Eagle Materials Q2 FY2027 Earnings: Record Revenue but Lower Profit

Eagle Materials (NYSE: EXP) reported fiscal Q2 2027 revenue of $652.7 million, up 2.2% from $638.9 million, while diluted EPS fell to $3.63 from $4.23 for the quarter ended September 30, 2026. Net earnings declined 18.8% to $111.5 million, as higher freight, labor, raw-material and production costs outweighed modest revenue growth.

Core Results

Revenue reached a quarterly record, with both Heavy Materials and Light Materials posting approximately 2% growth. However, cost of goods sold increased 8.8%, substantially faster than revenue, reducing gross profit and margins.

Adjusted EBITDA also declined as higher costs affected multiple business lines. Lower average diluted shares outstanding partially cushioned the decline in EPS relative to net earnings.

Adjusted EBITDA is a non-GAAP measure that excludes stock-based compensation from EBITDA in the periods shown.

Business and Segment Performance

Heavy Materials and Light Materials both generated modest revenue growth, but operating earnings fell by double digits in each sector. Cost pressure was especially visible in Concrete and Aggregates, while lower wallboard pricing weighed on Light Materials.

Heavy Materials revenue includes joint venture and intersegment cement revenue. Intersegment sales are eliminated from consolidated revenue, while Eagle Materials’ 50% interest in Texas Lehigh Cement is accounted for under the equity method in its consolidated results.

Cement, Concrete and Aggregates

Cement revenue, including joint venture and intersegment sales, increased 1% to $390.5 million. Volume rose slightly to a record 2.2 million tons, but the average net sales price slipped to $154.58 per ton as higher freight costs offset a 1% increase in gross pricing. Cement operating earnings fell 9% to $108.8 million because of higher labor, depreciation, purchased raw-material and freight expenses.

Concrete and Aggregates revenue increased 7% to $87.2 million, while operating earnings declined 47% to $4.2 million. Concrete volume rose 5%, but aggregate volume fell 6%; higher maintenance, diesel and production costs reduced profitability.

Gypsum Wallboard and Recycled Paperboard

Gypsum Wallboard volume increased 7% to 696 million square feet, supported by a favorable comparison and steady end-market demand despite residential housing softness. The average net sales price declined 10% to $209.37 per thousand square feet, reflecting lower gross pricing and higher freight costs. Wallboard operating earnings consequently fell to $57.4 million from $67.3 million.

Recycled Paperboard volume increased 5% to 86,000 tons, while its average net sales price rose 4% to $622.90 per ton under long-term contract provisions tied to input costs. Operating earnings were nearly unchanged at $10.9 million.

Cost Inflation Outpaced Revenue Growth, While Buybacks Cushioned EPS

Revenue increased by $13.8 million, but cost of goods sold rose by $38.8 million. That imbalance reduced gross margin by approximately 4.5 percentage points. Diesel-driven freight costs affected every business line, while labor, raw materials, maintenance and production expenses created additional pressure in Heavy Materials.

Corporate general and administrative expenses rose 26% to $26.9 million because of higher health insurance costs and expenses associated with the new enterprise resource planning system. Management expects ERP implementation costs to continue as the system is extended to the remaining businesses. Net interest expense also increased to $11.9 million from $9.4 million.

Average diluted shares outstanding declined 5.3% to 30.75 million. This helped limit the EPS decline to 14.2%, compared with an 18.8% decrease in net earnings.

Balance Sheet and Capital Allocation

Eagle Materials ended the quarter with $241.2 million in cash and cash equivalents, down from $297.9 million at March 31, 2026. Management reported total debt of approximately $1.8 billion, net debt of $1.5 billion and a net leverage ratio of 2.1 times adjusted EBITDA.

The company repurchased 304,881 shares for approximately $62 million during the quarter. For the first six months of fiscal 2027, repurchases totaled 711,381 shares for approximately $146 million. Eagle Materials also continued modernizing its Mountain Cement and Duke, Oklahoma, wallboard facilities to improve reliability, efficiency and production capacity.

Management View

Management said public infrastructure spending and large private non-residential projects continued to support Heavy Materials demand. In contrast, elevated interest rates placed additional pressure on residential construction, while higher diesel prices raised transportation costs across the portfolio.

The company remains focused on operational execution and its plant modernization projects. Management did not provide quantitative revenue or earnings guidance in the supplied results.

Recent Insider Transactions

Separate insider-transaction data showed 40,359 shares reported as purchased across 26 transactions and 8,289 shares sold across two transactions over the latest six-month period, resulting in net purchases of 32,070 shares. The two recent sales with disclosed transaction values are shown below; no conclusion about company prospects can be drawn from these transactions alone.

The supplied transaction list also included director stock awards and a stock gift recorded at zero value.

Risks Investors Need to Watch

• Freight and diesel costs: Higher diesel prices reduced net selling prices and raised transportation expenses across all business lines. Continued pressure would make margin recovery more difficult.
• Residential construction weakness: Elevated interest rates are weighing on housing activity. This is particularly relevant to Gypsum Wallboard, where net pricing declined 10% despite higher volume.
• Persistent operating expenses: Labor, raw materials, maintenance and production costs reduced segment earnings, while ERP implementation and health insurance costs increased corporate expenses.
• Debt and financing costs: Eagle Materials ended the quarter with approximately $1.8 billion of debt, and net interest expense increased 27%. Its 2.1-times net leverage ratio provides context for monitoring future capital allocation and financing costs.

Summary

Eagle Materials delivered record fiscal Q2 2027 revenue as construction demand supported volumes, but higher operating and freight costs and weaker wallboard pricing drove broad margin compression. Infrastructure and non-residential demand remained supportive, while residential construction was constrained by interest rates. Future results will depend on cost control, wallboard pricing, construction demand and execution of the company’s plant modernization investments.