Eagle Materials Inc. (EXP) on Q4 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, apologies for the technical difficulties. We now have everything set. Good day everyone and welcome to the Eagle Materials’ Fourth Quarter and Fiscal 2021 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir. Michael R. Haack: Good morning. Welcome to Eagle Materials conference call for our fiscal year and fourth fiscal quarter of 2021. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer; Bob Stewart, Executive Vice President of Strategy, Corporate Development and Communications. In addition, joining us today is Mike Nicolais, Eagle’s Chairman of the Board who is here to comment on two noteworthy developments that were included in our earnings release. One related to the Board’s decision to remain a combined company, and the other to the reinstatement of our quarterly cash dividend. We are glad you could be with us today. There will be a slide presentation made in connection with this call. To access it, please go to www.eaglematerials.com and click on the link to the webcast. While you're accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during the call. These statements are subjects to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release. I'll begin today with some perspectives on the quarter, the fiscal year, and our outlook. Our latest results represent a culmination of a decade of sustained top line growth for the company where our bottom line has grown by more than 20 fold. In every respect, fiscal 2021 was an extraordinary year for Eagle Materials. Our resilient business model and our team's commitment to Eagle’s vision and strategic priorities have enabled us to achieve record financial results, integrate the largest acquisition in the company's history, operate all facilities safely during COVID, and quickly rebound from a historic winter storm. These results would not be possible without the extraordinary, talented, and dedicated employees of Eagle Materials. My personal thanks goes out to all of them for navigating these challenging times safely. We have long emphasized the favorable cash flow characteristics of Eagle Materials and this was never more clearly illustrated than during this year. In effect we were able to repay the entire $665 million purchase price of the Kosmos acquisition during the fiscal year, providing us with significant balance sheet firepower and financial flexibility going forward. A few additional strategic items that I would like to highlight are around our completion of the expansion of our vertically integrated paper mill and some portfolio shaping. The paper mill expansion added 20% additional capacity allowing Eagle to set a monthly production record for wallboard and paper in March. The expansion will also provide cost and value benefits that we expect to realize longer term. The business portfolio is shaping, involving the divestiture of Eagle’s Proppants business and other non-core assets in Northern California. We found buyers with alternative ownership value exceeded operating value for us. Michael R. Nicolais: Thanks, Michael and thanks for the invitation to join the call today. The first key announcement is that Eagle’s Board of Directors has decided to remain a combined company as you've read in our press release. And I'm here because I'd like to share some perspectives around this decision. Much has transpired since the separation announcement that has caused the Board to reevaluate the separation's merits. First, the size and financial strength of the combined company with its diversified asset base, geographic diversity, and robust balance sheet have provided great comfort, stability, and value to our shareholders, employees, customers, and suppliers during an unprecedented and uncertain time. Second, given the continued consolidation of the industries in which we participate and the company's rigorous examination of a number of strategic alternatives since the announcement of the proposed separation, it has become clear that a combined company with greater financial scale and flexibility will be better positioned to pursue key strategic growth options and enhance shareholder value. Third, since the announcement of the proposed separation, the company has streamlined its business portfolio including the divestiture of its Oil and Gas Proppants business and other non-core assets. There is no question that the company is exceedingly well positioned and is performing as well as at any time in its history. Both major business segments continue to post industry leading metrics on just about every measure. As a shareholder, I cannot be more pleased with the position of the company. While the Board will continue to evaluate the merits of a separation on a periodic basis as we have in the past, it has concluded in consultation with external advisers that the combined company is in the best position to create long-term shareholder value. This was an important decision for Eagle and for the Board and one that was very carefully considered. A second decision that the Board has made relates to our quarterly cash dividend. This decision is an important one in the context of our capital allocation priorities, which I might add remain unchanged. We have three capital allocation priorities. The first are growth investments that meet our strict financial returns criteria and which falls squarely within our strategic focus boundaries. The second investment priorities are organic improvement investments. These are investments to maintain our facilities in like new condition, strengthen the low cost producer positions, and to ensure the long-term sustainability of our operations. The third priority is the return of cash to shareholders, and this has been primarily through share repurchases. In fact, over the past three years we have invested just over 625 million in share repurchases and dividends. This compares with nearly 700 million in growth acquisitions and 300 million in organic improvement investments over that same time