UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2023 Commission File Number 1-12984 EAGLE MATERIALS INC. (Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 75-2520779 (I.R.S. Employer Identification No.) 5960 Berkshire Lane, Suite 900, Dallas, Texas 75225 (Address of principal executive offices) (214) 432-2000 ...

Eagle Materials Inc. (NYSE:EXP) Q4 2023 Earnings Conference Call May 18, 2023 8:30 AM ET Company Participants Michael Haack - President and Chief Executive Officer Craig Kesler - Executive Vice President, Finance & Administration and Chief Financial Officer Conference Call Participants Trey Grooms - Stephens Inc. Brent Thielman - D.A. Davidson Asher Sohnen - Citigroup Jerry Revich - Goldman Sachs Stanley Elliott - Stifel, Nicolaus & Company Adam Thalhimer - Thompson, Davis & Company Philip Ng - Jefferies LL ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Eagle Materials Inc. is a leading U.S. manufacturer of heavy and light construction materials, emphasizing low-cost production, decentralized operations, and strategic growth [Overview, Competitive Strengths, and Strategy](index=3&type=section&id=Overview) The company manufactures essential construction materials, leveraging a low-cost plant network and substantial raw material reserves, while pursuing growth and responsible operations - The company's primary products are portland Cement and Gypsum Wallboard, which are essential commodities for commercial, residential, and public construction[13](index=13&type=chunk) - Key competitive strengths include a strategically located plant network, a low-cost producer position, and substantial owned raw material reserves (**25 to 50 years of supply** for cement and wallboard facilities)[15](index=15&type=chunk)[16](index=16&type=chunk)[19](index=19&type=chunk) - The company's strategy emphasizes being a **low-cost producer**, maintaining a **decentralized operating structure**, focusing on attractive U.S. markets, and growing through strategic acquisitions and organic development[21](index=21&type=chunk) - Capital allocation priorities are: 1) growth opportunities, 2) operating capital investments to maintain low-cost positions, and 3) returning excess cash to shareholders via buybacks and dividends; over the past five years, the company has returned approximately **$1.7 billion** to shareholders[32](index=32&type=chunk) [Fiscal 2023 Events](index=6&type=section&id=FISCAL%202023%20EVENTS) Fiscal 2023 saw record financial performance with **15% revenue growth** and **36% diluted EPS increase**, alongside strategic acquisitions and ESG advancements Fiscal 2023 Financial Highlights (vs. Fiscal 2022) | Metric | Value (USD) | Change | | :--- | :--- | :--- | | Revenue | $2.1 billion | +15% | | Net Earnings | $461.5 million | +23% | | Gross Profit Margin | 29.8% | +190 bps | | Diluted EPS | $12.46 | +36% | | Share Repurchases | $387.7 million (3.1M shares) | - | - Completed the ConAgg Acquisition (readymix concrete and aggregates) in Colorado for approximately **$120.2 million** and the Terminal Acquisition (cement distribution) in Nashville for approximately **$39.5 million**[35](index=35&type=chunk)[36](index=36&type=chunk) - Advanced ESG initiatives by increasing Portland Limestone Cement (PLC) sales to approximately **30% of cement sales volume** in fiscal 2023[38](index=38&type=chunk) - Amended its Revolving Credit Facility, adding a **$200.0 million term loan** and extending the maturity to May 2027[40](index=40&type=chunk) [Human Capital](index=7&type=section&id=HUMAN%20CAPITAL) The company employed approximately **2,400 people** as of March 31, 2023, prioritizing employee health and safety, with all segments achieving TRIRs below industry averages - The company had approximately **2,400 employees** as of March 31, 2023, with about **700 hourly employees** covered by collective bargaining agreements[42](index=42&type=chunk) - Management emphasizes employee health and safety through comprehensive processes, training, and an annual safety conference; in fiscal 2023, all business segments achieved TRIR averages lower than the applicable industry average[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [Industry Segment Information](index=7&type=section&id=INDUSTRY%20SEGMENT%20INFORMATION) The company operates in Heavy Materials (infrastructure) and Light Materials (residential) sectors, both benefiting from strong demand in their respective markets - The business is organized into two sectors: Heavy Materials (Cement, Concrete and Aggregates) and Light Materials (Gypsum Wallboard, Recycled Paperboard)[46](index=46&type=chunk) - The primary end market for Heavy Materials is infrastructure, while the primary end market for Light Materials is residential construction[46](index=46&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including cyclical construction demand, seasonality, commodity price volatility, environmental regulations, operational challenges, and financial risks [Industry Risk Factors](index=27&type=section&id=INDUSTRY%20RISK%20FACTORS) The company's performance is tied to the cyclical, seasonal construction industry, facing risks from government spending, inflation, interest rates, weather, and commodity price fluctuations - Demand is directly related to the cyclical construction industry, which is affected by government infrastructure spending, inflation, and interest rates[167](index=167&type=chunk)[169](index=169&type=chunk) - The business is seasonal, with peak revenue and profits typically occurring from April through November[170](index=170&type=chunk) - As a producer of commodity products, the company is subject to price fluctuations based on supply, demand, and general economic conditions[175](index=175&type=chunk) [Economic, Political, and Legal Risk Factors](index=29&type=section&id=ECONOMIC%2C%20POLITICAL%2C%20AND%20LEGAL%20RISK%20FACTORS) The company faces extensive and costly governmental regulations, especially environmental laws on GHG emissions, along with ESG scrutiny, mining permit dependencies, and potential litigation costs - Operations are subject to extensive and costly governmental regulations, including environmental laws that can be burdensome[179](index=179&type=chunk) - Climate change legislation and regulation of greenhouse gases (GHGs) could have a material adverse effect, particularly on the cement manufacturing process, which is inherently carbon-intensive[182](index=182&type=chunk)[184](index=184&type=chunk) - Operations are dependent on the ability to mine properties and renew required permits and approvals from governmental authorities[190](index=190&type=chunk) [Financial and Operational Risk Factors](index=34&type=section&id=FINANCIAL%20AND%20OPERATIONAL%20RISK%20FACTORS) The company faces operational risks from capital-intensive cement operations, fluctuating fuel and raw material costs, transportation dependencies, and financial risks from debt covenants and rising interest rates - The Cement business is capital intensive with significant fixed costs, making earnings sensitive to changes in sales volume[201](index=201&type=chunk) - Results are subject to significant changes in the cost and availability of fuel, energy, and raw materials[204](index=204&type=chunk) - Debt agreements contain restrictive covenants and require meeting financial ratios, which could limit flexibility and lead to default if not met[213](index=213&type=chunk) - Increases in interest rates and inflation could adversely affect the business by increasing borrowing costs and potentially decreasing demand for products[217](index=217&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) The company owns most of its diverse operating facilities across the U.S., including plants, quarries, and terminals, with none pledged as debt security - The company's operating facilities, which include plants, quarries, and terminals, are located across the U.S.[234](index=234&type=chunk) - All facilities are owned except for the Dallas headquarters and certain terminals, which are leased; no facilities are pledged as security for debt[234](index=234&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course litigation not expected to be material, but has commenced litigation against the EPA regarding ozone standards, with an unpredictable outcome - The company is involved in litigation in the ordinary course of business, which management does not expect to have a material effect[237](index=237&type=chunk) - The company has commenced litigation against the EPA in response to the disapproval of State Implementation Plans (SIPs) for Nevada, Oklahoma, and Texas concerning ozone standards; the outcome is currently uncertain[238](index=238&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosure information, as required by the Dodd-Frank Act, is included in Exhibit 95 of this Annual Report - Mine safety disclosure information required by Section 1503(a) of the Dodd-Frank Act is included in Exhibit 95 to this Annual Report[240](index=240&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under EXP; in fiscal 2023, **3.1 million shares** were repurchased for **$387.7 million**, with an additional **7.5 million shares** authorized - In fiscal 2023, the company repurchased **3,075,788 shares** at an average price of **$126.05 per share**[243](index=243&type=chunk) - On May 17, 2022, the Board of Directors authorized the repurchase of an additional **7,500,000 shares**[242](index=242&type=chunk) Share Repurchases for Quarter Ended March 31, 2023 | Period | Total Shares Purchased | Average Price Paid Per Share (USD) | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2023 | 240,000 | $139.60 | | Feb 1 - Feb 28, 2023 | — | — | | Mar 1 - Mar 31, 2023 | 288,000 | $139.98 | | **Quarter 4 Totals** | **528,000** | **$139.81** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=45&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2023 saw **15% revenue growth** to **$2.1 billion** and **23% net earnings increase** to **$461.5 million**, driven by strong pricing; the company maintains liquidity for operations and planned capital expenditures despite residential construction headwinds [Market Conditions and Outlook](index=46&type=section&id=MARKET%20CONDITIONS%20AND%20OUTLOOK) The company anticipates strong cement demand from infrastructure, but expects higher mortgage rates to impact residential construction; solid fuel costs for cement are projected to rise, while OCC prices for paperboard should remain stable - Demand for cement is expected to remain strong due to increased federal and state infrastructure funding, with the company's cement network operating at high utilization levels[261](index=261&type=chunk) - Tighter fiscal policy and higher mortgage