Eagle Materials misses Q2 profit estimates on higher costs

Eagle Materials (EXP) said on Nov. 4 that its diluted earnings per share for the fiscal second quarter were $3.63, below the $3.98 consensus estimate. Revenue of $652.75 million was above the $644.63 million estimate.

Shares rose 2.8% in regular trading as of 3:59 p.m. ET on Nov. 4, from a regular-session close of $192.76.

The quarter ended Sept. 30. According to a regulatory filing, the company makes Portland cement and gypsum wallboard at more than 70 facilities in 21 states, and is headquartered in Dallas.

Here's how the company did:

• Diluted EPS: $3.63 vs. $4.23 a year earlier, against $3.98 expected
• Revenue: $652.75 million vs. $638.91 million a year earlier, against $644.63 million expected
• Net earnings: $111.53 million vs. $137.38 million a year earlier
• Adjusted EBITDA: $202.68 million vs. $233.29 million a year earlier

Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding non-routine items and stock-based compensation.

President and Chief Executive Officer Michael Haack said, "Eagle's businesses continued to perform well during the quarter despite a challenging operating environment characterized by elevated diesel fuel prices and higher interest rates."

Haack said higher diesel fuel prices increased transportation costs across all of the company's business lines.

Segment results

Heavy Materials revenue, which includes cement, concrete and aggregates, a joint venture and intersegment cement revenue, rose 2% to $477.8 million. Operating earnings fell 12% to $113.0 million.

Cement revenue rose 1% to $390.5 million, and cement sales volume rose slightly to a record 2.2 million tons. Cement operating earnings fell 9% to $108.8 million, on higher fixed costs, purchased raw materials and freight.

Concrete and aggregates revenue rose 7% to $87.2 million, but operating earnings fell 47% to $4.2 million, reflecting higher maintenance, diesel and production costs.

Light Materials revenue rose 2% to $216.4 million, mainly on higher sales volume. Operating earnings fell 13% to $68.3 million.

Gypsum wallboard sales volume rose 7% to 696 million square feet. The average net sales price fell 10%, reflecting higher freight costs, while the average gross wallboard price was down 6%.

Recycled paperboard sales volume rose 5% to 86,000 tons, and its average net sales price rose 4% to $622.90 per ton.

Costs and capital returns

Corporate general and administrative expenses rose 26%, mainly because of higher health insurance costs and work on a new enterprise resource planning system. The company expects that system cost to continue in future quarters as it is rolled out across the remaining businesses.

The company is modernizing its Mountain Cement and Duke, Oklahoma Gypsum Wallboard facilities. It said the projects should deliver meaningful financial and strategic benefits, including a lower-cost operating position and greater production capacity.

In the quarter, Eagle repurchased 304,881 shares for about $62 million. In the first half of fiscal 2027 it repurchased 711,381 shares for about $146.0 million.

Debt stood at $1.77 billion at Sept. 30, and net debt was $1.53 billion. The net leverage ratio, net debt to adjusted EBITDA, was 2.1x, up from 1.9x at March 31.

Haack said higher interest rates, broader economic uncertainty and geopolitical conditions may continue to affect construction activity in the near term.