period. Currently, over 7 million shares remain under the current repurchase authorization. Craig Kesler: Thank you Mike. Fiscal year 2021 revenue was a record $1.6 billion, up 16% from the prior year. The increase was driven by contribution from the acquired Kosmos cement business and increased cement and wallboard sales volume and pricing. The Kosmos cement business contributed approximately $176 million of revenue during the year. Revenue for the fourth quarter was up 12% to $343 million, reflecting a very strong end to our fiscal year. Annual diluted earnings per share increased 46% to $7.99, reflecting a contribution from the Kosmos cement business, improvement in the organic businesses, and a gain of approximately $0.98 per share on the sale of our Northern California businesses during the first quarter. The fourth quarter EPS comparison was affected by the CARES Act, which generated a 37 million or $0.76 per share benefit in the prior year period. This year's fourth quarter financial results were affected by the disruption of Winter Storm Uri. Prior to and during the storm, we brought down operations at all of our Oklahoma and Texas facilities. This was done in a controlled manner to ensure the safety and security of our employees, communities, and assets. I commend our manufacturing teams for their focus as these facilities ultimately lost utilities including electricity and natural gas. Fortunately, we avoided significant damage to our critical equipment and our operations were fully restored by late February. The total financial impact from the winter storm was approximately $12 million during the fourth quarter. Most of the impact resulted from higher variable costs, namely higher energy. However, we also had negative fixed cost absorption, freeze related repairs and restart costs. On the flip side, we were able to curtail other operations and sell a portion of our natural gas commitments to offset these higher costs. These offsets were included in other non-operating income. Operator: Thank you. . Our first question comes from Trey Grooms with Stephens, you may proceed with your question. Trey Grooms: Hey, good morning everyone. Thanks for taking my question. First is on pricing, you guys are seeing nice traction on wallboard pricing to date and as you mentioned even after April increase and then also a June increase in wallboard and then likewise in cement you announced April increase and a second increase in Texas, to the extent you can, can you talk about how those are going in wallboard and cement and are you thinking about the possibility of a second price increase in cement and any of your other markets? Michael R. Haack: Yeah Trey, this is Michael, thanks for the question. For the wallboard one again, we've just announced that we need time for that to be our discussions with our customers in the market and everything. Moving to the cement side, we announced in Texas and we are going to look at the demand drivers on the cement side of the business in each market individually and see where that resides in the coming months and then we'll make a decision what we do with pricing in those markets working with our customers at that time. So we are constantly evaluating every market in the cement side to see how the demand maintains throughout the year. Trey Grooms: Okay, fair enough. And secondly, clearly the outages during the quarter impacted the margins on both businesses and -- but with production back on line have these margins, I guess, back to wallboard and cement both, have the margins bounced back to what you would expect there, are those kind of -- are there any lingering issues or cost impacts whether it be raw materials or energy, anything like that that are lingering on or should we expect kind of a bounce back there in the margins? Craig Kesler: Yeah, no thanks Trey, this is Craig. No lingering issues from the winter storm. March was a very strong month for us. And on the cost side again, we're a little unique in that, we own our primary raw materials on the cement side, that's limestone. We generally have close to 50-years’ worth of limestone located right near our facilities. And that's the primary raw material. On the gypsum -- on the wallboard side, it's gypsum. Again, very similar, our raw material reserves are close to the plants. We've got a good solid foundation of deposits there. Energy prices are still low, gas is still below $3 a million this morning. So from a margin perspective, we're in good shape. Trey Grooms: Alright, thanks Craig. I will leave it there and pass it on. Thanks and good luck. Operator: Thank you. Our next question comes from Brent Thielman with D.A. Davidson, you may proceed with your question. Brent Thielman: Yeah, great. Thank you. Are you able to provide the specifics of the price increases that have been announced to customers? Craig Kesler: Brent, as we said, so the April price increase in cement was $6 to $8 per ton across our entire network. On the wallboard side those specific price increases were communicated directly with customers. We haven't given any quantification there. We'll certainly do that for you in our call in a couple of months here in July. Brent Thielman: Okay, fair enough. Maybe just your thoughts, where you're seeing the strongest sort of momentum in your wallboard markets right now? Craig Kesler: Yeah, Brent, again fortunately, we sit in the Southern half of the U.S. with our operations generally and look, we're seeing it across all of our markets from the West Coast to the East Coast, single family, and again remember within the demand dynamics for wallboard, single family construction is the biggest driver. The intensity of wallboard in a single family home is much greater than it is a multifamily unit. And so as we've seen single family construction activity pickup, that's been very meaningful for us and it's been very strong across all of our markets. Brent Thielman: Okay, great. And I guess with the decision to stay as a combined company, curious which of the two platforms do you see the