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The diversified materials company wrote down the value of its oil and gas proppants business.
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Eagle Materials (EXP 0.02%) continued to face several headwinds in its fiscal fourth quarter, which negatively affected results. For starters, the company battled persistently wet weather, which weighed on demand for the heavy materials it produces. On top of that, volatility in the oil market and a shift in how oil companies obtain sand for fracking new wells hurt its oil and gas proppant business. On a more positive note, the company does see continued positives in the construction materials market, which should drive better results through the rest of this calendar year.
|
Metric |
Fiscal Q4 2019 |
Fiscal Q4 2018 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$284.7 million |
$284.4 million |
0% |
|
Net earnings |
($127.8 million) |
$37 million |
N/A |
|
Earnings per share |
($2.82) |
$0.76 |
N/A |
Data source: Eagle Materials.
Wet weather and a writedown affected the quarter:
Image source: Getty Images.
CEO Dave Powers commented on the company's results:
In fiscal 2019, our businesses continued to generate strong earnings and cashflow, despite challenging weather trends that depressed sales opportunities throughout much of our fiscal year. Importantly, we continued to improve our already low-cost position throughout the year, making meaningful investments to further improve our operational efficiency, while continuing to repurchase shares in line with our capital allocation strategy. In fiscal 2019, we purchased more than 3.3 million shares, or 7% of our outstanding shares, and we returned nearly $300 million to shareholders, through a combination of share repurchases and dividends.
As Powers pointed out, Eagle Materials delivered solid results overall despite persistent issues with the weather and in the oil and gas market. One of the highlights was cash flow, which the company is increasingly returning to shareholders through the dividend as well as a meaningful repurchase program.
Powers also stated, "Looking ahead, a strong jobs market, coupled with real wage growth and low interest rates, bodes well for our key construction markets in calendar 2019. We are confident that we will continue to produce industry-leading margins and generate significant cash flow, and our ongoing strategic portfolio review will ensure that Eagle's inherent value is appropriately reflected in the marketplace." As Powers pointed out, Eagle Materials launched a strategic review of its portfolio in mid-April. The company plans to carefully consider a range of options to enhance shareholder value, including the potential of separating businesses. The company also intends to return more cash to investors via an expanded stock buyback program of up to 10 million additional shares.