‘Demand for building materials and construction products remains weak,’ Eagle Materials says in Q2 results
Eagle Materials Inc. reported in its financial results for the second quarter of fiscal 2011, which ended Sept. 30, 2010, revenues of $132.1 million.
The company reported that cash flow from company operations was $40.8 million and net earnings of $9.6 million. It reported diluted earnings per share at $0.22.
Demand for building materials and construction products remains weak, according to Eagle Materials. “Implementing capital projects that will reduce our costs and enhance our competitive positions remains a major focus for all Eagle Materials employees,” the company says in its earnings report.
Other notable items from the Eagle Materials quarterly report include the following:
Gypsum wallboard and paperboard
Gypsum wallboard and paperboard’s second quarter operating earnings of $5.1 million were down 10 percent compared to the same quarter last year. Lower wallboard sales volumes were the primary driver of the quarterly earnings decline.
Gypsum wallboard and paperboard revenues for the second quarter totaled $70.7 million, a 3 percent increase from the same quarter a year ago. The revenue increase reflects higher wallboard sales prices and higher paperboard sales volumes and prices, offset by lower gypsum wallboard sales volumes.
The average gypsum wallboard net sales price this quarter was $96.08 per MSF, 4-percent higher than the same quarter a year ago. Gypsum Wallboard sales volume for the quarter of 397 million square feet (MMSF) represents a 15-percent decline from the same quarter last year. The average Paperboard net sales price this quarter was $474.29 per ton, 14-percent higher than the same quarter a year ago. Paperboard sales volumes for the quarter were 62,000 tons, 19% higher than the same quarter a year ago.
Cement, concrete and aggregates
Operating earnings from cement for the second quarter were $12.1 million, a 38-percent decline from the same quarter a year ago. Cement operating earnings were impacted by approximately $5 million, or $0.09 per diluted share, in major maintenance costs occurring during the quarter that did not occur in the same quarter last year. Cement revenues for the quarter, including joint venture and intersegment revenues, totaled $67.8 million, 7-percent less than the same quarter last year. Cement sales volumes for the quarter were 775,000 tons, 2-percent below the same quarter a year ago. The average net sales price this quarter was $80.03 per ton, 7-percent less than the same quarter last year.
Concrete and aggregates reported a $0.5 million operating profit for the second quarter, up from the $0.3 million operating profit for the same quarter a year ago, primarily due to lower operating costs in both businesses partially offset by lower sales volumes and lower net sales prices.
Revenues from concrete and aggregates were $12.9 million for the quarter, 8-percent less than the same quarter a year ago. Concrete sales volume decreased 4-percent from the same quarter a year ago to 123,000 cubic yards. Concrete average net sales price for the quarter of $67.01 per cubic yard was 1-percent less than the same quarter a year ago. Aggregates sales volume of 0.8 million tons for this quarter was 10-percent less than the sales volume for the same quarter a year ago. Aggregates average net sales price for the quarter was $5.90 per ton, down 5-percent compared to last year’s second quarter.
Details of financial results
During the second quarter of fiscal 2011, we received a final assessment from the IRS related to their audit of the Republic asset acquisition in tax years 2001 through 2006. In connection with the final assessment, we paid approximately $29.5 million in federal and state taxes. This payment and all payments previously deposited with the IRS (totaling $98.7 million) were applied to pay the taxes, penalties and interest assessed by the IRS. We have filed refund claims with the IRS to recover all payments made related to the Republic asset acquisition and in the event those refund claims are denied, we will file a lawsuit in Federal District Court to recover the requested refunds.
Additionally, net earnings for the second quarter of fiscal 2011 were affected positively by approximately $2.5 million, or $0.06 per diluted share, to reflect the difference between actual interest assessed by the IRS and previously accrued interest. These benefits were handled as discrete items in the tax provision and interest computations.
Texas Lehigh Cement Company LP, one of Eagle Materials’ cement plant operations, is conducted through a 50/50 joint venture.
Eagle Materials uses the equity method of accounting for its 50-percent interest in the joint venture.
For segment reporting purposes, the company proportionately consolidates its 50-percent share of the joint venture’s revenues and operating earnings, which Eagle Materials says is consistent with the way management organizes the segments in the company for making operating decisions and assessing performance.
In addition, for segment reporting purposes, the reports intersegment revenues as a part of a segment’s total revenues.
Intersegment sales are eliminated on the income statement.
From our partners
MORE FROM Aggbeat Online
SUBSCRIBE & FOLLOW
- VIDEO: Caterpillar builds world’s tallest sand castle, then destroys it 897 Views
- Sand saves a construction worker's life491 Views
- Last second Christmas gift ideas for construction workers278 Views
- Congress passes $1.1 trillion spending bill; cuts billions from federal construction accounts167 Views
- Get operations off to a good start with sound mine planning157 Views