Shares of The Monarch Cement Company MCEM have gained 2.3% since reporting results for the second quarter of 2025. This compares with the S&P 500 index’s 1.8% growth over the same period. However, over the past month, the stock has declined 4.3%, underperforming the S&P 500’s 2.5% advance. The divergence suggests investors reacted positively in the immediate aftermath of earnings, but broader sentiment toward the stock has softened in the weeks that followed.
In the second quarter of 2025, Monarch Cement posted net sales of $67.8 million, down 6.3% from $72.4 million a year earlier. Despite the revenue decline, profitability improved sharply. Net income surged 62.7% year over year to $18.7 million from $11.5 million, aided by stronger equity investment results.
Earnings per share jumped to $4.99 from $3.14, even as gross profit margins contracted modestly to 36.2% from 38.4%. For the first six months of 2025, revenues stood at $106.5 million, down 13% from $122.4 million, while EPS fell to $5.70 from $7.67 a year earlier.
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
The company’s segment data highlights contrasting trends between its Cement and Ready-Mixed Concrete businesses. In the second quarter, Cement sales rose $3 million, supported by a 0.5% increase in volumes and $2.8 million in price gains. By contrast, Ready-Mixed Concrete revenues plunged $7.5 million, reflecting a 31.9% volume decline, only partially offset by modest pricing improvements.
On the cost side, consolidated expenses fell $1.3 million year over year, as lower Ready-Mixed volumes reduced input needs, though cement production costs increased $5.1 million. Gross profit in the Cement business contracted sharply, with margins falling to 42.6% from 50.6% a year earlier, while the Ready-Mixed segment achieved modest margin expansion, rising to 21.8% from 19.8%.
Management Commentary
In its discussion, management emphasized the seasonality of operations, noting that demand peaks in the second and third quarters but remains highly sensitive to adverse weather, such as heavy rainfall that can disrupt construction activity. The quarter benefited from higher cement pricing but was weighed down by weakness in the Ready-Mixed Concrete division, particularly due to reduced volumes.
Liquidity remained stable with working capital at $136.5 million at June 30, 2025, down slightly from $141.2 million at the end of 2024. The company’s cash balance was $34.2 million compared with $38.7 million a year earlier, reflecting higher dividends and capital expenditure.
Factors Influencing the Headline Numbers
Equity investment results had a pronounced impact on earnings. Monarch Cement recorded an unrealized gain of $4.1 million in the second quarter of 2025 against a $10.6 million loss in the prior-year period. Additionally, gains from equity investment sales were $9.5 million in the first half of 2025, significantly higher than $1.5 million in the first half of 2024. These investment-related swings helped offset declining sales in the core concrete business.
Dividend income, however, was softer at $0.1 million in the second quarter of 2025, down from $0.2 million a year earlier. The effective tax rate rose to 26% in the first half of 2025 from 21% a year earlier, modestly pressuring net income.
Management View
Management reiterated plans to invest $40.1 million in property, plant and equipment during 2025, with $16 million already directed toward cement production facilities and $6 million to Ready-Mixed Concrete equipment by mid-year.
Other Developments
A notable structural change took place in late 2024 that continued to shape the results in 2025. Monarch Cement contributed its Springfield Ready Mix, City Wide Construction Products, and Kay Concrete Materials subsidiaries into RMCMO Holdings, LLC, a joint venture in which it holds a 49% stake. This transaction included the transfer of more than 114,000 shares of Monarch Cement valued at approximately $217 per share. While financial contributions from the JV were not significant in the first half of 2025, the investment is expected to diversify operations and provide long-term strategic benefits.
In summary, Monarch Cement’s second-quarter 2025 results reflected a mixed operating environment. While revenues contracted due to pronounced weakness in the Ready-Mixed Concrete segment, improved equity investment results drove net income sharply.
Margin pressures in cement production and the drag from reduced concrete volumes remain challenges, but stronger pricing, disciplined cost controls, and ongoing capital investments demonstrate management’s focus on long-term competitiveness. The joint venture established in late 2024 adds another dimension to Monarch’s growth strategy, though near-term performance remains closely tied to weather-driven construction cycles.
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The Monarch Cement Co. (MCEM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).