Eagle Materials Inc. reported financial results for the second quarter of fiscal 2017 ended Sept. 30, 2016. The company’s construction products and building materials businesses performed well during the quarter, with the Cement business reporting record second quarter operating earnings of $50.7 million. Second quarter cash flow from operations improved 22 percent and was used to fund capital improvements, pay dividends, reduce debt and repurchase shares.
As previously announced, on Sept. 11, 2016, Eagle entered into a definitive agreement with a subsidiary of Cemex S.A.B. de C.V. to purchase Cemex's Fairborn, Ohio, cement plant and related assets. The purchase price is $400 million, subject to customary post-closing adjustments. Eagle expects that the acquisition will increase its U.S. annual cement capacity by approximately 20 percent to nearly 6 million tons. The transaction is expected to close in the fourth quarter of calendar 2016, or shortly thereafter. Eagle intends to finance the acquisition through a combination of cash on hand and borrowings under its existing bank credit facility.
Cement revenues for the second quarter, including joint venture and intersegment revenues, totaled $166.8 million, which was 1 percent higher than the same quarter last year. The average net sales price for this quarter was $99.95 per ton, 3 percent higher than the same quarter last year. Wholly-owned average net sales prices improved 5 percent from the second quarter last year. The average net cement sales price at the joint venture declined year-over-year reflecting the shift from oil well cement to construction-grade cement over the past year; however, profitability improved 4 percent at the joint venture. Total cement sales volumes for the quarter were 1.4 million tons, 3 percent lower than the same quarter a year ago. Cement sales volumes were negatively impacted during the quarter by above average rainfall in Midwestern markets.
Operating earnings from Cement for the second quarter were a record $50.7 million and 4 percent greater than the same quarter a year ago. The earnings improvement was driven primarily by improved average net cement sales prices.
Concrete and Aggregates reported revenues for the second quarter of $38.8 million, an increase of 7 percent. Second quarter operating earnings were $4.8 million, a 25 percent improvement from the same quarter a year ago, reflecting improved aggregates sales volumes and improved concrete and aggregates sales prices.