rates are expected to have some adverse impact on residential construction, affecting the Gypsum Wallboard segment[262](index=262&type=chunk) - Solid fuel costs for cement are expected to increase in fiscal 2024, while OCC (recycled paperboard raw material) prices are expected to remain stable[264](index=264&type=chunk)[265](index=265&type=chunk) [Results of Operations (FY2023 vs FY2022)](index=47&type=section&id=RESULTS%20OF%20OPERATIONS) Fiscal 2023 saw **15% revenue growth** to **$2.15 billion** and **23% net earnings increase** to **$461.5 million**, driven by higher sales prices, resulting in a **30% gross margin** and **$12.46 diluted EPS** Consolidated Results of Operations (in thousands, except per share) | Metric | FY 2023 (USD) | FY 2022 (USD) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $2,148,069 | $1,861,522 | 15% | | Gross Profit | $639,266 | $519,614 | 23% | | Net Earnings | $461,540 | $374,247 | 23% | | Diluted EPS | $12.46 | $9.14 | 36% | - Revenue increase was largely due to higher gross sales prices of approximately **$261.8 million**, partially offset by lower sales volume of **$19.7 million**[268](index=268&type=chunk) - Gross margin increased to **30%** in fiscal 2023 from **28%** in fiscal 2022, primarily due to higher gross sales prices[271](index=271&type=chunk) [Results by Segment (FY2023 vs FY2022)](index=50&type=section&id=FISCAL%20YEAR%202023%20vs%20FISCAL%20YEAR%202022%20RESULTS%20BY%20SEGMENT) In fiscal 2023, all segments showed strong pricing power; Cement operating earnings rose **7%**, Gypsum Wallboard surged **35%**, and Recycled Paperboard doubled, while Concrete and Aggregates revenue grew **35%** with flat earnings Cement Segment Performance (FY2023 vs FY2022) | Metric | FY 2023 (USD) | FY 2022 (USD) | % Change | | :--- | :--- | :--- | :--- | | Revenue (incl. JV) | $1,074.1M | $1,007.1M | +7% | | Sales Volume (M Tons) | 7,133 | 7,534 | -5% | | Avg. Net Sales Price/ton | $134.36 | $119.13 | +13% | | Operating Earnings | $278.8M | $259.6M | +7% | Concrete and Aggregates Segment Performance (FY2023 vs FY2022) | Metric | FY 2023 (USD) | FY 2022 (USD) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $239.5M | $177.1M | +35% | | Concrete Volume (M Cubic Yds) | 1,545 | 1,333 | +16% | | Aggregate Volume (M Tons) | 2,909 | 1,525 | +91% | | Operating Earnings | $18.3M | $18.5M | -1% | Gypsum Wallboard Segment Performance (FY2023 vs FY2022) | Metric | FY 2023 (USD) | FY 2022 (USD) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $872.5M | $692.2M | +26% | | Sales Volume (MMSF) | 3,065 | 2,944 | +4% | | Avg. Net Sales Price/MSF | $232.31 | $190.76 | +22% | | Operating Earnings | $352.5M | $261.5M | +35% | Recycled Paperboard Segment Performance (FY2023 vs FY2022) | Metric | FY 2023 (USD) | FY 2022 (USD) | % Change | | :--- | :--- | :--- | :--- | | Revenue (incl. Intersegment) | $201.3M | $194.1M | +4% | | Sales Volume (M Tons) | 326 | 334 | -2% | | Operating Earnings | $25.2M | $12.6M | +100% | [Critical Accounting Policies](index=54&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The company's critical accounting policies involve significant judgment, particularly in impairment testing of long-lived assets and goodwill, and in valuing assets and liabilities during business combinations - Key critical accounting policies include impairment of long-lived assets, goodwill impairment testing, and accounting for business combinations[294](index=294&type=chunk) - Goodwill is tested for impairment annually in Q4 at the reporting unit level; in fiscal 2023, a qualitative assessment was performed, and it was determined that it was not more likely than not that an impairment existed[296](index=296&type=chunk)[367](index=367&type=chunk) - Business combinations are accounted for using the acquisition method, which requires estimating the fair values of acquired assets and liabilities, a process involving significant management judgment[303](index=303&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains sufficient liquidity through cash flow and its **$750 million** revolving credit facility; fiscal 2023 saw **$541.7 million** in operating cash flow, with FY2024 capital expenditures projected at **$145-$165 million** Summary of Cash Flows (in thousands) | Cash Flow Activity | FY 2023 (USD) | FY 2022 (USD) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $541,726 | $517,171 | | Net Cash Used in Investing Activities | ($268,594) | ($74,121) | | Net Cash Used in Financing Activities | ($277,306) | ($692,154) | - The debt-to-capitalization ratio was **48.1%** at March 31, 2023, up from **45.6%** at March 31, 2022[317](index=317&type=chunk) - As of March 31, 2023, the company had **$586.6 million** of available borrowings under its Revolving Credit Facility[319](index=319&type=chunk) - Capital expenditures for fiscal 2024 are expected to range from **$145.0 million** to **$165.0 million**[327](index=327&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on its **$349.5 million** variable-rate debt, where a **100 basis point increase** would raise annual interest expense by **$3.5 million**, and from commodity price changes - The company is exposed to interest rate risk on its variable-rate debt, which totaled **$349.5 million** at March 31, 2023[338](index=338&type=chunk) - A hypothetical **100 basis point (1%) increase** in interest rates would increase annual interest expense by **$3.5 million**[338](index=338&type=chunk) - The company is subject to commodity risk from price changes in coal, petroleum coke, natural gas, and power[339](index=339&type=chunk) [Financial Statements and Supplementary Data](index=63&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2021-2023, including key financial statements and notes, along with an unqualified audit opinion from Ernst & Young LLP [Consolidated Statements of Earnings](index=64&type=section&id=Consolidated%20Statements%20of%20Earnings) The Consolidated Statement of Earnings shows significant fiscal 2023 performance, with revenue growing to **$2.15 billion**, net earnings rising to **$461.5 million**, and diluted EPS increasing to **$12.46** Key Earnings Data (in thousands, except per share data) | Metric | 2023 (USD) | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | :--- | | Revenue | $2,148,069 | $1,861,522 | $1,622,642 | | Gross Profit | $639,266 | $519,614 | $408,355 | | Net Earnings | $461,540 | $374,247 | $339,444 | | Diluted EPS | $12.46 | $9.14 | $8.12 | [Consolidated Balance Sheets](index=66&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2023, the Consolidated Balance Sheet shows total assets of **$2.78 billion**, total liabilities of **$1.60 billion**, and total stockholders' equity of **$1.19 billion** Key Balance Sheet Data (in thousands) | Metric | March 31, 2023 (USD) | March 31, 2022 (USD) | | :--- | :--- | :--- | | Total Current Assets | $521,503 | $442,727 | | Property, Plant, and Equipment, net | $1,662,061 | $1,616,539 | | Goodwill and Intangible Assets, net | $466,043 | $387,898 | | **Total Assets** | **$2,781,002** | **$2,579,652** | | Total Current Liabilities | $212,889 | $207,551 | | Long-term Debt | $1,079,032 | $938,265 | | **Total Liabilities** | **$1,595,308** | **$1,446,096** | | **Total Stockholders' Equity** | **$1,185,694** | **$1,133,556** | [Notes to Consolidated Financial Statements](index=69&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial data, including fiscal 2023 acquisitions, **$1.1 billion** in total debt, segment performance, stock-based compensation, and no goodwill impairment charge - **Acquisitions (Note B):** In FY2023, the company completed the ConAgg Acquisition for ~**$120.2 million** and the Nashville Terminal Acquisition for ~**$39.5 million**, both funded primarily through its Revolving Credit Facility[392](index=392&type=chunk)[396](index=396&type=chunk) - **Debt (Note G):** As of March 31, 2023, total debt was **$1.1 billion**, consisting of a **$750 million 2.500% Senior Unsecured Note** due 2031, a **$192.5 million Term Loan**, and **$157.0 million** outstanding on the Revolving Credit Facility[409](index=409&type=chunk) - **Goodwill (Note A):** A qualitative assessment on all reporting units in Q4 FY2023 determined it was not more likely than not that an impairment existed, so no quantitative test was performed[367](index=367&type=chunk) - **Stock Repurchases (Note A):** In FY2023, the company repurchased **3,075,788 shares** for an average price of **$126.05**; as of March 31, 2023, **7,747,204 shares** remained authorized for repurchase[375](index=375&type=chunk) [Controls and Procedures](index=100&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2023, confirmed by an unqualified audit opinion from Ernst & Young LLP - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[483](index=483&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2023, based on the COSO 2013 framework[485](index=485&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of March 31, 2023[487](index=487&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=103&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement; the company maintains a code of ethics, 'The Eagle Way' - Most information for Items 10-14 is incorporated by reference from the Company's Proxy Statement for the August 3, 2023 Annual Meeting of Stockholders[497](index=497&type=chunk) - The company has a code of ethics, 'The Eagle Way,' which applies to the principal executive officer, principal financial officer, and other employees, and is published on its website[499](index=499&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=104&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This item lists all exhibits filed with the Form 10-K, including governance documents, debt agreements, compensation plans, and certifications; financial statement schedules are omitted - This section provides an index of all exhibits filed with the Form 10-K, including governance documents, debt agreements, compensation plans, and various certifications[507](index=507&type=chunk)[509](index=509&type=chunk) - Financial statement schedules are omitted because they are not applicable or the required information is included within the main financial statements[506](index=506&type=chunk)

| --- | --- | --- | |--------------------------------------------|-------------------------------------------------|-----------------------| | | Fiscal Year ended March 31, 2022 \nIn millions | TTM December 31, 2022 | | Net Earnings, as reported | $374 | $435 | | Income Tax Expense | 101 | 120 | | Interest Expense | 31 | 31 | | Depreciation, Depletion and Amortization | 129 | 137 | | EBITDA | 635 | 723 | | Loss on Early Retirement of Senior Notes 1 | 8 | - | | Purchase Accounting Impact 2 | - | 2 | | Stock- ...

