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Monarch Cement's Sales Increase Y/Y in 2024, Earnings Decline
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Shares of The Monarch Cement Company (MCEM - Free Report) have gained 0.4% since reporting results for 2024. This compares with the S&P 500 index’s 0.6% rise over the same time frame. Over the past month, the stock has lost 2.6% compared with the S&P 500’s 7.3% decline.
Revenue & Earnings Performances
For the year ended Dec. 31, 2024, Monarch Cement reported net sales of $268.1 million, an increase of $5.3 million, or 2%, from $262.8 million in 2023. Growth was driven by a $0.5-million increase in the Cement Business and a $4.8-million rise in the Ready-Mixed Concrete Business. While cement sales volume declined 7.8%, price increases contributed an additional $12.7 million to revenues, offsetting a $12.2-million drop in sales due to volume contraction. Ready-mixed concrete sales volume declined 1%, reducing revenues by $0.9 million, but price increases added $4.9 million.
Despite sales growth, net income declined 10.4% to $66.1 million from $73.7 million in 2023. This translated to basic earnings per share of $18.02 compared with $19.92 in the prior year. The earnings decline was influenced by a $13.2-million decrease in unrealized gains on equity investments and a higher effective tax rate of 26.0% compared with 21.1% in 2023.
The Monarch Cement Co. Price, Consensus and EPS Surprise
Gross profit improved 6.7% to $98.4 million from $92.2 million in 2023. The company’s gross margin expanded to 36.7% from 35.1% due to pricing improvements in the Cement Business. The gross profit margin for cement operations rose to 52.4% from 48.7%, while the Ready-Mixed Concrete Business saw a slight contraction to 14.4% from 15.0%.
Selling, general, and administrative (SG&A) expenses increased $2.4 million year over year to $24.7 million. These costs, typically considered fixed, did not scale proportionately with sales growth, contributing to the decline in the operating profit margin.
On the balance sheet, Monarch Cement reported total assets of $458.3 million, up from $381.3 million at the end of 2023, driven by growth in investments and property, plant and equipment. The company maintained a debt-free balance sheet, with no long-term debt obligations.
Management Commentary & Influencing Factors
Monarch attributed the revenue increase primarily to pricing adjustments that offset lower sales volumes in both business segments. The company noted that inflationary pressures, particularly in production and delivery costs, affected margins.
The Cement Business was impacted by a reduction in sales volume, which the company linked to project timing and softer demand in certain markets. However, price adjustments helped maintain profitability. The Ready-Mixed Concrete Business saw a modest volume decline but benefited from higher pricing and steady demand in key metropolitan areas.
Monarch Cement’s investment portfolio was a key factor in the year-over-year decline in net income. The company recorded a $13.2-million reduction in unrealized gains on equity investments, which provided a significant boost to the bottom line in 2023.
Other Developments
On Dec. 31, 2024, Monarch Cement contributed 100% of its ownership in Springfield Ready Mix, LLC, City Wide Construction Products, LLC, and Kay Concrete Materials, LLC to a newly formed joint venture — RMCMO Holdings, LLC. Monarch retained a 49% ownership stake in the venture and contributed 114,618 shares of MCEM common stock, valued at $217.49 per share, to the JV. This move is expected to enhance operational efficiencies and expand market presence in the ready-mix concrete segment.
Additionally, Monarch advanced its sustainability initiatives with a 100-acre solar field project near its Humboldt, KS, cement plant. Expected to generate 20 megawatts of electricity, the project is likely to reduce the company’s grid electricity demand by 25% and provide corresponding cost savings when it becomes operational in May 2025.
Conclusion
Monarch Cement delivered moderate revenue growth in 2024, driven by pricing gains that offset volume declines. However, net income declined due to reduced equity investment gains and higher taxes. The company maintained a strong balance sheet with no long-term debt and continued investing in strategic initiatives, including a renewable energy project and a joint venture in the ready-mix concrete space.
Looking ahead, MCEM’s ability to navigate cost pressures while sustaining pricing strength will be a key factor influencing its financial performance.
