‘Demand for building materials and construction products remains weak,’ Eagle Materials says in Q2 results
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.
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