[PART I. FINANCIAL INFORMATION (unaudited)](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION%20%28unaudited%29) This section presents the unaudited consolidated financial statements and management's discussion and analysis for Eagle Materials Inc [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Eagle Materials Inc. and its subsidiaries, including statements of earnings, comprehensive earnings, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) This section provides a summary of the company's financial performance, detailing revenues, gross profit, net earnings, and earnings per share for the specified periods Consolidated Statements of Earnings (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :--------------------------------- | :--------------- | :--------------- | :--------- | | Revenue | $511,487 | $462,941 | 10.5% | | Gross Profit | $158,770 | $138,586 | 14.6% | | Net Earnings | $117,184 | $102,479 | 14.4% | | Basic EPS | $3.23 | $2.56 | 26.2% | | Diluted EPS | $3.20 | $2.53 | 26.5% | | Cash Dividends Per Share | $0.25 | $0.25 | 0.0% | Consolidated Statements of Earnings (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :--------------------------------- | :--------------- | :--------------- | :--------- | | Revenue | $1,677,942 | $1,448,405 | 15.8% | | Gross Profit | $503,875 | $420,438 | 19.9% | | Net Earnings | $361,184 | $299,931 | 20.4% | | Basic EPS | $9.72 | $7.30 | 33.2% | | Diluted EPS | $9.66 | $7.23 | 33.6% | | Cash Dividends Per Share | $0.75 | $0.50 | 50.0% | [Consolidated Statements of Comprehensive Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Earnings) This section presents the company's comprehensive earnings, including net earnings and other comprehensive income components for the specified periods Consolidated Statements of Comprehensive Earnings (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :----------- | :--------------- | :--------------- | :--------- | | Net Earnings | $117,184 | $102,479 | 14.4% | | Comprehensive Earnings | $117,207 | $102,506 | 14.3% | Consolidated Statements of Comprehensive Earnings (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :----------- | :--------------- | :--------------- | :--------- | | Net Earnings | $361,184 | $299,931 | 20.4% | | Comprehensive Earnings | $361,254 | $300,012 | 20.4% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, outlining assets, liabilities, and stockholders' equity at specific reporting dates Consolidated Balance Sheets (as of December 31, 2022, and March 31, 2022) | Asset/Liability/Equity | Dec 31, 2022 (thousands) | Mar 31, 2022 (thousands) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :--------- | | **ASSETS** | | | | | Cash and Cash Equivalents | $60,937 | $19,416 | 213.8% | | Accounts and Notes Receivable, net | $172,543 | $176,276 | -2.1% | | Inventories | $247,155 | $236,661 | 4.4% | | Total Current Assets | $491,278 | $442,727 | 11.0% | | Property, Plant, and Equipment, net | $1,641,638 | $1,616,539 | 1.5% | | Goodwill and Intangible Assets, net | $467,703 | $387,898 | 20.6% | | Total Assets | $2,730,170 | $2,579,652 | 5.8% | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | | Accounts Payable | $106,571 | $113,679 | -6.3% | | Accrued Liabilities | $83,759 | $86,754 | -3.4% | | Total Current Liabilities | $208,300 | $207,551 | 0.4% | | Long-term Debt | $1,054,215 | $938,265 | 12.4% | | Total Liabilities | $1,564,656 | $1,446,096 | 8.2% | | Total Stockholders' Equity | $1,165,514 | $1,133,556 | 2.8% | | Total Liabilities and Stockholders' Equity | $2,730,170 | $2,579,652 | 5.8% | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the specified periods Consolidated Statements of Cash Flows (Nine Months Ended December 31) | Cash Flow Activity | 2022 (thousands) | 2021 (thousands) | Change (thousands) | | :--------------------------------- | :--------------- | :--------------- | :----------------- | | Net Cash Provided by Operating Activities | $480,111 | $428,878 | $51,233 | | Net Cash Used in Investing Activities | $(219,402) | $(55,188) | $(164,214) | | Net Cash Used in Financing Activities | $(219,188) | $(624,818) | $405,630 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $41,521 | $(251,128) | $292,649 | | Cash and Cash Equivalents at End of Period | $60,937 | $17,392 | $43,545 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's stockholders' equity, including net earnings, dividends, and share repurchases - Total Stockholders' Equity increased from **$1,133,556 thousand** at March 31, 2022, to **$1,165,514 thousand** at December 31, 2022. This increase was primarily driven by Net Earnings of **$361,184 thousand** for the nine months ended December 31, 2022, partially offset by **$28,421 thousand** in dividends paid and **$313,898 thousand** in common stock repurchases[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements, covering accounting policies and specific financial line items [(A) BASIS OF PRESENTATION](index=9&type=section&id=%28A%29%20BASIS%20OF%20PRESENTATION) This note describes the accounting principles and rules followed in preparing the interim consolidated financial statements - The accompanying Unaudited Consolidated Financial Statements are prepared by the Company in accordance with SEC rules and regulations, condensing or omitting certain disclosures normally included in GAAP financial statements[16](index=16&type=chunk)[17](index=17&type=chunk) - All adjustments are normal recurring adjustments, and interim results are not indicative of full-year results[17](index=17&type=chunk) - No recent accounting pronouncements are expected to materially affect the Company[19](index=19&type=chunk) [(B) SUPPLEMENTAL CASH FLOW INFORMATION](index=9&type=section&id=%28B%29%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides additional details on non-cash investing and financing activities and other cash flow related disclosures Supplemental Cash Flow Information (Nine Months Ended December 31) | Cash Payments | 2022 (thousands) | 2021 (thousands) | Change (thousands) | | :-------------- | :--------------- | :--------------- | :----------------- | | Interest | $26,526 | $11,143 | $15,383 | | Income Taxes | $94,793 | $70,502 | $24,291 | | Operating Leases | $6,360 | $6,082 | $278 | [(C) ACQUISITIONS](index=10&type=section&id=%28C%29%20ACQUISITIONS) This note details the company's recent business acquisitions, including purchase prices, funding sources, and their financial contributions - On April 22, 2022, Eagle Materials Inc. completed the ConAgg Acquisition, purchasing a readymix concrete and aggregates business for approximately **$120.2 million**, funded through its revolving credit facility[22](index=22&type=chunk) - This acquisition contributed **$34.7 million** in Revenue and **$1.3 million** in Operating Earnings for the nine months ended December 31, 2022[25](index=25&type=chunk) - On September 16, 2022, the company acquired a cement distribution terminal in Nashville, Tennessee (Terminal Acquisition) for approximately **$39.5 million**, also funded by the revolving credit facility[26](index=26&type=chunk) - The purchase price allocation for the Terminal Acquisition is preliminary[28](index=28&type=chunk) [(D) REVENUE](index=11&type=section&id=%28D%29%20REVENUE) This note describes the company's revenue recognition policies and primary sources of revenue from product sales - Revenue is primarily generated from the sale of cement, concrete, aggregates, gypsum wallboard, and recycled paperboard[29](index=29&type=chunk) - Revenue recognition generally occurs upon shipment or transfer of control to customers, with adjustments for rebates and incentives using the most likely amount method[30](index=30&type=chunk)[31](index=31&type=chunk) - Freight and delivery charges billed to customers are recorded as revenue, while costs incurred are included in Cost of Goods Sold[32](index=32&type=chunk) [(E) ACCOUNTS AND NOTES RECEIVABLE](index=12&type=section&id=%28E%29%20ACCOUNTS%20AND%20NOTES%20RECEIVABLE) This note provides information on the composition of accounts and notes receivable, including the allowance for doubtful accounts - Accounts Receivable are presented net of an allowance for doubtful accounts, which was **$6.9 million** at December 31, 2022, and **$6.7 million** at March 31, 2022[35](index=35&type=chunk) - The allowance is based on economic trends and expected collectability[35](index=35&type=chunk) - Notes Receivable totaled approximately **$8.6 million** at December 31, 2022, bearing interest at LIBOR plus 3% (approx. **6.8%**)[36](index=36&type=chunk) [(F) INVENTORIES](index=12&type=section&id=%28F%29%20INVENTORIES) This note details the valuation methods and composition of the company's inventory, including raw materials and finished goods - Inventories are valued at the lower of average cost or net realizable value, including material, labor, depreciation, and plant overhead[37](index=37&type=chunk) - Raw Materials and Materials-in-Progress include clinker[37](index=37&type=chunk) - Quantities are estimated based on measured volumes and standard density factors[37](index=37&type=chunk) Inventory Composition (thousands) | Inventory Type | Dec 31, 2022 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Raw Materials and Materials-in-Progress | $72,114 | $81,308 | | Finished Cement | $35,617 | $38,769 | | Aggregates | $7,329 | $3,558 | | Gypsum Wallboard | $6,778 | $3,452 | | Paperboard | $8,091 | $7,462 | | Repair Parts and Supplies | $106,426 | $91,593 | | Fuel and Coal | $10,800 | $10,519 | | **Total Inventories** | **$247,155** | **$236,661** | [(G) ACCRUED EXPENSES](index=12&type=section&id=%28G%29%20ACCRUED%20EXPENSES) This note provides a breakdown of various accrued liabilities, such as payroll, benefits, and taxes, at specific reporting dates Accrued Expenses (thousands) | Accrued Expense Type | Dec 31, 2022 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Payroll and Incentive Compensation | $34,760 | $37,262 | | Benefits | $16,466 | $14,894 | | Dividends | $9,288 | $9,756 | | Interest | $2,201 | $5,052 | | Property Taxes | $6,315 | $6,514 | | Power and Fuel | $4,269 | $2,877 | | Freight | $1,882 | $1,172 | | Legal and Professional | $1,637 | $989 | | Sales and Use Tax | $1,362 | $1,509 | | Other | $5,579 | $6,729 | | **Total Accrued Expenses** | **$83,759** | **$86,754** | [(H) LEASES](index=13&type=section&id=%28H%29%20LEASES) This note outlines the company's leasing arrangements, including lease terms, expenses, and related right-of-use assets and liabilities - The Company leases real estate, buildings, and equipment, with lease terms ranging from **one to 20 years** for extensions[39](index=39&type=chunk) - Lease expense for operating and short-term leases totaled **$2.1 million** for the three months and **$5.8 million** for the nine months ended December 31, 2022[40](index=40&type=chunk) - Operating Lease Right-of-Use Assets were **$20.7 million** and Total Operating Lease Liabilities were **$31.4 million** as of December 31, 2022[40](index=40&type=chunk) [(I) SHARE-BASED EMPLOYEE COMPENSATION](index=13&type=section&id=%28I%29%20SHARE-BASED%20EMPLOYEE%20COMPENSATION) This note describes the company's share-based compensation plans, including stock options and restricted stock, and their associated expenses - The Company grants performance-vesting and time-vesting stock options and restricted stock to officers, key employees, and Board members under the Amended and Restated Incentive Plan[41](index=41&type=chunk)[42](index=42&type=chunk) - Stock option expense was **$0.8 million** for the three months and **$2.7 million** for the nine months ended December 31, 2022[45](index=45&type=chunk) - Restricted stock expense was **$3.3 million** for the three months and **$11.0 million** for the nine months ended December 31, 2022[48](index=48&type=chunk)[51](index=51&type=chunk) Stock Option Activity (Nine Months Ended December 31, 2022) | Metric | Number of Shares | Weighted Average Exercise Price | | :-------------------------- | :--------------- | :------------------------------ | | Outstanding Options at March 31, 2022 | 456,849 | $83.81 | | Granted | 56,621 | $125.90 | | Exercised | (19,241) | $67.74 | | Cancelled | (3,178) | $109.15 | | Outstanding Options at December 31, 2022 | 491,051 | $89.13 | | Options Exercisable at December 31, 2022 | 299,948 | | | Weighted-Average Fair Value of Options Granted During the Year | | $48.36 | Nonvested Restricted Stock Activity (Nine Months Ended December 31, 2022) | Metric | Number of Shares | Weighted-Average Grant Date Fair Value | | :-------------------------- | :--------------- | :------------------------------------- | | Nonvested Restricted Stock at March 31, 2022 | 258,779 | $85.34 | | Granted | 111,230 | $126.23 | | Vested | (55,467) | $108.98 | | Forfeited | (3,247) | $124.82 | | Nonvested Restricted Stock at December 31, 2022 | 311,295 | $98.31 | [(J) COMPUTATION OF EARNINGS PER SHARE](index=16&type=section&id=%28J%29%20COMPUTATION%20OF%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share, including weighted-average shares outstanding Weighted-Average Shares Outstanding (Three Months Ended December 31) | Metric | 2022 | 2021 | | :--------------------------------- | :--------- | :--------- | | Weighted-Average Shares of Common Stock Outstanding | 36,336,056 | 40,049,456 | | Weighted-Average Common Stock and Dilutive Securities Outstanding | 36,605,982 | 40,458,049 | | Shares Excluded Due to Anti-dilution Effects | 66,802 | 7,528 | Weighted-Average Shares Outstanding (Nine Months Ended December 31) | Metric | 2022 | 2021 | | :--------------------------------- | :--------- | :--------- | | Weighted-Average Shares of Common Stock Outstanding | 37,149,927 | 41,096,702 | | Weighted-Average Common Stock and Dilutive Securities Outstanding | 37,395,586 | 41,493,339 | | Shares Excluded Due to Anti-dilution Effects | 48,736 | 4,298 | [(K) PENSION AND EMPLOYEE BENEFIT PLANS](index=16&type=section&id=%28K%29%20PENSION%20AND%20EMPLOYEE%20BENEFIT%20PLANS) This note provides information on the company's defined benefit and defined contribution pension plans and their funding status - The Company sponsors single-employer defined benefit and defined contribution plans covering substantially all employees[54](index=54&type=chunk) - Defined benefit plans have been frozen to new participants and benefits, with the last plan frozen in fiscal 2020[54](index=54&type=chunk) - All defined benefit plans are fully funded, with plan assets exceeding benefit obligations as of March 31, 2022, resulting in expected pension expense of less than **$0.1 million** for fiscal 2023[54](index=54&type=chunk) [(L) INCOME TAXES](index=17&type=section&id=%28L%29%20INCOME%20TAXES) This note explains the company's effective income tax rate and the factors contributing to its deviation from the statutory rate - The effective tax rate for the nine months ended December 31, 2022, was approximately **22%**, consistent with the prior-year period[56](index=56&type=chunk) - This rate was slightly higher than the U.S. Statutory rate of **21%** primarily due to state income taxes, partially offset by a recognized benefit related to percentage depletion[56](index=56&type=chunk) [(M) LONG-TERM DEBT](index=17&type=section&id=%28M%29%20LONG-TERM%20DEBT) This note details the company's long-term debt instruments, including revolving credit facilities, term loans, and senior unsecured notes Long-term Debt (thousands) | Debt Type | Dec 31, 2022 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Revolving Credit Facility | $130,000 | $200,000 | | 2.500% Senior Unsecured Notes Due 2031 | $750,000 | $750,000 | | Term Loan | $195,000 | — | | **Total Debt** | **$1,075,000** | **$950,000** | | Less: Current Portion of Long-term Debt | $(10,000) | — | | Less: Unamortized Discounts and Debt Issuance Costs | $(10,785) | $(11,735) | | **Long-term Debt** | **$1,054,215** | **$938,265** | - The Company has an unsecured **$750.0 million** revolving credit facility, amended on May 5, 2022, which includes a **$200.0 million** term loan facility and expires on May 5, 2027[58](index=58&type=chunk)[59](index=59&type=chunk) - As of December 31, 2022, **$130.0 million** was outstanding under the Revolving Credit Facility, with **$613.6 million** available for future borrowings[63](index=63&type=chunk) - The Company was in compliance with all financial covenants[63](index=63&type=chunk) - On July 1, 2021, the Company issued **$750.0 million** of 2.500% Senior Unsecured Notes due July 2031[65](index=65&type=chunk) - In July 2021, the Company repaid its **$665.0 million** term loan credit agreement and redeemed **$350.0 million** of 4.500% Senior Unsecured Notes due August 2026, incurring an early termination premium of approximately **$8.4 million** and expensing **$6.1 million** in debt issuance costs[66](index=66&type=chunk) [(N) SEGMENT INFORMATION](index=19&type=section&id=%28N%29%20SEGMENT%20INFORMATION) This note provides financial data by operating segment, including revenue, operating earnings, and goodwill for Heavy Materials and Light Materials - The Company operates in two sectors: Heavy Materials (Cement, Concrete and Aggregates) and Light Materials (Gypsum Wallboard, Recycled Paperboard)[68](index=68&type=chunk)[69](index=69&type=chunk) - Products are commodities essential for construction, with demand being cyclical and seasonal[70](index=70&type=chunk)[71](index=71&type=chunk) - Operations are primarily in the U.S., excluding the Northeast, providing regional economic diversification[72](index=72&type=chunk) Segment Revenue (thousands) | Segment | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | 9 Months Ended Dec 31, 2022 | 9 Months Ended Dec 31, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cement | $256,313 | $261,155 | $860,289 | $819,734 | | Concrete and Aggregates | $55,176 | $42,384 | $186,407 | $139,888 | | Gypsum Wallboard | $212,016 | $163,584 | $652,981 | $502,836 | | Paperboard | $47,774 | $49,763 | $155,520 | $140,828 | | Less: Intersegment Revenue | $(32,172) | $(26,539) | $(98,190) | $(77,858) | | Less: Joint Venture Revenue | $(27,620) | $(27,406) | $(79,065) | $(77,023) | | **Total Revenue** | **$511,487** | **$462,941** | **$1,677,942** | **$1,448,405** | Segment Operating Earnings (thousands) | Segment | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | 9 Months Ended Dec 31, 2022 | 9 Months Ended Dec 31, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cement | $72,315 | $79,836 | $233,442 | $231,133 | | Concrete and Aggregates | $2,692 | $4,115 | $15,700 | $16,998 | | Gypsum Wallboard | $87,335 | $60,841 | $261,164 | $190,425 | | Paperboard | $7,805 | $2,349 | $17,200 | $6,667 | | **Sub-Total** | **$170,147** | **$147,141** | **$527,506** | **$445,223** | Goodwill by Segment (thousands) | Segment | Dec 31, 2022 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | | Cement | $215,781 | $203,342 | | Concrete and Aggregates | $40,774 | $1,639 | | Gypsum Wallboard | $116,618 | $116,618 | | Paperboard | $7,538 | $7,538 | | **Total Goodwill** | **$380,711** | **$329,137** | [(O) INTEREST EXPENSE](index=22&type=section&id=%28O%29%20INTEREST%20EXPENSE) This note details the components of net interest expense and explains the factors influencing its changes over periods Interest Expense, net (thousands) | Component | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | 9 Months Ended Dec 31, 2022 | 9 Months Ended Dec 31, 2021 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest Income | $(163) | $0 | $(245) | $(38) | | Interest Expense | $8,621 | $4,959 | $23,676 | $16,511 | | Other Expenses | $474 | $692 | $1,411 | $8,418 | | **Interest Expense, net** | **$8,932** | **$5,651** | **$24,842** | **$24,891** | - Interest Expense, net increased by **$3.2 million (58%)** for the three months ended December 31, 2022, primarily due to higher interest rates and average outstanding balance under the Revolving Credit Facility[80](index=80&type=chunk) - For the nine months, Interest Expense, net was relatively flat, with increased Revolving Credit Facility interest offset by prior year loan amortization and debt issuance costs[80](index=80&type=chunk) [(P) COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=%28P%29%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's various financial commitments, contingent liabilities, and legal proceedings - The Company has deductible limits under insurance policies and standby letter of credit agreements totaling approximately **$6.4 million** at December 31, 2022[82](index=82&type=chunk) - It is also contingently liable for **$26.9 million** in performance bonds[83](index=83&type=chunk) - Management believes these indemnifications and legal proceedings will not have a material adverse effect on its financial position, results of operations, or cash flows[84](index=84&type=chunk) [(Q) FAIR VALUE OF FINANCIAL INSTRUMENTS](index=23&type=section&id=%28Q%29%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note provides information on the fair value measurements of the company's financial instruments, including debt and short-term assets - The fair value of the 2.500% Senior Unsecured Notes Due 2031 was estimated at **$588.3 million** as of December 31, 2022, based on quoted prices of similar publicly traded debt instruments[85](index=85&type=chunk) - The carrying values of short-term assets and liabilities, as well as the Revolving Credit Facility and Term Loan, approximate their fair values due to short-term maturities[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including an executive summary, market outlook, detailed analysis of consolidated and segment-level performance, critical accounting policies, and a discussion of liquidity and capital resources [EXECUTIVE SUMMARY](index=24&type=section&id=EXECUTIVE%20SUMMARY) This section provides an overview of Eagle Materials Inc.'s business, its market position, and key strategic acquisitions - Eagle Materials Inc. is a leading manufacturer of heavy (Cement, Concrete and Aggregates) and light (Gypsum Wallboard, Recycled Paperboard) construction materials in the U.S[86](index=86&type=chunk)[87](index=87&type=chunk) - Demand is cyclical and seasonal, with regional economic diversification[87](index=87&type=chunk) - The Company completed the ConAgg Acquisition (**$120.2 million**) in April 2022 and the Terminal Acquisition (**$39.5 million**) in September 2022[90](index=90&type=chunk)[91](index=91&type=chunk) [MARKET CONDITIONS AND OUTLOOK](index=24&type=section&id=MARKET%20CONDITIONS%20AND%20OUTLOOK) This section discusses current market trends and future expectations for demand and costs across the company's product segments [Demand Outlook](index=24&type=section&id=Demand%20Outlook) This section assesses expected demand for cement, gypsum wallboard, and recycled paperboard, considering economic factors and infrastructure spending - Cement demand is expected to remain strong due to recovery in private non-residential construction, increased federal funding from the Infrastructure Investment and Jobs Act, and high state