best opportunity to grow and I guess through this process of evaluating the spend and also just thinking about your ability to pay off Kosmos so quickly, any change in views of what your tolerance to leverage is, is three times still kind of the upper band of what you'd want to push to? Craig Kesler: Brent, let me say it this way, one of the hallmarks of Eagle has been to understand how to manage cycles. And a big component of that is managing the balance sheet so that when opportunities come our way, we have the balance sheet capacity to execute on those transactions. That has served us very well during uncertain financial times like the great financial crisis this past 14-months with the COVID pandemic. And recall that over the last eight years, coming out of financial crisis, we've more than tripled the cement business, which was a $1.5 billion investments. And the quality of the assets that we were able to acquire are without question. Keep in mind at the same time, right, our balanced approach to capital allocation we've also taken out 15% of the float over that same time period. So, I continue to look at the capital allocation priorities as the commitment we've always had to a high degree of financial requirements with their strategic background as well for sure as we look at M&A, and we look at it across the company. And when those opportunities don't meet our hurdle rates, we have been very happy to return cash to shareholders and we have generally done that through share repurchases. Brent Thielman: Okay, last quick one, just that the other non-operating income, I think related to the natural gas commitment, is there going to be any carryover of that in the first quarter or should we just see that line item normalize? Craig Kesler: Yeah, that will normalize, that was very specific to the 7 to 10-day winter storm that we dealt with. Brent Thielman: Yup. Okay. Great. Thanks for taking the questions. Operator: Thank you. Our next question comes from Adrian Huerta working with JP Morgan, you may proceed with your question. Adrian Huerta: Hi, thank you, good morning everyone. Going back again to the capital deployment. Well, the focus continues to be more to look for opportunities on the heavy side versus the light side and many potential to get into other new businesses as well on the heavy side that are not necessarily just cement or ready mix? Michael R. Haack: Yeah, thanks Adrian for the question though, this is Michael. As Craig said, we are very disciplined in how we approach stuff. Our strategy in the past as Craig highlighted, as we've grown the heavy side of the business, we continue to look for opportunities on the heavy side of the business as we always do. We will stay to our core values of we have really two businesses that are two pure play businesses with the heavy and light side with it and that is going to be our focus areas it is growing either one of those businesses with special emphasis on the heavy side of the business. Adrian Huerta: Thank you. Operator: Thank you. Our next question comes from Anthony Pettinari with Citi. You may proceed with your question. Anthony Pettinari: Good morning. Hey, in cement you saw volumes down 2% in 4Q, I think ex-Kosmos and I'm guessing that was due to the weather impact. I'm just wondering if you could talk a little bit more about how volumes have trended quarter-to-date and do you see that as kind of a potentially a good run rate for volumes over the course of the year in 2022? Michael R. Haack: Yeah so, Anthony, we had a little hiccup with the winter storm coming into play and we had some there. Cement during this time of the year is more weather dependent than anything else. With it if we get lots of rain in areas, we have less shipments. With what we look out for the demand drivers, which went through with the earnings, with the preamble side, our demand across all markets is very strong. We've also talked to everybody in the past in earnings calls on the capacity expansions we've done with grinding mills and everything with it. Our cement plants pretty much across our network are near or at capacity. So we feel very, very strong. The demand picture looks good, our plants are operating well, and we should return to a normal shipment schedule that you've seen in the past. Anthony Pettinari: Okay, that's helpful. And then on the JV, I think volumes were significantly below your wholly owned business, and was that due to disproportionate impact of the weather or I think you had some reduced oil well, cement activity, have you lapped that or do you start to lap that soon, just any color there? Craig Kesler: Yeah Anthony, this is Craig. Certainly the winter storm impacted Texas in a way that we haven't seen in quite some time. So February was a rough month. Yeah, the construction season has gotten off to a very good start here in April. Oil well, cement, really has become a non-factor in this business for our company at least for the last several years. It hasn't been meaningful for quite some time. Anthony Pettinari: Okay, that's helpful. I'll turn it over. Operator: Thank you. Our next question comes from Jerry Revich with Goldman Sachs, you may proceed with your question. Jerry Revich: Yes, hi, good morning everyone. Craig Kesler: Good morning Jerry. Jerry Revich: I'm wondering if you could talk about just the range of strategic options that you evaluated for each business day, just expand on the opening remarks if you wouldn't mind as well, sounds like there was a really extensive process, I'm wondering if you could just -- to the extent you can comment, just say more, please? Craig Kesler: Yeah, Jerry look, I don't -- we wouldn't as a matter of course talk about specific items there. Look, I think, as we've always done and we continue to do, it is turning over every rock and trying to figure out the best ways to enhance shareholder value and growing the company. And that's where we would end it. But it was a very extensive process, no doubt. Jerry Revich: Including acquisitions and other business combinations