Eagle Materials Inc. (NYSE: EXP) on 19 May 2020, reported its financial results for fiscal year 2020 and its fiscal quarter 4 ending 31 March 2020. The company recorded a revenue of $315.4 million, an increase of 11% in the quarter. Net Earnings were recorded at $72.4 million overcoming a loss of $127.8 million from the previous year financials. The revenue for the whole fiscal year, was recorded at $1.5 billion, an increase of 4% compared to last year.
Michael Haack, President and Chief Executive Officer of the company, looking at the financials commented, “Having achieved record results in fiscal 2020, we entered this crisis period in a strong financial position, and we are taking prudent actions to sustain the financial health of our business. In light of the risks posed by the COVID-19 pandemic and its possible future effects on our business, we are managing our balance sheet and cash flow for stability today and in the future. We are limiting capital spending to critical projects only, managing inventory levels to improve working capital, and taking additional steps such as suspending share repurchases and future dividends to maximize free cash flow. The sale of our concrete and aggregates business in Northern California announced on April 17, coupled with the carry-back treatment of our net operating loss, will increase our near-term liquidity considerably.”
Highlights for the full year report
- Net earnings per diluted share went up by 14%, recorded at $1.68 per share
- Net earnings increased by 3%, amounting to $70.9 million
- Adjusted EBITDA increased by 1%, amounting to $471.5 million
- Revenue from the Cement segment of the business including joint venture and inter-segment revenue increased by 15%, amounting to $752 million.
- Revenue from the Concrete and Aggregates segment increased by 31% to $181.3 million.
Revenue by Segment
(Source: Business Quant)
- Heavy Materials: Cement, Concrete, and Aggregates:- This segment was the major contributor to the positive financial results, recording a revenue of $933.3 million, an increase of 17%. This improvement in the sector as a result of higher sales volumes and sales prices, this was partially offset by expenses related to the Kosmos Acquisition. The Kosmos cement business helped the business increase its revenue by $7.9 million in the quarter.
- Light Materials: Gypsum Wallboard and Paperboard: The revenue was recorded at $605.8 million, a decrease of 4% for the Fiscal Year 2020. Revenue from Gypsum Wallboard and Paperboard segment for the quarter amounted to $151.2 million (a decrease of 2%). The decline in the sector was majorly due to the fall in the net sale volume and prices.
- Oil and Gas Proppants: The income from sales was recorded at $46.8 million, a decrease of 44%, which was seen primarily due to a decline in the sales volume by 20% in the Fiscal year 2020. The quarter showed a decrease of 42%, with the revenue amounting to $10.2 million. The decreases in revenue were majorly a reflection of the decline in sales volumes in the sector (a decrease of 32%).
(Source: Business Quant)
The operating earnings from the Cement segment for the Fiscal year 2020 increased by 10%, to 181.3 million. Though there was a significant negative impact from the expenses related to the annual maintenance outage at the Kosmos Cement Business and the impact of purchase accounting on inventory costs which approximately amounted to $6.8 million. For the quarter, it increased by 8%, amounting to $24.5 million.
The operating income from the Concrete and Aggregates segments for the Fiscal year 2020 was recorded at $17.6 million, an increase of 36%. For the quarter, it recorded an operating income of $2.5 million, an increase of 13%. These increases were seen as a result of reflecting improved sales volume and pricing and the acquiring of a concrete and aggregate business in August 2019. Overall, the Heavy Materials segment recorded its operating income at $198.9 million, an increase of 12%.
The Light Materials segment saw a decrease of 12%, recording its operating income at $189.6 million. The quarter saw a decrease of 9%, recording it at $45.7 million. Though the sales volumes improved in the segment, lower selling prices resulted in the overall decline for the segment. Furthermore, this was paired with higher costs associated with the paper mill expansion. In addition, the installation of new operating equipment’s reduced the production and added up the costs to $3 million during the quarter.
The Oil and Gas Proppants segment saw an operating loss of $14.6 million for the fiscal year 2020 as compared to that of $28.7 million, the previous year. The segment saw a decrease in its sales volume in the last quarter. This was also a result of the deterioration of the market conditions later in March into April given the pronounced decline in oil and gas prices beginning in March 2020 and the resulting slowdown in drilling and fracturing activity.
Mr. Haack, President and Chief Executive Officer, commented, “In the face of the COVID-19 pandemic, our management team is focused first and foremost on protecting the safety and health of our employees, customers, and business partners. We’ve generally been deemed an essential business, and as we continue operations, we are enforcing health and safety protocols that meet or exceed CDC guidelines.”
The company is not wholly impacted by the outbreak of the pandemic while some of its segments have seen a declining trend. If the company utilizes its resources wisely it can produce strong and stable financials trough the year. Investors can take the company into consideration as a long term investment option!