Company: Eagle Materials (EXP US)
QMG product view: POSITIVE (US26.5 – Producers of cement, lime & plaster)
Event: Q4 15 Earnings
- Record Q4 revenues of $223.8 million, up 18% (cons $247m)
- Fiscal year 2015 revenues of $1.1 billion, up 19%
- Fiscal year 2015 net earnings per diluted share of $3.71, up 49%
We highlighted recently the positive trends which are becoming evident across US cement/aggregate producers (Link – Eagle Materials Q2 earnings preview) on the back of strong QMG US homebuilder data. EXP reported record Q4 revenues of $223.8m (+18%, vs. cons $247m) – this print was in line with QMG’s sales growth figure of +17%. The company’s fourth quarter sales volumes improved across nearly all businesses, reflecting improved construction fundamentals in the US. In addition, improved pricing was achieved across all businesses units.
As detailed in our recent note, US cement consumption continues to recover after reaching an inflection point in 2010, with positive trends evident across residential, commercial and industrial construction. According to the Portland Cement Association and US Geological survey data, demand for cement in the US may exceed domestic capacity by 2017, while the barriers to entry for new supply are set to rise on the back of new EPA standards which are set to take effect in September. QMG data shows volume growth of +8% and pricing +9% leading to top line growth of +17% for Us cement producers. In addition, margins continue to expand (+1185bps) with costs in decline. We added Eagle Materials to our US focus list on 08/04 (+7%) on the back of this positive product data. Given the significant exposure to the US market, QMG’s product level data provides detailed insight on EXP’s sales and margin trends – our outlook remains positive and we maintain our positive view on EXP in our US focus list.