budget allocations[94](index=94&type=chunk) - However, the Company's ability to achieve further Cement sales volume growth is limited by high utilization levels[94](index=94&type=chunk) - Gypsum Wallboard and Recycled Paperboard demand is supported by home construction backlogs, but tighter U.S. fiscal policy and higher mortgage rates may adversely impact residential construction[95](index=95&type=chunk) [Cost Outlook](index=25&type=section&id=Cost%20Outlook) This section forecasts trends in key operating costs, including energy, freight, and raw materials, and the company's mitigation strategies - The Company is well-positioned to manage its cost structure due to substantial raw material reserves and proximity to manufacturing facilities[96](index=96&type=chunk) - Energy and freight costs increased in fiscal 2022 and the first nine months of fiscal 2023[97](index=97&type=chunk) - While natural gas costs have declined and freight stabilized, solid fuel and electricity costs are expected to increase in fiscal 2024[98](index=98&type=chunk) - OCC prices have recently declined, and gypsum liner contracts include price adjustments that will partially compensate for fiber price changes in future quarters[98](index=98&type=chunk) [RESULTS OF OPERATIONS](index=26&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's consolidated financial performance, detailing revenue, gross profit, and net earnings for the reporting periods [THREE MONTHS ENDED DECEMBER 31, 2022, COMPARED WITH THREE MONTHS ENDED DECEMBER 31, 2021](index=26&type=section&id=THREE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202022%2C%20COMPARED%20WITH%20THREE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202021) This section compares the company's consolidated financial results for the three-month periods, highlighting key changes in revenue, profit, and expenses Consolidated Financial Performance (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :--------------------------------- | :--------------- | :--------------- | :--------- | | Revenue | $511,487 | $462,941 | 10% | | Cost of Goods Sold | $(352,717) | $(324,355) | 9% | | Gross Profit | $158,770 | $138,586 | 15% | | Equity in Earnings of Unconsolidated Joint Venture | $11,377 | $8,555 | 33% | | Corporate General and Administrative Expense | $(12,497) | $(12,851) | (3)% | | Other Nonoperating Income | $2,210 | $3,207 | (31)% | | Interest Expense, net | $(8,932) | $(5,651) | 58% | | Earnings Before Income Taxes | $150,928 | $131,846 | 14% | | Income Tax Expense | $(33,744) | $(29,367) | 15% | | Net Earnings | $117,184 | $102,479 | 14% | | Diluted Earnings per Share | $3.20 | $2.53 | 26% | - Revenue increased by **$48.6 million (10%)**, with **$9.8 million** from the ConAgg Acquisition and the remainder from higher gross sales prices, partially offset by lower sales volume[101](index=101&type=chunk) - Gross Profit increased **15%** to **$158.8 million**, with gross margin rising to **31%**[103](index=103&type=chunk) - Equity in Earnings of Unconsolidated Joint Venture increased **33%** due to higher gross sales prices, despite lower sales volume and higher operating costs[104](index=104&type=chunk) - Interest Expense, net, rose **58%** to **$8.9 million**, primarily due to higher interest rates and average outstanding balance under the Revolving Credit Facility[107](index=107&type=chunk) - Net Earnings increased **14%** to **$117.2 million**[110](index=110&type=chunk) [NINE MONTHS ENDED DECEMBER 31, 2022, COMPARED WITH NINE MONTHS ENDED DECEMBER 31, 2021](index=28&type=section&id=NINE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202022%2C%20COMPARED%20WITH%20NINE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202021) This section compares the company's consolidated financial results for the nine-month periods, detailing changes in revenue, profit, and expenses Consolidated Financial Performance (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :--------------------------------- | :--------------- | :--------------- | :--------- | | Revenue | $1,677,942 | $1,448,405 | 16% | | Cost of Goods Sold | $(1,174,067) | $(1,027,967) | 14% | | Gross Profit | $503,875 | $420,438 | 20% | | Equity in Earnings of Unconsolidated Joint Venture | $23,631 | $24,785 | (5)% | | Corporate General and Administrative Expense | $(37,944) | $(32,986) | 15% | | Loss on Early Retirement of Senior Notes | $0 | $(8,407) | (100)% | | Other Nonoperating Income | $911 | $5,941 | (85)% | | Interest Expense, net | $(24,842) | $(24,891) | (0)% | | Earnings Before Income Taxes | $465,631 | $384,880 | 21% | | Income Tax Expense | $(104,447) | $(84,949) | 23% | | Net Earnings | $361,184 | $299,931 | 20% | | Diluted Earnings per Share | $9.66 | $7.23 | 34% | - Revenue increased by **$229.5 million (16%)**, with **$34.7 million** from the ConAgg Acquisition and the remainder primarily from higher gross sales prices[113](index=113&type=chunk) - Gross Profit increased **20%** to **$503.9 million**, with gross margin rising to **30%**[115](index=115&type=chunk) - Equity in Earnings of Unconsolidated Joint Venture declined **5%** due to lower sales volume and increased operating costs, partially offset by higher gross sales prices[116](index=116&type=chunk) - Corporate General and Administrative Expense increased **15%** due to higher incentive compensation, IT upgrades, and legal/professional expenses[118](index=118&type=chunk) - Net Earnings increased **20%** to **$361.2 million**[124](index=124&type=chunk) [THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 vs. THREE AND NINE MONTHS ENDED DECEMBER 31, 2021 BY SEGMENT](index=30&type=section&id=THREE%20AND%20NINE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202022%20vs.%20THREE%20AND%20NINE%20MONTHS%20ENDED%20DECEMBER%2031%2C%202021%20BY%20SEGMENT) This section provides a detailed segment-level analysis of financial performance for both Heavy Materials and Light Materials over the three and nine-month periods [Heavy Materials](index=30&type=section&id=Heavy%20Materials) This section analyzes the performance of the Cement, Concrete, and Aggregates segments, including revenue, sales volume, and operating earnings [CEMENT](index=30&type=section&id=CEMENT) This section details the Cement segment's revenue, sales volume, average net sales price, and operating earnings performance Cement Segment Performance (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $256,313 | $261,155 | (2)% | | Sales Volume (M Tons) | 1,699 | 1,963 | (13)% | | Average Net Sales Price, per ton | $134.42 | $118.44 | 13% | | Operating Earnings | $72,315 | $79,836 | (9)% | Cement Segment Performance (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $860,289 | $819,734 | 5% | | Sales Volume (M Tons) | 5,837 | 6,197 | (6)% | | Average Net Sales Price, per ton | $131.44 | $117.49 | 12% | | Operating Earnings | $233,442 | $231,133 | 1% | - For the three months, Cement Revenue decreased **2%** due to lower sales volume (**-$32.0 million**), partially offset by higher gross sales prices (**+$27.1 million**)[129](index=129&type=chunk) - Operating Earnings declined **9%** due to lower sales volume and higher operating costs (energy, maintenance), partially offset by higher prices[130](index=130&type=chunk) - For the nine months, Revenue increased **5%** due to higher gross sales prices (**+$78.8 million**), partially offset by lower sales volume (**-$38.2 million**)[131](index=131&type=chunk) - Operating Earnings increased **1%** due to higher prices, offset by lower sales volume and higher operating costs[132](index=132&type=chunk) [CONCRETE AND AGGREGATES](index=31&type=section&id=CONCRETE%20AND%20AGGREGATES) This section details the Concrete and Aggregates segment's revenue, sales volume, average net sales price, and operating earnings performance Concrete and Aggregates Segment Performance (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $55,176 | $42,384 | 30% | | M Cubic Yards of Concrete Sales Volume | 353 | 317 | 11% | | M Tons of Aggregate Sales Volume | 626 | 341 | 84% | | Average Net Sales Price (Concrete - Per Cubic Yard) | $134.42 | $122.36 | 10% | | Average Net Sales Price (Aggregates - Per Ton) | $11.70 | $10.38 | 13% | | Operating Earnings | $2,692 | $4,115 | (35)% | Concrete and Aggregates Segment Performance (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $186,407 | $139,888 | 33% | | M Cubic Yards of Concrete Sales Volume | 1,210 | 1,063 | 14% | | M Tons of Aggregate Sales Volume | 2,333 | 1,183 | 97% | | Average Net Sales Price (Concrete - Per Cubic Yard) | $132.46 | $120.17 | 10% | | Average Net Sales Price (Aggregates - Per Ton) | $11.21 | $10.25 | 9% | | Operating Earnings | $15,700 | $16,998 | (8)% | - For the three months, Revenue increased **30%** to **$55.2 million**, with the ConAgg Acquisition contributing **$9.8 million**[135](index=135&type=chunk) - Excluding the acquisition, revenue increased **7%** due to higher gross sales prices[135](index=135&type=chunk) - Operating Earnings decreased **35%** to **$2.7 million**, impacted by increased operating costs (materials, maintenance, delivery) and lower sales volume[136](index=136&type=chunk) - For the nine months, Revenue increased **33%** to **$186.4 million**, with ConAgg contributing **$34.7 million**[137](index=137&type=chunk) - Operating Earnings decreased **8%** to **$15.7 million**, primarily due to increased operating costs[138](index=138&type=chunk) [Light Materials](index=32&type=section&id=Light%20Materials) This section analyzes the performance of the Gypsum Wallboard and Recycled Paperboard segments, including revenue, sales volume, and operating earnings [GYPSUM WALLBOARD](index=32&type=section&id=GYPSUM%20WALLBOARD) This section details the Gypsum Wallboard segment's revenue, sales volume, average net sales price, and operating earnings performance Gypsum Wallboard Segment Performance (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $212,016 | $163,584 | 30% | | Sales Volume (MMSF) | 728 | 695 | 5% | | Average Net Sales Price, per MSF | $238.51 | $191.41 | 25% | | Operating Earnings | $87,335 | $60,841 | 44% | Gypsum Wallboard Segment Performance (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $652,981 | $502,836 | 30% | | Sales Volume (MMSF) | 2,309 | 2,194 | 5% | | Average Net Sales Price, per MSF | $230.01 | $186.16 | 24% | | Operating Earnings | $261,164 | $190,425 | 37% | - For the three months, Gypsum Wallboard Revenue increased **30%** to **$212.0 million**, driven by higher gross sales prices (**+$40.7 million**) and sales volume (**+$7.7 million**)[141](index=141&type=chunk) - Operating Earnings increased **44%** to **$87.3 million**, primarily due to higher prices and volume, partially offset by increased operating costs (freight, energy, raw materials)[142](index=142&type=chunk) - For the nine months, Revenue increased **30%** to **$653.0 million**, and Operating Earnings increased **37%** to **$261.2 million**, with similar drivers[143](index=143&type=chunk)[144](index=144&type=chunk) [RECYCLED PAPERBOARD](index=33&type=section&id=RECYCLED%20PAPERBOARD) This section details the Recycled Paperboard segment's revenue, sales volume, average net sales price, and operating earnings performance Recycled Paperboard Segment Performance (Three Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $47,774 | $49,763 | (4)% | | Sales Volume (M Tons) | 77 | 81 | (5)% | | Average Net Sales Price, per ton | $594.93 | $585.54 | 2% | | Operating Earnings | $7,805 | $2,349 | 232% | Recycled Paperboard Segment Performance (Nine Months