beyond just separate listing correct, Craig? Craig Kesler: If we -- we have looked at every way to enhance shareholder value and being very creative and we didn't leave any stone unturned. Jerry Revich: Okay. Michael R. Haack: And Jerry, I might add to that, that continues, right. So we will continue to go through that exercise and I'm looking for ways to enhance value and grow the company, again, against a very specific set of strategic priorities and financial requirements as well. Jerry Revich: Okay, terrific. And then I'm wondering if you could talk about the wallboard pricing cadence over the course of the quarter, how did that evolve as you had additional job codes rolling through that we exit at a higher pricing point than we entered the quarter? Craig Kesler: I would say we were largely so, remember we had a price increase that was implemented in November, another one in early January, and then the next price increase was in early April. So the quarter really reflects the January price increase. We try not to get too granular month by month but we have largely ended the quarter in line with the average and then the April price increase would be incremental as would this additional June price increase that we recently announced. Jerry Revich: Okay. And Craig to your point, between the April increase, the January increase, and the June increase, I mean, we haven't seen this type of pricing in the market for five or so years now. Can you talk about how you see the environment today comparing to 2012-2013 timeframe when you folks were posting price increases that are similar to what's been announced by the industry so far? What are your key cyclical observations comparing this environment to the environment at that point? Craig Kesler: Yeah, look this is a very different demand environment that we're operating in. You've seen housing starts over the last 9 to 12 months really accelerate and that's what's driving this opportunity. As demand has increased, Michael highlighted in the beginning, you've got some supply constraints certainly around the synthetic gypsum shortages and diminishing availability utilization rates therefore, are much higher than where we were in 2012 and 2013 just coming out of financial crisis. So, very much better demand environment than we've seen for quite some time. Jerry Revich: Okay, terrific. Thanks. Operator: Thank you. Our next question comes from Kevin Hocevar with Northcoast Research, you may proceed with your question. Kevin Hocevar: Hey, good morning everybody. Where are you coming on the wallboard side, I think you guys on your -- some of your investor presentations show you have about 4 billion square feet of name play capacity, you've got -- you're operating at just under 3 billion square feet of sales volumes at this point but I think, it seems like there's a lot of room to grow there, so I'm wondering how much capacity you do have to grow there because, one of the things I think that I've at least learned currently is that I think name play capacity for the entire industry is like 33.4 billion square feet but it seems like we're operating well below that and we're in pretty much sold out conditions with lead times extended and everything, so I'm curious how much capacity and maybe part of that is the synthetic gypsum shortage and some of the COVID related downtime some of these plants have had, but can you comment on -- can you ultimately sell 4 billion square feet, can you get to that name play capacity or how much room do you have to grow, available capacity you have to grow within that wallboard business? What's a realistic amount that these plants can actually produce, I guess an effective utilization you can get to? Michael R. Haack: Yeah, it's a good question. We look at our plants weekly or monthly on what the capacity is. Those capacities are good capacities that we publish out there, that you quoted with it. We can get to those capacities, and the one advantage we have that Craig really highlighted before is we own our natural gypsum reserves. So when we look at expansion opportunities or anything or bringing on an additional line or increasing capacity at any of the facilities with it, it's really just a people and small amount of capital addition with it. We are not constrained by raw material side of the business, which we feel some of our competitors may be constrained at some point if the synthetic chips and market does go with the trend we're seeing today. Kevin Hocevar: Okay. And can you comment on the OCC costs, what type of inflation did you see here in this quarter and what type of impacts are you expecting in fiscal 2022? Craig Kesler: Yeah, OCC prices one of the raw material ingredients into paper. We've seen that pick up slightly over the last couple of months. Just recall, Kevin, that the majority of that gets passed through. It does happen on a quarterly lag, but our supply agreements in the paper business allow for that pass through to happen. Kevin Hocevar: Okay, alright. Thank you very much. Operator: Thank you. Our next question comes from Adam Thalhimer with Thompson Davis. You may proceed with your question. Adam Thalhimer: Thanks. Good morning, guys. I wanted to ask on organic cement volumes, just not sure how to think about those over the next couple of years just given your preamble about capacity and is there anything you can do to expand capacity or there is flat kind of the right expectation for the next couple of years? Michael R. Haack: You know, we continuously look at ways to get an extra ton out of our facilities. If we can get that ton out, we're going to continue to be diligent on that side. We have a fantastic engineering group that we've been able to squeeze extra capacity out. But right now we are running at or near capacity at all of our facilities. So we will continue to progress to see whatever ton we could get out of that facility, but I don't have a quantified value of what that would be. Adam Thalhimer: Alright, and I just kind of wanted to push back a little bit on your