Eagle Materials, Inc. Cements a Record-Setting Year

Despite some weather issues during the quarter, Eagle Materials (EXP 0.02%) finished its fiscal year on a positive note and delivered record revenue. That solid finish enabled the diversified materials producer to set full-year records for both sales and earnings. Meanwhile, with a strong balance sheet and some tailwinds at its back, the company sees even better days ahead.

Eagle Materials results: The raw numbers

Data source: Eagle Materials Inc. EPS = earnings per share.

Image source: Getty Images.

What happened with Eagle Materials this quarter? 

Soggy weather couldn't dampen the quarter:

• Cement revenue slipped 1% from last year's fiscal fourth quarter to $155.7 million. While the average net sales price improved 3%, volumes declined 4% mainly due to persistently wet weather during the quarter across many of the company's markets. Those lower volumes caused operating earnings to drop 5% to $24.7 million.
• Concrete and aggregate sales tumbled 22% to $30.7 million, which caused operating earnings to plunge 44% to $2.8 million. Wet weather in two of the company's markets hampered its ability to deliver concrete to customers during the quarter.
• Revenue from the gypsum wallboard and paperboard segment dipped 1% to $136.4 million due to lower volumes. Operating earnings, on the other hand, improved 3% to $45.7 million thanks to higher pricing and lower expenses as recycled paper fiber costs fell during the quarter.
• The oil and gas proppants segment rebounded sharply as revenue skyrocketed 43% to $22.6 million thanks to a 59% surge in frack sand volumes. Driving the rebound was an improvement in oil and gas drilling activities fueled by higher oil prices. That strong showing came even though harsh winter weather and rail delays impacted volumes during the quarter. Operating earnings, however, remained mired in the red: The segment posted an operating loss of $1.6 million.
• For the full fiscal year, Eagle Materials' revenue rose 14% to a record $1.4 billion. Earnings, likewise, set a record at $5.28 per share, which was up 29% year over year.

What management had to say

CEO Dave Powers commented on the company's results by saying:

Our track record of competitive margin performance remains industry leading due to our long-standing commitment to improving our low-cost producer positions, through wise investment in our people, processes, and operations. We have invested more than $1.5 billion so far this cycle to profitably grow our businesses and create shareholder value.

A prime example of Eagle's targeted investments in recent years was the $400 million purchase of the Fairborn, Ohio, cement plant. That deal has been a key earnings driver over the past year and was one of the factors contributing to the company's record-setting results in fiscal 2018.

Even as Eagle is investing to expand its business, the company is still rewarding shareholders. Over the past three years, it has returned $303 million to investors via share repurchases and dividends, including buying back $61.1 million in shares in fiscal 2018.

Looking forward

"As we look ahead, our strong balance sheet and anticipated cash flows, which have been enhanced by tax reform, position us to continue to execute on value-creation opportunities," said Powers. The company's priorities for that money will be to make acquisitions that meet its strict return standards, undertake organic investments that strengthen its low-cost positions, and return cash to investors, mainly via share repurchases.