observations about some of the things that stand out to me about the quarter. First, the opportunity to sell products across all of our businesses: Cement, Wallboard, profits, and concrete and aggregates continues to improve and we're taking advantages of these trends. The underlying drivers of our businesses are almost universally toggled in the up position and longer-term risk currently skew to the upside. Single-family housing starts, for example, continue to improve, and have substantial room for growth. Household formation trends, combined with an economic environment of low unemployment, healthy job growth, and low interest rates, are a powerful combination. Most areas of the U.S. are doing well especially in the markets that we operate. Infrastructure investment is growing and could grow even more in the years to come. 

As Powers notes, business is booming right now thanks to healthy economic growth. The company doesn't expect those trends to slow anytime soon given that there's ample room for continued housing growth and the expectation that infrastructure investment will pick up as a result of President Trump's desire to rebuild the country's infrastructure.

Looking forward 

Given those trends, Powers provided the following forecast: 

Going forward, we would expect our cement volumes to grow at about a 3% to 5% rate. On Wallboard, we expect volumes to grow in the mid-single digits and our proppant volumes to grow around threefold this year, albeit from a relatively low comparable base. To the last point. We've continued to take advantage of the current general low on oilfield activity broadly across America to build our capabilities in the proppants business... I'm pleased to announce that we have signed a definitive agreement to acquire Wildcat Minerals, a well-established frack sand distribution company.

Powers sees healthy growth ahead for all of Eagle's segments, especially in its frack sand business where it recently took advantage of improving market conditions to bolster its position so it can capture the upside as the market rebound takes hold.