mid-term housing outlook, curious how you see rising material prices playing into that? Craig Kesler: Yeah. Look Adam, it's a good question. I think as many have said, we've under built homes in the U.S. now for over a decade. And that has led to an extreme shortage of homes in most markets. There's no existing homes for sale and the only way to create inventory is to build new albeit while costs are going up, interest rates are still very low, affordability is still very good. And this idea of going out to a single family, home versus more of a densely populated multifamily unit, has certainly continued to push the demand level for single family homes. So our view on the near term and the medium term is very positive, very constructive around single family construction. Adam Thalhimer: Okay, and then just quickly Craig on state budgets, is there any state to call out in terms of where you're seeing either improvement or cause for concern? Craig Kesler: No, no, look we're seeing good growth and DOT budgets across our network. And again, what we like about our network is it's pretty diversified. We stretch from Northern California all the way east to Ohio and Pennsylvania and South Texas. So markets are in good shape. Those state budgets are in good shape as well. Adam Thalhimer: Okay, thank you. Operator: Thank you. Our next question comes from Phil Ng with Jefferies. You may proceed with your question. Philip Ng: Hey, good morning guys. So looks like you're pretty much sold out in cement in your footprint. Do you have any color in terms of how your competitors are running, are they running pretty full on the regions that you compete in, and in any color in terms of the markets that you're in where it's a little more tight, I mean, you kind of hinted at Texas, it is obviously quite tight, because you're going for a second increase there? Michael R. Haack: Yeah Philip, we don't want to speculate on where our competitors are with it. We'll talk a little bit about ourselves and as you stated, we're pretty much at capacity at our cement facilities across our network. So we see the demand fundamentals in the markets we operate as very strong at this time. Philip Ng: Okay, and outside of Texas, are there any markets that you compete in cement where you've seen your competitors actually now the second cement pricing is ready, appreciating Michael you're still assessing at this point? Michael R. Haack: Yeah, again, I don't want to talk about what our competitors may or may not be doing. We evaluate each of our markets independently and we look at ourselves and say, what does our supply demand outlook look like and what does our cost structure look like, can we make our decision independently. Philip Ng: Okay, fair enough. Wallboard demand was up a solid 3% but given how strong housing is and the way you kind of characterize the demand backdrop, I would have thought shipments might have been a little better. Was there any pre-pandemic dynamic in the quarter and did you see any impact from storms that may have weighed on shipments in the quarter? Craig Kesler: Yeah, well I would point you to the latter. Pre-buy activity was interesting a decade ago, when economic activity was low. It's less interesting today. But that winter storm really did shut things down, especially in Texas for pushing 10 days and then you got to remobilize crews and etc. So I would have told you as you looked at the cadence during the quarter, the January March months were very, very strong or February just had a big impact from the storm. Philip Ng: Okay, super helpful. Sorry, just one last one. Michael, you highlighted impact on potentially down the road or now, on the synthetic gypsum side. Have you seen extra tightness in the market where some of your competitors have added like idle capacity or the cost could really pick up? And then I know in 2018, when freight did get a little tighter, that kind of limited your ability in just the broader market, moving board around that naturally tightened the market as well. So just curious, both on the synthetic gypsum side as well as freight, are you seeing much Governor dynamics in terms of supply and just creating a tighter market all in all? Michael R. Haack: Yeah, so part of the answer to that is you know, we have one plant in the East Coast area that we do run synthetic gypsum. We have a fantastic partner with Santee Cooper there that we have a great relationship with. The only perspectives I could give you on that is that plant has been at capacity, and we continuously look at how we get to next MSF of board out of that plant with it. So, it's something that we look at continuously on that side and the demand in that market has been strong. Philip Ng: And freight dynamic Michael? Michael R. Haack: Yeah, freight dynamic, that's an interesting point. We continue to monitor the freight side with the business right now. And, that's one thing that is a higher cost driver for us. So we're going to continue to keep monitoring that. We've seen a little bit of creep on the freight rates with it and we'll continue to watch that and work with our suppliers and our vendors on that side with it, but it is something that we are going to watch closely over the coming term. Philip Ng: Okay, super. Thanks a lot, guys. Operator: Thank you. Our next question comes from Josh Wilson with Raymond James, you may proceed with your question. Josh Wilson: Good morning and thanks for taking my questions and good execution despite the tough weather. Michael R. Haack: Thanks, Josh. Josh Wilson: Wanted to get into the strategic growth opportunities you talked about being better addressed as a combined company. Can you give us a sense of how much that was an inorganic comment versus an organic comment and what the possible timing of either of those might be? Michael R. Haack: Yeah, look it's certainly an organic discussion, the building of new facilities, more Greenfield or organic is something that we could manage. And but again, because of permitting restrictions, difficult to do that