Ended December 31) | Metric | 2022 (thousands) | 2021 (thousands) | Change (%) | | :-------------------- | :--------------- | :--------------- | :--------- | | Gross Revenue | $155,520 | $140,828 | 10% | | Sales Volume (M Tons) | 246 | 252 | (2)% | | Average Net Sales Price, per ton | $603.73 | $535.55 | 13% | | Operating Earnings | $17,200 | $6,667 | 158% | - For the three months, Recycled Paperboard Revenue decreased **4%** to **$47.8 million** due to lower sales volume, partially offset by higher gross sales prices[147](index=147&type=chunk) - Operating Earnings increased **232%** to **$7.8 million**, driven by higher prices and significantly lower fiber costs, despite increased other input costs[148](index=148&type=chunk) - For the nine months, Revenue increased **10%** to **$155.5 million**, and Operating Earnings increased **158%** to **$17.2 million**, with similar drivers[149](index=149&type=chunk)[150](index=150&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=34&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section discusses the significant judgments and estimates involved in the company's financial reporting, particularly for long-lived assets, goodwill, and business combinations - The preparation of financial statements requires significant judgments and estimates[152](index=152&type=chunk) - Critical accounting policies, material to the financial statements, include those related to long-lived assets, goodwill, and business combinations[153](index=153&type=chunk) - Management reviews these policies and estimates with the Audit Committee and independent registered public accounting firm[153](index=153&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=34&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section evaluates the company's ability to generate and manage cash, covering cash flow, debt, dividends, share repurchases, and capital expenditures - The Company believes it has sufficient financial resources from liquidity sources to fund operations, contractual obligations, capital expenditures, and debt service for at least the next twelve months[155](index=155&type=chunk) - It monitors potential economic disruptions and market conditions[168](index=168&type=chunk) [Cash Flow](index=35&type=section&id=Cash%20Flow) This section analyzes the company's cash flows from operating, investing, and financing activities, and changes in working capital Summary of Cash Flows (Nine Months Ended December 31) | Cash Flow Activity | 2022 (thousands) | 2021 (thousands) | | :--------------------------------- | :--------------- | :--------------- | | Net Cash Provided by Operating Activities | $480,111 | $428,878 | | Net Cash Used in Investing Activities | $(219,402) | $(55,188) | | Net Cash Used in Financing Activities | $(219,188) | $(624,818) | | Net Increase (Decrease) in Cash and Cash Equivalents | $41,521 | $(251,128) | - Net Cash Provided by Operating Activities increased by **$51.2 million** to **$480.1 million** for the nine months ended December 31, 2022, primarily due to higher Net Earnings[156](index=156&type=chunk) - Net Cash Used in Investing Activities increased by **$164.2 million** to **$219.4 million**, mainly due to **$158.5 million** in acquisition spending[161](index=161&type=chunk) - Net Cash Used in Financing Activities decreased by **$405.6 million** to **$219.2 million**, driven by higher net borrowings and lower debt termination/share repurchase costs[162](index=162&type=chunk) - Working capital increased by **$47.9 million** to **$283.0 million** at December 31, 2022, primarily due to higher cash and inventories[157](index=157&type=chunk) - Inventory increased by **$10.5 million**, with repair parts and gypsum wallboard increasing, while raw materials and finished cement decreased consistent with the business cycle[160](index=160&type=chunk) [Debt Financing Activities](index=36&type=section&id=Debt%20Financing%20Activities) This section details the company's outstanding debt facilities, borrowing capacity, and compliance with financial covenants - The Company's outstanding debt facilities at December 31, 2022, include a Revolving Credit Facility (maturity May 2027), a Term Loan (maturity May 2027), and 2.500% Senior Unsecured Notes (maturity July 2031)[164](index=164&type=chunk) - The Revolving Credit Facility has a **$750.0 million** borrowing capacity, with **$613.6 million** available at December 31, 2022[165](index=165&type=chunk) - The Company has no off-balance sheet debt or outstanding debt guarantees[165](index=165&type=chunk) [Dividends](index=37&type=section&id=Dividends) This section provides information on dividends paid and the company's dividend policy - Dividends paid were **$28.4 million** for the nine months ended December 31, 2022, compared to **$20.5 million** in the prior year[171](index=171&type=chunk) - The Company reinstated its quarterly dividend on May 19, 2021, with the Board of Directors reviewing the payment amount quarterly[171](index=171&type=chunk) [Share Repurchases](index=37&type=section&id=Share%20Repurchases) This section outlines the company's share repurchase programs, including authorized amounts and shares purchased Share Repurchase Activity (Year-to-Date Totals as of December 31, 2022) | Metric | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------- | :------------------------------- | :--------------------------- | | Year-to-Date Totals | 2,547,788 | $123.20 | | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | 8,275,204 | | - The Board of Directors authorized an additional **7.5 million** shares for repurchase on May 17, 2022, bringing the cumulative total authorized to **55.9 million** shares since April 1994[172](index=172&type=chunk) - As of December 31, 2022, approximately **47.6 million** shares have been repurchased[172](index=172&type=chunk) - The **1%** excise tax on stock repurchases, effective January 1, 2023, is not expected to materially affect the business[174](index=174&type=chunk) [Capital Expenditures](index=38&type=section&id=Capital%20Expenditures) This section details the company's investments in property, plant, and equipment, and projected capital spending Capital Expenditures by Category (Nine Months Ended December 31) | Category | 2022 (thousands) | 2021 (thousands) | | :-------------------------- | :--------------- | :--------------- | | Land and Quarries | $11,178 | $5,306 | | Plants | $33,650 | $30,026 | | Buildings, Machinery, and Equipment | $16,123 | $10,209 | | **Total Capital Expenditures** | **$60,951** | **$45,541** | - Total capital expenditures for the nine months ended December 31, 2022, were **$60.9 million**, an increase from **$45.5 million** in the prior year[176](index=176&type=chunk) - Fiscal 2023 capital expenditures are projected to range from **$90.0 million** to **$100.0 million**, allocated across both Heavy Materials and Light Materials sectors for maintenance, improvements, safety, and regulatory projects[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, primarily related to fluctuations in interest rates on its variable-rate debt and commodity price changes for key inputs like coal, natural gas, and power - The Company is exposed to market risks from interest rate fluctuations on its Revolving Credit Facility and Term Loan[180](index=180&type=chunk) - A hypothetical **100 basis point** increase in interest rates on the **$325.0 million** combined borrowings at December 31, 2022, would increase annual interest expense by approximately **$3.5 million**[180](index=180&type=chunk) - The Company also faces commodity risk from price changes in coal, coke, natural gas, and power, which it attempts to mitigate through contracts or alternative fuels[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures, as evaluated by management, including the CEO and CFO, at the end of the reporting period - The Company's disclosure controls and procedures, designed to ensure timely and accurate reporting of information required by the Exchange Act, were evaluated by management, including the CEO and CFO, and concluded to be effective as of December 31, 2022[182](index=182&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional disclosures on legal proceedings, risk factors, equity sales, mine safety, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the Company's involvement in legal proceedings and management's assessment of their potential impact on the financial condition - The Company is involved in various legal proceedings in the ordinary course of business, including claims related to worker safety, environmental matters, and commercial contracts[184](index=184&type=chunk) - Management believes that the ultimate outcome of any currently pending legal proceeding will not have a material adverse effect on the Company's consolidated financial condition, results of operations, or liquidity[184](index=184&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the Company's latest annual report for a comprehensive discussion of factors that could impact its financial results - For information regarding factors that could impact the Company's results of operations, financial condition, and liquidity, readers are referred to Part 1, Item 1A. Risk Factors in the Annual Report on Form 10-K for the fiscal year ended March 31, 2022[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that the required disclosure regarding unregistered sales of equity securities and use of proceeds is incorporated by reference from another part of the report - The disclosure required under this Item is included in the 'Share Repurchases' heading within 'Management's Discussion and Analysis of Results of Operations and Financial Condition' of this Quarterly Report on Form 10-Q and is incorporated by reference[187](index=187&type=chunk) [Item 4. Mine Safety Information](index=41&type=section&id=Item%204.%20Mine%20Safety%20Information) This section states that information concerning mine safety violations and regulatory matters is provided in an exhibit - Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q[188](index=188&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate bylaws, certifications, mine safety disclosures, and XBRL-related documents - The exhibits filed with this Form 10-Q include the Company's Second Amended and Restated Bylaws, certifications from the CEO and CFO (pursuant to Rules 13a-14, 15d-14, and 18 U.S.C. Section 1350), Mine Safety Disclosure, and various Inline XBRL documents[189](index=189&type=chunk)[190](index=190&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) This section contains the official signatures of the Company's principal executive, financial, and accounting officers, certifying the report - The report is duly signed on January 26, 2023, by Michael R. Haack (President and Chief Executive Officer), D. Craig Kesler (Executive Vice President – Finance and Administration and Chief Financial Officer), and William R. Devlin (Senior Vice President – Controller and Chief Accounting Officer)[193](index=193&type=chunk)

Eagle Materials Inc. (NYSE:EXP) Q2 2023 Earnings Conference Call October 26, 2022 8:30 AM ET Company Participants Michael Haack - President & Chief Executive Officer Craig Kesler - Chief Financial Officer Conference Call Participants Trey Grooms - Stephens Brent Thielman - D.A. Davidson Asher Sohnen - Citigroup Jerry Revich - Goldman Sachs Stanley Elliott - Stifel Adam Thalhimer - Thompson Davis Operator Good day, everyone, and welcome to Eagle Materials Second Quarter of Fiscal 2023 Earnings Conference Cal ...

