Eagle Materials Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024 (not calendar 2023 or a standalone fourth-quarter report). Eagle Materials manufactures cement, concrete and aggregates, gypsum wallboard, and recycled paperboard in the United States.
Financial performance
| Metric | FY2024 | Change vs. FY2023 |
|---|---|---|
| Revenue | $2.259 billion | +5% |
| Gross profit | $685.3 million | +7% |
| Gross margin | 30.3% | Up 0.5 percentage point |
| Net earnings | $477.6 million | +3% |
| Diluted EPS | $13.61 | +9% |
| Operating cash flow | $563.9 million | Up from $541.7 million |
| Capital expenditures | $120.3 million | Up from $110.1 million |
| Net interest expense | $42.3 million | +20% |
Revenue growth reflected higher selling prices, partly offset by lower sales volumes. Excluding the Battletown aggregates operation and Stockton terminal acquisition, revenue increased 3%. The effective tax rate rose to 23% from 22%.
Segment results
- Cement: Segment revenue, including the company’s proportionate share of its joint venture, was $1.226 billion, up 14%; operating earnings rose 21% to $338.3 million. Average net sales price increased 12% and sales volume increased 2%.
- Concrete and Aggregates: Segment revenue including intersegment sales was $253.0 million; operating earnings fell 32% to $12.4 million. Concrete volume declined 14%, while aggregate volume increased 40%, largely reflecting the Kentucky operation.
- Gypsum Wallboard: Revenue was $839.5 million, down 4%, and operating earnings fell 5% to $334.5 million. Sales volume declined 3%; average net sales price was essentially flat.
- Recycled Paperboard: Segment revenue including intersegment sales was $184.2 million, down 8%; operating earnings increased 25% to $31.6 million, mainly on lower input costs. Volume increased 2% and average net sales price declined 7%.
Balance sheet, liquidity, and capital allocation
- Cash was $34.9 million at March 31, 2024. Current assets were $627.7 million and current liabilities were $239.4 million; reported working capital was $388.3 million.
- Total debt was $1.103 billion, versus $1.100 billion a year earlier. Debt-to-capitalization was 45.7%, down from 48.1%. The company had $571.7 million available under its $750 million revolving credit facility, net of letters of credit, and reported compliance with debt covenants.
- Operating cash flow of $563.9 million funded capital spending, acquisitions, dividends, and repurchases. The company repurchased approximately 1.86 million shares for $343.3 million and paid $35.3 million in dividends; dividends were $1.00 per share.
- Fiscal 2025 capital expenditures are expected to be $310–$340 million. The company also expects to spend approximately $430 million over two years on the Mountain Cement plant modernization and expansion; those future project payments were not yet contractual obligations at filing.
Outlook, material developments, and risks
- Management described end markets as resilient and cement demand as strong, with the cement network operating at high utilization. The Portland Cement Association forecast U.S. cement consumption to rise about 1% in calendar 2024. Management expects wallboard demand to remain supported by residential construction and repair and remodel activity.
- Management expects some energy costs to decline in fiscal 2025 but remain above fiscal 2023 levels; freight and delivery costs are also expected to rise. Maintenance costs increased 21% in fiscal 2024 and management expects continued inflation. Concrete materials and diesel costs are expected to continue increasing.
- Key investments include a planned Houston slag-cement facility adding 500,000 tons of capacity, expected to start in summer 2024, and a roughly $430 million Wyoming cement plant modernization expected to start up in the second half of calendar 2026. The Wyoming project is expected to add 400,000 tons of capacity and reduce manufacturing costs by about 25%.
- The May 2023 Stockton terminal acquisition cost approximately $55.1 million and contributed $39.3 million of revenue but reported an operating loss of $2.4 million for the period included in FY2024.
- On May 1, 2024, after year-end, the company and its 50% joint venture partner entered into reciprocal put options. Following a qualifying outside purchase agreement for at least $1 billion in the joint venture market area, either party may require the other to buy its interest for approximately $550 million, subject to adjustments. The agreement expires August 1, 2025.
- Principal risks include construction-cycle and seasonal demand, interest rates and inflation, fuel, energy, maintenance and transportation costs, commodity pricing and imports, operational interruptions, and environmental regulation. EPA ozone-related emissions rules and revised fine-particle standards could require additional controls, spending, or operating changes; litigation over state plan disapprovals and federal rules was unresolved. Management could not estimate the eventual impact.
- Environmental compliance capital spending for cement is expected to be $7.5 million in fiscal 2025; wallboard, $1.3 million; and recycled paperboard, $11.9 million, principally for a water-treatment project. The company reported no material pending legal proceeding expected by management to affect consolidated financial condition, results, or liquidity. Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting; no goodwill impairment was recorded.
Important facts for investors to verify
- Track cement and wallboard pricing, volumes, utilization, and whether infrastructure and residential demand support management’s outlook.
- Assess whether cost inflation—especially maintenance, energy, freight, and concrete materials—can be offset by pricing and efficiency gains.
- Monitor the $310–$340 million fiscal 2025 capital-spending outlook, the Wyoming project’s cost and schedule, and the expected returns from new capacity.
- Review debt, variable-rate exposure, and covenant headroom: a 100-basis-point rate increase on variable-rate borrowings would add an estimated $3.5 million to annual interest expense.
- Follow litigation and implementation of EPA air-quality rules, potential compliance costs, and the joint venture put-option terms and any triggering transaction.
- Note customer concentration: four customers represented approximately 60% of Gypsum Wallboard segment sales; two external paperboard contracts represented approximately 50% of that segment’s revenue.