in a meaningful way. So it's really looking at the M&A landscape, where the larger transactions are. And again we won't go into specifics but certainly that's the direction we're talking about. Josh Wilson: And as we think about your capital needs, your guidance for 2022 is still not where you were prior to the pandemic, how should we think about either the split maintenance versus growth or how that might evolve in the coming years? Craig Kesler: Yeah, so look this past year $54 million was on the low end of the sustaining needs of the business. It's closer to a $60 million to $70 million type of level which again is what you might consider low. I would say pre-pandemic, there were a number of large expansion projects we're going through, for example, the paper mill, that's completed, that doesn't happen again. So, it's going to be in this range until there's specific projects that meet our hurdle rates. But, this is kind of where the business is, and that’s why you love these businesses. They don't require a tremendous amount of cash on an annual basis and that's why they do have a high free cash flow generation capability. Josh Wilson: Got it? Thanks. Operator: Thank you. And our next question comes from Keith Hughes with Truist, you may proceed with your question. Keith Hughes : Thank you. We've heard a lot over the last couple of weeks about some non-residential construction seeing some life, I guess. I guess my question for you particularly on the cement side, are you -- is your -- are your salespeople starting to see a quotation activity and things picking up that we could see a pickup in that business this calendar year or next? Michael R. Haack: Yeah, look the non-residential, the private non-residential construction side is really the hardest to predict. There's so many subcategories as we highlighted earlier, things like warehouses, data centers, those things have been strong and/or only continuing to grow. And as you say, some of these other sectors, subcategories are starting to percolate and improve a little bit. I'd add to that, right, that then you got to look at geographically where you are. And again, we're fortunate where we're located, better economies generally. So New York might be very different than Texas, for example. We're not in New York. So -- and then I would last add to that, we don't necessarily sell direct to a specific job, we're selling through to a ready mix company or on the wallboard side and be a distributor. So we don't have the direct end to consumer project insight. But I think I would generally agree with you that the non-res side has started to pick up a little bit. Keith Hughes : Okay, thank you. Operator: Thank you. And I'm not showing any further questions at this time. I'd now like to turn the call back over to Michael Haack for any further remarks. Michael R. Haack: Thanks Josh. Thank you all for joining us today and we look forward to talking to you again here in a couple months. Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
Eagle Materials Inc. (NYSE: EXP) Fiscal Year 2025 Earnings Report Highlights
- Eagle Materials Inc. (NYSE:EXP) reported a record revenue of $2.3 billion for the fiscal year 2025 but fell short of earnings expectations with an EPS of $2.08.
- The company's quarterly revenue was $470.18 million, missing the Zacks Consensus Estimate, and indicating a pattern of underperformance in surpassing consensus EPS estimates over the past four quarters.
- EXP's financial metrics reveal a P/E ratio of approximately 16.16, a moderate debt-to-equity ratio of 0.70, and a slight decrease in net earnings to $463.4 million for the year.
Eagle Materials Inc. (NYSE:EXP) operates in the building products sector, focusing on concrete and aggregates. The company recently reported its earnings for the fiscal year 2025 and the fourth quarter ending March 31, 2025. Despite achieving a record revenue of $2.3 billion for the full fiscal year, the company faced challenges in meeting earnings expectations.
On May 20, 2025, EXP reported earnings per share (EPS) of $2.08, which fell short of the Zacks Consensus Estimate of $2.34. This represents an 11.11% negative surprise. The EPS also decreased from $2.24 in the same quarter last year. Over the past four quarters, EXP has only surpassed consensus EPS estimates once, indicating a pattern of underperformance.
The company's revenue for the quarter was $470.18 million, missing the Zacks Consensus Estimate of $622.11 million by 1.59%. This is a slight decline from the $476.71 million reported a year ago. Despite the quarterly shortfall, EXP achieved a record revenue of $2.3 billion for the full fiscal year, marking a slight increase from the previous year.
EXP's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of approximately 16.16, indicating how the market values its earnings. The price-to-sales ratio is about 3.38, reflecting its market value relative to revenue. The enterprise value to sales ratio is around 3.82, showing the total valuation compared to sales.
The company's financial health is further highlighted by its debt-to-equity ratio of approximately 0.70, indicating a moderate level of debt. The current ratio of about 2.76 suggests that EXP can cover its short-term liabilities with its short-term assets. Despite these financial metrics, the company reported a 3% decrease in net earnings for the year, totaling $463.4 million.
Eagle Materials Inc. (NYSE:EXP) Quarterly Earnings Preview
Eagle Materials Inc. (NYSE:EXP) is a leading name in the construction materials industry, focusing on the production of gypsum wallboard and cement. As the company prepares to unveil its quarterly earnings on May 20, 2025, investors are eagerly awaiting the reported figures. Wall Street's anticipation includes an earnings per share (EPS) of $2.34 and a revenue forecast of approximately $479 million.
- The expected EPS of $2.34 for the quarter ending March 2025 signifies a 4.5% increase from the previous year.
- Revenue is projected to hit $479 million, a modest 0.2% growth year-over-year.