[PART I. FINANCIAL INFORMATION (unaudited)](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION%20%28unaudited%29) This section presents the unaudited financial information, including consolidated statements, notes, and management's discussion and analysis [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including statements of earnings, comprehensive earnings, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, acquisitions, debt, and segment performance for the periods ended September 30, 2022 [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) This statement details the company's revenues, gross profit, net earnings, and earnings per share for the specified periods Consolidated Statements of Earnings (Unaudited, thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :----------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $605,068 | $509,694 | $1,166,455 | $985,464 | | Gross Profit | $194,239 | $155,341 | $345,105 | $281,852 | | Net Earnings | $138,995 | $102,125 | $244,000 | $197,452 | | Basic EPS | $3.74 | $2.48 | $6.50 | $4.74 | | Diluted EPS | $3.72 | $2.46 | $6.46 | $4.70 | | Cash Dividends Per Share | $0.25 | $0.25 | $0.50 | $0.25 | [Consolidated Statements of Comprehensive Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Earnings) This statement presents net earnings and other comprehensive income components, such as actuarial changes in defined benefit plans Consolidated Statements of Comprehensive Earnings (Unaudited, thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Earnings | $138,995 | $102,125 | $244,000 | $197,452 | | Net Actuarial Change in Defined Benefit Plans | | | | | | Amortization of Net Actuarial Loss | $30 | $36 | $60 | $72 | | Tax Expense | ($6) | ($9) | ($13) | ($18) | | Comprehensive Earnings | $139,019 | $102,152 | $244,047 | $197,506 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific reporting dates Consolidated Balance Sheets (Unaudited, thousands) | Asset/Liability/Equity | September 30, 2022 | March 31, 2022 | | :----------------------------------- | :----------------- | :------------- | | **ASSETS** | | | | Cash and Cash Equivalents | $84,140 | $19,416 | | Total Current Assets | $552,874 | $442,727 | | Property, Plant, and Equipment, net | $1,655,616 | $1,616,539 | | Goodwill and Intangible Assets, net | $469,491 | $387,898 | | Total Assets | $2,809,149 | $2,579,652 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total Current Liabilities | $223,321 | $207,551 | | Long-term Debt | $1,126,398 | $938,265 | | Total Liabilities | $1,652,445 | $1,446,096 | | Total Stockholders' Equity | $1,156,704 | $1,133,556 | | Total Liabilities and Stockholders' Equity | $2,809,149 | $2,579,652 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities over the reporting periods Consolidated Statements of Cash Flows (Unaudited, thousands) | Cash Flow Activity | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :----------------------------------------------------------------------------------- | :---------------------------- | :---------------------------- | | Net Cash Provided by Operating Activities | $300,445 | $261,462 | | Net Cash Used in Investing Activities | ($201,700) | ($26,777) | | Net Cash Used in Financing Activities | ($34,021) | ($457,991) | | NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $64,724 | ($223,306) | | CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | $19,416 | $268,520 | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | $84,140 | $45,214 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This statement details changes in stockholders' equity, including net earnings, stock repurchases, and dividends Consolidated Statements of Stockholders' Equity (Unaudited, thousands) | Metric | Balance at March 31, 2022 | Balance at September 30, 2022 | | :------------------------------------ | :------------------------ | :---------------------------- | | Total Stockholders' Equity | $1,133,556 | $1,156,704 | | Net Earnings | $244,000 (Six Months) | $138,995 (Three Months) | | Purchase and Retirement of Common Stock | ($109,612) (Six Months) | ($100,786) (Three Months) | | Dividends to Shareholders | ($19,149) (Six Months) | ($9,471) (Three Months) | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, significant transactions, and financial statement line items [Basis of Presentation](index=8&type=section&id=%28A%29%20BASIS%20OF%20PRESENTATION) This note outlines the preparation principles for the unaudited consolidated financial statements, including GAAP compliance and management estimates - The Unaudited Consolidated Financial Statements are prepared by the Company, without audit, pursuant to SEC rules and regulations[17](index=17&type=chunk) - Certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted[18](index=18&type=chunk) - Management makes estimates and assumptions that affect reported amounts; actual results could differ from these estimates[19](index=19&type=chunk) - No recent accounting pronouncements are expected to materially affect the Company[20](index=20&type=chunk) [Supplemental Cash Flow Information](index=8&type=section&id=%28B%29%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides additional details on cash payments for interest, income taxes, and operating leases Cash Payments (dollars in thousands) | Cash Payments | For the Six Months Ended September 30, 2022 | For the Six Months Ended September 30, 2021 | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Interest | $12,940 | $10,634 | | Income Taxes | $61,592 | $54,581 | | Operating Cash Flows Used for Operating Leases | $4,248 | $3,987 | [Acquisitions](index=9&type=section&id=%28C%29%20ACQUISITIONS) This note details the ConAgg and Terminal acquisitions, including their purchase prices and preliminary fair value allocations - The ConAgg Acquisition was completed on April 22, 2022, for approximately **$120.2 million**, funded through borrowings under the revolving credit facility, with operations included in the Concrete and Aggregates business[23](index=23&type=chunk) ConAgg Acquisition Purchase Price Allocation (Fair Value in thousands) | Item | Fair Value | | :----------------------------- | :--------- | | Working Capital | $10,780 | | Property, Plant, and Equipment | $39,489 | | Intangible Assets | $30,750 | | Goodwill | $39,135 | | Total Estimated Purchase Price | $120,154 | - The Terminal Acquisition was completed on September 16, 2022, for approximately **$39.5 million**, funded through borrowings under the revolving credit facility, with operations included in the Cement business[27](index=27&type=chunk) Terminal Acquisition Preliminary Purchase Price Allocation (Estimated Fair Value in thousands as of Sep 30, 2022) | Item | Estimated Fair Value | | :----------------------------- | :------------------- | | Working Capital | $1,116 | | Property, Plant, and Equipment | $23,301 | | Intangible Assets | $5,050 | | Goodwill | $9,978 | | Total Estimated Purchase Price | $39,445 | [Revenue Recognition](index=10&type=section&id=%28D%29%20REVENUE) This note describes the company's policies for recognizing revenue from product sales and long-term supply agreements - Revenue is primarily earned from the sale of cement, concrete, aggregates, gypsum wallboard, and recycled paperboard, mostly to third-party contractors and suppliers[30](index=30&type=chunk) - Revenue from long-term supply agreements is recognized upon transfer of control, generally at shipment, with market-based pricing subject to contractual adjustments[31](index=31&type=chunk) - Rebates and incentives offered to customers are treated as variable consideration and adjusted using the most likely amount method[32](index=32&type=chunk) [Accounts and Notes Receivable](index=11&type=section&id=%28E%29%20ACCOUNTS%20AND%20NOTES%20RECEIVABLE) This note provides details on accounts and notes receivable, including the allowance for doubtful accounts and collateral - Accounts Receivable are net of an allowance for doubtful accounts of **$6.8 million** at September 30, 2022, and **$6.7 million** at March 31, 2022, with no significant credit risk concentration[36](index=36&type=chunk) - Notes Receivable totaled approximately **$8.5 million** at September 30, 2022, bearing interest at LIBOR plus 3% (approx. 5.2%), maturing in fiscal 2025, and collateralized by borrower assets[37](index=37&type=chunk) [Inventories](index=11&type=section&id=%28F%29%20INVENTORIES) This note outlines the valuation method for inventories and provides a breakdown of their composition - Inventories are stated at the lower of average cost or net realizable value, including raw materials, finished products, and repair parts[38](index=38&type=chunk) Inventory Composition (thousands) | Inventory Type | September 30, 2022 | March 31, 2022 | | :-------------------------------- | :----------------- | :------------- | | Raw Materials and Materials-in-Progress | $72,610 | $81,308 | | Finished Cement | $26,671 | $38,769 | | Aggregates | $6,753 | $3,558 | | Gypsum Wallboard | $3,357 | $3,452 | | Paperboard | $5,371 | $7,462 | | Repair Parts and Supplies | $98,547 | $91,593 | | Fuel and Coal | $12,526 | $10,519 | | Total | $225,835 | $236,661 | [Accrued Expenses](index=11&type=section&id=%28G%29%20ACCURUED%20EXPENSES) This note details the composition of accrued expenses, including payroll, benefits, dividends, and taxes Accrued Expenses Composition (thousands) | Accrued Expense Type | September 30, 2022 | March 31, 2022 | | :------------------------------------ | :----------------- | :------------- | | Payroll and Incentive Compensation | $32,289 | $37,262 | | Benefits | $15,832 | $14,894 | | Dividends | $9,482 | $9,756 | | Interest | $7,167 | $5,052 | | Property Taxes | $10,399 | $6,514 | | Power and Fuel | $4,633 | $2,877 | | Freight | $2,485 | $1,172 | | Legal and Professional | $1,608 | $989 | | Sales and Use Tax | $2,291 | $1,509 | | Other | $5,329 | $6,729 | | Total | $91,515 | $86,754 | [Leases](index=12&type=section&id=%28H%29%20LEASES) This note describes the company's lease arrangements, including lease costs, liabilities, and key terms - The Company leases real estate, buildings, and equipment, with some leases containing rent escalations and extension options ranging from one to 20 years[41](index=41&type=chunk) Total Lease Cost (thousands) | Lease Cost Type | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating Lease Cost | $1,671 | $1,566 | $3,398 | $3,080 | | Short-term Lease Cost | $126 | $309 | $275 | $811 | | Total Lease Cost | $1,797 | $1,875 | $3,673 | $3,891 | Operating Lease Liabilities (thousands) | Item | September 30, 2022 | March 31, 2022 | | :--------------------------------- | :----------------- | :------------- | | Operating Lease Right-of-Use Assets | $22,126 | $23,856 | | Current Operating Lease Liabilities | $6,736 | $7,118 | | Noncurrent Operating Lease Liabilities | $26,736 | $29,212 | | Total Operating Lease Liabilities | $33,472 | $36,330 | - The weighted-average remaining lease term is **10.2 years**, with a weighted-average discount rate of **3.73%**[42](index=42&type=chunk) [Share-Based Employee Compensation](index=12&type=section&id=%28I%29%20SHARE-BASED%20EMPLOYEE%20COMPENSATION) This note details the company's equity award plans, including stock option and restricted stock activity and unrecognized compensation costs - The Company's Amended and Restated Incentive Plan allows for the issuance of equity awards, including stock options and restricted stock, to employees and Board members[43](index=43&type=chunk) Stock Option Activity (Six Months Ended September 30, 2022) | Metric | Number of Shares | Weighted-Average Exercise Price | | :--------------------------------------- | :--------------- | :------------------------------ | | Outstanding Options at March 31, 2022 | 456,849 | $83.81 | | Granted | 56,621 | $125.90 | | Exercised | (17,841) | $125.36 | | Cancelled | (3,178) | $109.15 | | Outstanding Options at September 30, 2022 | 492,451 | $89.09 | | Options Exercisable at September 30, 2022 | 301,348 | | | Weighted-Average Fair Value of Options Granted During the Year | | $48.36 | Nonvested Restricted Stock Activity (Three Months Ended September 30, 2022) | Metric | Number of Shares | Weighted-Average Grant Date Fair Value | | :--------------------------------------- | :--------------- | :------------------------------------- | | Nonvested Restricted Stock at March 31, 2022 | 258,779 | $85.34 | | Granted | 111,230 | $126.23 | | Vested | (55,467) | $127.05 | | Forfeited | (3,247) | $124.82 | | Nonvested Restricted Stock at September 30, 2022 | 311,295 | $98.31 | - At September 30, 2022, there was approximately **$4.8 million** of unrecognized compensation cost related to outstanding stock options, expected to be recognized over **2.4 years**, and **$23.7 million** from restricted stock, expected over **2.5 years**[48](index=48&type=chunk)[54](index=54&type=chunk) [Computation of Earnings Per Share](index=15&type=section&id=%28J%29%20COMPUTATION%20OF%20EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share, including the effect of dilutive securities Basic and Diluted Common Shares Outstanding | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Weighted-Average Shares of Common Stock Outstanding | 37,140,197 | 41,222,161 | 37,559,087 | 41,623,187 | | Effect of Dilutive Shares: | | | | | | Assumed Exercise of Outstanding Dilutive Options | 420,199 | 560,876 | 424,489 | 606,876 | | Less Shares Repurchased from Proceeds of Assumed Exercised Options | (310,956) | (365,887) | (311,373) | (395,516) | | Restricted Stock Units | 117,439 | 177,583 | 120,410 | 179,300 | | Weighted-Average Common Stock