Eagle Materials Inc Reports Record Third Quarter with 16% EPS Growth
Revenue: Record third-quarter revenue of $559 million, up from $511.5 million in the prior year's fiscal third quarter.
Earnings Per Share (EPS): Diluted EPS increased to $3.72, a 16% growth compared to the same period last year.
Gross Margin: Expanded by 130 basis points to 32.3%.
Free Cash Flow: Strong generation, with significant cash returned to shareholders.
Heavy Materials Sector: Revenue up 18% with operating earnings increasing 43%.
Light Materials Sector: Revenue decreased 4% with a 13% decline in operating earnings.
On January 25, 2024, Eagle Materials Inc (NYSE:EXP) released its 8-K filing, announcing financial results for the third quarter of fiscal 2024 ended December 31, 2023. The company, a leading U.S. manufacturer of construction products and building materials, reported a record third quarter with significant growth in revenue and earnings per share (EPS).
Eagle Materials Inc produces and sells construction products and building materials, including cement, concrete, aggregates, gypsum wallboard, and recycled paperboard. The company operates through two sectors: Heavy Materials, which includes Cement and Concrete and Aggregates segments, and Light Materials, which includes the Gypsum Wallboard and Recycled Paperboard segments.
Financial Performance and Market Conditions
President and CEO Michael Haack expressed satisfaction with the company's performance, citing record revenue of $559 million, a record EPS of $3.72, and an expansion in gross margins to 32.3%. The company's strong free cash flow facilitated the repurchase of 558,500 shares and the return of $106 million of cash to shareholders during the quarter. Haack also highlighted the company's environmental initiatives, including the expansion of eco-friendly cement products and a new agreement with Terra CO2 to produce low-carbon supplementary cementitious material.
Despite the positive results, the Light Materials sector faced challenges with a 4% decrease in revenue and a 13% decline in operating earnings, primarily due to lower Wallboard sales volume and pricing. The Heavy Materials sector, on the other hand, saw an 18% increase in revenue and a 43% increase in operating earnings, driven by higher Cement net sales prices and sales volume.
Segment Financial Results
The Heavy Materials sector's revenue, which includes Cement, Concrete, and Aggregates, as well as Joint Venture and intersegment Cement revenue, was up 18% to $366.4 million. Operating earnings in this sector increased 43% to $107.3 million, primarily due to higher Cement net sales prices and sales volume. The Light Materials sector, encompassing Gypsum Wallboard and Recycled Paperboard, saw a 4% decrease in revenue to $226.9 million, reflecting lower sales prices and slightly lower Wallboard sales volume.
Key Financial Metrics
Important metrics from the income statement include a net earnings increase to $129.1 million for the quarter, up from $117.2 million in the prior year. The balance sheet remains solid, with the company maintaining a robust financial position. Cash flow statements reflect the company's strong free cash flow generation, which supports its shareholder return initiatives.
"Eagle's heartland geographic footprint remains well-positioned for long-term growth, supported by trends in population growth, well-documented housing production deficits and supply shortages, and a multi-year federal highway bill further enhanced by state-level infrastructure spending," said Michael Haack, President and CEO.
The company's performance is particularly important in the context of the building materials industry, where strong demand for construction products continues to drive growth. Eagle Materials Inc's ability to increase revenue and EPS in such a market underscores its operational efficiency and strategic positioning.
Analysis and Outlook
Eagle Materials Inc's record third-quarter results demonstrate the company's resilience and strategic growth in a dynamic market environment. The company's focus on environmental stewardship and innovative product offerings, combined with its strong financial performance, positions it favorably for continued success. With a commitment to delivering shareholder value and a robust portfolio of businesses, Eagle Materials Inc is well-equipped to navigate future market conditions and maintain its growth trajectory.
Explore the complete 8-K earnings release (here) from Eagle Materials Inc for further details.
This article first appeared on GuruFocus.