- The company's financial health is highlighted by a price-to-earnings (P/E) ratio of approximately 17.00, a debt-to-equity ratio of roughly 0.70, and a current ratio of about 2.76. The anticipated EPS of $2.34 for the quarter ending March 2025 marks a 4.5% rise from the prior year, as underscored by the company's performance.
Revenue is expected to reach $479 million, indicating a slight 0.2% increase compared to the same quarter last year. These figures suggest a consistent growth path for Eagle Materials, despite a downward revision of the consensus EPS estimate by 3.3% over the past month. Such adjustments in earnings forecasts are pivotal as they often foretell potential investor actions and have a significant correlation with the short-term price movement of a stock.
The market is closely monitoring whether Eagle Materials can exceed these forecasts, as this could positively impact the stock's price. On the other hand, failing to meet these estimates might lead to a decrease in stock value. Eagle Materials' financial indicators provide deeper insight into its market standing. With a P/E ratio of approximately 17.00, investors are willing to pay $17 for every dollar of earnings. The company's price-to-sales ratio is about 3.55, reflecting the value attributed to its sales. Moreover, the enterprise value to sales ratio is around 4.00, indicating how the market values the company's total worth in relation to its sales.
The company's financial stability is further highlighted by its debt-to-equity ratio of approximately 0.70, showing moderate financial leverage. A current ratio of about 2.76 suggests that Eagle Materials is well-equipped to meet its short-term liabilities with its short-term assets. As the earnings release date approaches, the company's performance and future earnings outlook will largely hinge on management's discussion of business conditions during the earnings call.
Eagle Materials Inc. Faces a Challenging Quarter.
- Eagle Materials Inc. reported a decrease in earnings per share (EPS) to $2.24, missing analyst expectations.
- Revenue for the quarter was approximately $476.7 million, showing a modest year-over-year growth of 1.4%.
- The company announced record fiscal year 2024 revenue of $2.3 billion and a 9% rise in diluted EPS to $13.61.
Eagle Materials Inc. (NYSE:EXP), a key player in the building products, concrete, and aggregates industry, recently disclosed its financial outcomes for the quarter ending March 2024. The company, known for its significant contributions to construction and building materials, faced a challenging quarter, as evidenced by its earnings per share (EPS) and revenue figures. These results are particularly noteworthy as they provide insights into the company's performance against Wall Street's expectations and its financial health over the past year.
For the fiscal fourth quarter, EXP reported earnings per share of $2.24, which did not meet the anticipated $2.72 set by analysts. This represents a notable decrease from the previous year's EPS of $2.79, marking a -17.65% surprise against expectations. Such a decline in EPS is a critical indicator of the company's profitability challenges during the quarter, despite having outperformed earnings forecasts in the preceding quarter with a positive surprise of 4.49%.
On the revenue front, Eagle Materials reported approximately $476.7 million, slightly missing the Zacks consensus estimate by 0.40%. This figure, however, represents a modest year-over-year growth of 1.4% from $470.13 million, showcasing the company's ability to increase its revenue despite the market's tough conditions. It's important to note that this is only the second time in the last four quarters that the company has not surpassed consensus revenue estimates, highlighting the variability in its financial performance.
For the fiscal year 2024, Eagle Materials announced a record revenue of $2.3 billion, a 5% increase from the previous year, and net earnings of $477.6 million, up by 3%. These figures, along with a 9% rise in diluted earnings per share to $13.61 and a 7% improvement in adjusted EBITDA to $834.5 million, underscore the company's strong performance over the year. The repurchase of 1.9 million shares, investing $343 million back into the company, further demonstrates Eagle Materials' commitment to enhancing shareholder value.
In terms of valuation metrics, EXP's price-to-earnings (P/E) ratio stands at approximately 17.28, indicating the market's valuation of its earnings. The price-to-sales (P/S) ratio of about 3.69, along with the enterprise value-to-sales (EV/Sales) ratio of roughly 4.17, reflects the company's market valuation in relation to its sales. Additionally, the enterprise value to operating cash flow (EV/OCF) ratio of approximately 16.74 and an earnings yield of about 5.79% offer insights into the company's profitability and valuation from an investor's perspective. The debt-to-equity (D/E) ratio of around 0.84 and a current ratio of approximately 2.62 suggest the company's financial leverage and liquidity status, respectively. These metrics are crucial for investors to understand Eagle Materials' financial health and market position.
Eagle Materials Inc. Quarterly Earnings Preview
- Eagle Materials Inc. is expected to announce its quarterly earnings with an EPS forecast of $2.72 and projected revenue of $484.69 million.
- The company has a history of surpassing consensus earnings estimates, boasting an average earnings surprise of 6.5% over the last four quarters.
- Valuation metrics such as the P/E ratio of 17.64 and P/S ratio of 3.92 provide insights into the company's market valuation.