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Monarch Cement's Sales Increase Y/Y in 2024, Earnings Decline
Shares of The Monarch Cement Company (MCEM - Free Report) have gained 0.4% since reporting results for 2024. This compares with the S&P 500 index’s 0.6% rise over the same time frame. Over the past month, the stock has lost 2.6% compared with the S&P 500’s 7.3% decline.
Revenue & Earnings Performances
For the year ended Dec. 31, 2024, Monarch Cement reported net sales of $268.1 million, an increase of $5.3 million, or 2%, from $262.8 million in 2023. Growth was driven by a $0.5-million increase in the Cement Business and a $4.8-million rise in the Ready-Mixed Concrete Business. While cement sales volume declined 7.8%, price increases contributed an additional $12.7 million to revenues, offsetting a $12.2-million drop in sales due to volume contraction. Ready-mixed concrete sales volume declined 1%, reducing revenues by $0.9 million, but price increases added $4.9 million.
Despite sales growth, net income declined 10.4% to $66.1 million from $73.7 million in 2023. This translated to basic earnings per share of $18.02 compared with $19.92 in the prior year. The earnings decline was influenced by a $13.2-million decrease in unrealized gains on equity investments and a higher effective tax rate of 26.0% compared with 21.1% in 2023.
The Monarch Cement Co. Price, Consensus and EPS Surprise
The Monarch Cement Co. price-consensus-eps-surprise-chart | The Monarch Cement Co. Quote
Other Key Business Metrics
Gross profit improved 6.7% to $98.4 million from $92.2 million in 2023. The company’s gross margin expanded to 36.7% from 35.1% due to pricing improvements in the Cement Business. The gross profit margin for cement operations rose to 52.4% from 48.7%, while the Ready-Mixed Concrete Business saw a slight contraction to 14.4% from 15.0%.
Selling, general, and administrative (SG&A) expenses increased $2.4 million year over year to $24.7 million. These costs, typically considered fixed, did not scale proportionately with sales growth, contributing to the decline in the operating profit margin.
On the balance sheet, Monarch Cement reported total assets of $458.3 million, up from $381.3 million at the end of 2023, driven by growth in investments and property, plant and equipment. The company maintained a debt-free balance sheet, with no long-term debt obligations.
Management Commentary & Influencing Factors
Monarch attributed the revenue increase primarily to pricing adjustments that offset lower sales volumes in both business segments. The company noted that inflationary pressures, particularly in production and delivery costs, affected margins.
The Cement Business was impacted by a reduction in sales volume, which the company linked to project timing and softer demand in certain markets. However, price adjustments helped maintain profitability. The Ready-Mixed Concrete Business saw a modest volume decline but benefited from higher pricing and steady demand in key metropolitan areas.
Monarch Cement’s investment portfolio was a key factor in the year-over-year decline in net income. The company recorded a $13.2-million reduction in unrealized gains on equity investments, which provided a significant boost to the bottom line in 2023.
Other Developments
On Dec. 31, 2024, Monarch Cement contributed 100% of its ownership in Springfield Ready Mix, LLC, City Wide Construction Products, LLC, and Kay Concrete Materials, LLC to a newly formed joint venture — RMCMO Holdings, LLC. Monarch retained a 49% ownership stake in the venture and contributed 114,618 shares of MCEM common stock, valued at $217.49 per share, to the JV. This move is expected to enhance operational efficiencies and expand market presence in the ready-mix concrete segment.
Additionally, Monarch advanced its sustainability initiatives with a 100-acre solar field project near its Humboldt, KS, cement plant. Expected to generate 20 megawatts of electricity, the project is likely to reduce the company’s grid electricity demand by 25% and provide corresponding cost savings when it becomes operational in May 2025.
Conclusion
Monarch Cement delivered moderate revenue growth in 2024, driven by pricing gains that offset volume declines. However, net income declined due to reduced equity investment gains and higher taxes. The company maintained a strong balance sheet with no long-term debt and continued investing in strategic initiatives, including a renewable energy project and a joint venture in the ready-mix concrete space.
Looking ahead, MCEM’s ability to navigate cost pressures while sustaining pricing strength will be a key factor influencing its financial performance.