Eagle Materials Inc. (NYSE:EXP), a leading producer of construction materials including gypsum wallboard and cement, is set to announce its quarterly earnings on Tuesday, May 21, 2024, before the market opens. This announcement is highly anticipated by investors and analysts alike, as it provides a snapshot of the company's financial health and operational performance. Wall Street's expectations are set with an earnings per share (EPS) forecast of $2.72 and projected revenue of approximately $484.69 million for the quarter.
The company's financial outlook, as highlighted by Zacks Investment Research, suggests a slight decline in EPS by 2.5% year-over-year, with an adjusted revenue expectation of about $478.6 million, indicating a modest increase of 1.8% from the previous year. These projections have remained stable over the past 30 days, signaling a consensus among analysts about the company's performance for the quarter ending March 2024. This stability in earnings and revenue estimates underscores the importance of monitoring changes in these forecasts, as they can significantly influence investor reactions and the stock's short-term price movements.
Eagle Materials has a history of surpassing consensus earnings estimates, with an average earnings surprise of 6.5% over the last four quarters. This track record of exceeding expectations has contributed to the company's reputation for reliability in its financial reporting. However, the slight downward revision of the EPS estimate to $2.72 from $2.77 over the past month reflects a cautious outlook from analysts, despite the company's past performance.
The anticipated financial results are believed to be driven by improved residential and infrastructural activities, which could have provided a boost to Eagle Materials' performance in the fiscal fourth quarter. Nonetheless, concerns about lower pricing for Wallboard and Paperboard remain, potentially impacting the company's financials. As the earnings release date approaches, investors and stakeholders will be closely watching for any deviations from these projections, as the company's ability to meet or exceed analyst expectations could significantly influence its stock price in the near term.
Eagle Materials' valuation metrics, such as the price-to-earnings (P/E) ratio of approximately 17.64 and the price-to-sales (P/S) ratio of about 3.92, offer insights into how much investors are willing to pay for each dollar of earnings and sales, respectively. These ratios, along with the enterprise value to sales (EV/Sales) ratio of roughly 4.37 and the enterprise value to operating cash flow (EV/OCF) ratio of approximately 17.51, highlight the company's valuation in relation to its sales and operating cash flow after adjusting for debt. With an earnings yield of about 5.67% and a debt-to-equity (D/E) ratio of around 0.78, Eagle Materials demonstrates its profitability from an investor's perspective and its financial leverage in terms of debt used to finance its assets. The current ratio of approximately 2.61 further indicates the company's ability to cover its short-term liabilities with its short-term assets.
Eagle Materials Reports Q4 Beat, Increases Repurchase Authorization
Eagle Materials (NYSE:EXP) reported its Q4 results, with EPS coming in at $1.90, beating the Street estimate of $1.77. Revenue was $413.1 million, compared to the Street estimate of $400.62 million. The company also increased its repurchase authorization to 10.3 million (25% of outstanding share count).
Despite broader concerns around energy cost inflation and a decelerating/declining housing backdrop, the company continued to deliver strong pricing gains and margin expansion across both its Heavy and Light Materials segments.
Moreover, the company has enacted mid-year price increases across the majority of its business lines to further offset any inflationary pressures (particularly in energy/freight), which should embed some margin resilience in the upcoming fiscal year.
Eagle Materials Reports Q4 Beat, Increases Repurchase Authorization
Eagle Materials (NYSE:EXP) reported its Q4 results, with EPS coming in at $1.90, beating the Street estimate of $1.77. Revenue was $413.1 million, compared to the Street estimate of $400.62 million. The company also increased its repurchase authorization to 10.3 million (25% of outstanding share count).
Despite broader concerns around energy cost inflation and a decelerating/declining housing backdrop, the company continued to deliver strong pricing gains and margin expansion across both its Heavy and Light Materials segments.
Moreover, the company has enacted mid-year price increases across the majority of its business lines to further offset any inflationary pressures (particularly in energy/freight), which should embed some margin resilience in the upcoming fiscal year.
Eagle Materials Reported Q3 EPS Beat, In-Line Revenues
Eagle Materials Inc. (NYSE:EXP) reported its Q3 results, with EPS coming in at $2.53 (3% above the Street estimate) and revenue and EBIT of $463 million and $137 million, respectively, both in line with the consensus estimates.
More importantly, management made a few comments during the earnings call, which analysts at Berenberg Bank find encouraging. First, the company is ramping production of Portland Limestone Cement (PLC), which not only reduces its carbon footprint, but should also add around 8-12% to cement capacity over the coming years (depending on the plant). Secondly, management appeared confident that there was further upside potential for the Wallboard operating margin despite investor concerns that the company may have reached a peak at around 37-38%.