and Dilutive Securities Outstanding | 37,366,879 | 41,594,733 | 37,792,613 | 42,013,847 | | Shares Excluded Due to Anti-dilution Effects | 46,750 | 3,578 | 39,703 | 2,684 | [Pension and Employee Benefit Plans](index=15&type=section&id=%28K%29%20PENSION%20AND%20EMPLOYEE%20BENEFIT%20PLANS) This note describes the company's defined benefit and defined contribution plans and expected pension expenses - The Company sponsors fully funded single-employer defined benefit plans (frozen to new participants) and defined contribution plans, with expected pension expense for fiscal 2023 less than **$0.1 million**[57](index=57&type=chunk) [Income Taxes](index=16&type=section&id=%28L%29%20INCOME%20TAXES) This note details the effective tax rate and factors influencing it, such as state income taxes and depletion benefits - The effective tax rate for the six months ended September 30, 2022, was approximately **22%**, consistent with the prior year, primarily due to state income taxes partially offset by percentage depletion benefits[59](index=59&type=chunk) [Long-Term Debt](index=16&type=section&id=%28M%29%20LONG-TERM%20DEBT) This note outlines the composition of long-term debt, including credit facilities, senior unsecured notes, and compliance with covenants Long-term Debt Composition (thousands) | Debt Type | September 30, 2022 | March 31, 2022 | | :-------------------------------------- | :----------------- | :------------- | | Revolving Credit Facility | $200,000 | $200,000 | | 2.500% Senior Unsecured Notes Due 2031 | $750,000 | $750,000 | | Term Loan | $197,500 | — | | Total Debt | $1,147,500 | $950,000 | | Less: Current Portion of Long-term Debt | ($10,000) | — | | Less: Unamortized Discounts and Debt Issuance Costs | ($11,102) | ($11,735) | | Long-term Debt | $1,126,398 | $938,265 | - The Company has an unsecured **$750.0 million** revolving credit facility, amended on May 5, 2022, which includes a **$200.0 million** term loan facility and provides an option to increase revolving borrowing capacity by up to **$375.0 million**[61](index=61&type=chunk) - As of September 30, 2022, **$200.0 million** was outstanding under the Revolving Credit Facility, with **$543.6 million** of available borrowings, and the Company was in compliance with all financial covenants[67](index=67&type=chunk) - In July 2021, the Company repaid its **$665.0 million** term loan credit agreement and redeemed **$350.0 million** of 4.500% Senior Unsecured Notes, incurring an early termination premium of approximately **$8.4 million** and expensing **$6.1 million** in debt issuance costs[71](index=71&type=chunk) [Segment Information](index=18&type=section&id=%28N%29%20SEGMENT%20INFORMATION) This note provides financial data by business segment, including revenue, operating earnings, and joint venture performance - The business is organized into two sectors: Heavy Materials (Cement, Concrete and Aggregates) and Light Materials (Gypsum Wallboard, Recycled Paperboard), with products essential in various construction projects[73](index=73&type=chunk)[74](index=74&type=chunk) Revenue by Segment (thousands) | Segment | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :---------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Cement | $319,460 | $288,324 | $603,976 | $558,579 | | Concrete and Aggregates | $69,613 | $52,750 | $131,231 | $97,504 | | Gypsum Wallboard | $224,638 | $172,985 | $440,965 | $339,252 | | Paperboard | $53,673 | $47,798 | $107,746 | $91,065 | | Consolidated Revenue | $605,068 | $509,694 | $1,166,455 | $985,464 | Operating Earnings by Segment (thousands) | Segment | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Cement | $98,779 | $88,750 | $161,127 | $151,297 | | Concrete and Aggregates | $7,276 | $7,539 | $13,008 | $12,883 | | Gypsum Wallboard | $89,761 | $66,331 | $173,829 | $129,584 | | Paperboard | $5,579 | $981 | $9,395 | $4,318 | | Earnings Before Interest and Income Taxes | $187,104 | $143,583 | $330,613 | $272,274 | Joint Venture Summarized Financial Information (Total Amount, thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $50,259 | $53,852 | $102,889 | $99,234 | | Gross Margin | $15,977 | $17,776 | $28,003 | $34,609 | | Earnings Before Income Taxes | $14,312 | $16,519 | $24,508 | $32,459 | | Metric | September 30, 2022 | March 31, 2022 | | :------------------------- | :----------------- | :------------- | | Current Assets | $84,701 | $69,492 | | Noncurrent Assets | $114,764 | $112,926 | | Current Liabilities | $23,152 | $18,276 | [Interest Expense, Net](index=21&type=section&id=%28O%29%20INTEREST%20EXPENSE) This note details the components of net interest expense, including interest income, expense, and other related costs Interest Expense, Net Components (thousands) | Component | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Interest Income | ($70) | ($13) | ($82) | ($38) | | Interest Expense | $8,176 | $5,425 | $15,055 | $11,551 | | Other Expenses | $474 | $6,856 | $937 | $7,727 | | Interest Expense, net | $8,580 | $12,268 | $15,910 | $19,240 | - Other Expenses include amortization of debt issuance costs and Revolving Credit Facility costs[86](index=86&type=chunk) [Commitments and Contingencies](index=22&type=section&id=%28P%29%20COMMITMENTS%20AND%20CONTINGENCIES) This note describes the company's contingent liabilities, including letters of credit, performance bonds, and legal proceedings - The Company has contingent liabilities of approximately **$6.4 million** under outstanding letters of credit at September 30, 2022, related to workers' compensation and liability self-insurance[90](index=90&type=chunk) - The Company is contingently liable for **$26.8 million** in performance bonds for reclamation obligations and mining permits[92](index=92&type=chunk) - Management believes that indemnifications and legal proceedings will not have a material adverse effect on the consolidated financial position, results of operations, or cash flows[91](index=91&type=chunk)[195](index=195&type=chunk) [Fair Value of Financial Instruments](index=22&type=section&id=%28Q%29%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note provides information on the fair value of financial instruments, including long-term debt and short-term assets/liabilities - The fair value of the 2.500% Senior Unsecured Notes was **$550.2 million** at September 30, 2022[89](index=89&type=chunk) - The fair value of long-term debt is estimated based on current incremental borrowing rates for similar arrangements[93](index=93&type=chunk) - Carrying values of cash, receivables, payables, and the Revolving Credit Facility approximate their fair values due to short-term maturities[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, market conditions, and liquidity for the three and six months ended September 30, 2022, highlighting revenue growth, operational challenges, and strategic acquisitions. It details segment-specific results and discusses critical accounting policies, liquidity, and capital resources [Executive Summary](index=23&type=section&id=EXECUTIVE%20SUMMARY) This summary provides an overview of the company's business, recent acquisitions, and strategic positioning in the construction materials market - Eagle Materials is a leading U.S. manufacturer of heavy construction materials (Cement, Concrete and Aggregates) and light building materials (Gypsum Wallboard, Recycled Paperboard)[95](index=95&type=chunk)[96](index=96&type=chunk) - The Company completed the ConAgg Acquisition for approximately **$120.2 million** in April 2022, integrating it into the Concrete and Aggregates segment[99](index=99&type=chunk) - A cement distribution terminal was acquired in Nashville, Tennessee, for approximately **$39.5 million** in September 2022, included in the Cement business segment[100](index=100&type=chunk) [Market Conditions and Outlook](index=23&type=section&id=MARKET%20CONDITIONS%20AND%20OUTLOOK) This section discusses the current market environment, demand trends for key products, and the impact of external factors like inflation and interest rates - End markets remained resilient in the first half of fiscal 2023 despite external challenges like transportation disruptions, supply chain constraints, and increasing interest rates and inflation[101](index=101&type=chunk) - Demand for cement is expected to remain strong due to the Infrastructure Investment and Jobs Act, with the Cement business operating at high utilization levels[103](index=103&type=chunk) - Gypsum Wallboard shipments were up **6%**, with demand supported by home construction backlogs, though rising mortgage rates may adversely impact future residential construction[101](index=101&type=chunk)[104](index=104&type=chunk) - Energy and freight costs increased in fiscal 2022 and the first half of fiscal 2023, with further increases anticipated into fiscal 2024; the Company has forward purchase contracts for approximately **50%** of natural gas needs[106](index=106&type=chunk) [Results of Operations: Three Months Ended September 30, 2022 vs. 2021](index=25&type=section&id=THREE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202022%2C%20COMPARED%20WITH%20THREE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202021) This section analyzes the company's financial performance for the three-month period, focusing on revenue, gross profit, and net earnings changes Key Financial Highlights (Three Months Ended Sep 30, thousands, except per share data) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | | Revenue | $605,068 | $509,694 | 19% | | Gross Profit | $194,239 | $155,341 | 25% | | Net Earnings | $138,995 | $102,125 | 36% | | Diluted Earnings per Share | $3.72 | $2.46 | 51% | - Revenue increased by **$95.4 million (19%)**, with **$13.9 million** contributed by the ConAgg Acquisition; excluding the acquisition, revenue improved by **16%** due to higher gross sales prices and sales volume[110](index=110&type=chunk) - Gross Profit increased **25%** to **$194.2 million**, with the gross margin rising to **32%** due to higher gross sales prices, partially offset by increased operating costs[112](index=112&type=chunk) - Interest Expense, net, decreased by **30%** primarily due to the write-off of debt issue costs in the prior year, partially offset by higher interest rates and average outstanding balance under the Revolving Credit Facility[118](index=118&type=chunk) [Results of Operations: Six Months Ended September 30, 2022 vs. 2021](index=27&type=section&id=SIX%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202022%2C%20COMPARED%20WITH%20SIX%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202021) This section analyzes the company's financial performance for the six-month period, detailing changes in revenue, gross profit, and net earnings Key Financial Highlights (Six Months Ended Sep 30, thousands, except per share data) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | | Revenue | $1,166,455 | $985,464 | 18% | | Gross Profit | $345,105 | $281,852 | 22% | | Net Earnings | $244,000 | $197,452 | 24% | | Diluted Earnings per Share | $6.46 | $4.70 | 37% | - Revenue increased by **$181.0 million (18%)**, with **$24.9 million** from the ConAgg Acquisition; excluding the acquisition, revenue improved by **16%** due to higher gross sales prices and sales volume[124](index=124&type=chunk) - Gross Profit increased **22%** to **$345.1 million**, with the gross margin rising to **30%** due to higher gross sales prices, partially offset by increased operating costs[126](index=126&type=chunk) - Interest Expense, net, decreased by **17%** primarily due to the write-off of debt issue costs in the prior year, partially offset by higher interest rates and average outstanding balance under the Revolving Credit Facility[132](index=132&type=chunk) [Segment Results: Three and Six Months Ended September 30, 2022 vs. 2021](index=29&type=section&id=THREE%20AND%20SIX%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202022%20vs.%20THREE%20AND%20SIX%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202021%20BY%20SEGMENT) This section provides a detailed breakdown of financial performance across the company's Heavy Materials and Light Materials segments [Heavy Materials - Cement](index=29&type=section&id=CEMENT) This subsection details the Cement segment's revenue, sales volume, average net sales price, and operating earnings performance Cement Segment Performance (Three Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :-------------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue (incl. Intersegment & JV) | $319,460 | $288,324 | 11% | | Sales Volume (M Tons) | 2,145 | 2,198 | (2)% | | Average Net Sales Price, per ton | $132.50 | $117.78 | 12% | | Operating Earnings | $98,779 | $88,750 | 11% | Cement Segment Performance (Six Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :-------------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue (incl. Intersegment & JV) | $603,976 | $558,579 | 8% | | Sales Volume (M Tons) | 4,138 | 4,234 | (2)% | | Average Net Sales Price, per ton | $130.24 | $117.09 | 11% | | Operating Earnings | $161,127 | $151,297 | 6% | - Cement Revenue increased **11%** (three months) and **8%** (six months) primarily due to higher gross sales prices, partially offset by a **2%** decrease in sales volume for both periods[137](index=137&type=chunk)[139](index=139&type=chunk) - Operating Earnings increased **11%** (three months) and **6%** (six months), driven by higher gross sales prices but partially offset by increased energy and maintenance costs[138](index=138&type=chunk)[140](index=140&type=chunk) [Heavy Materials - Concrete and Aggregates](index=30&type=section&id=CONCRETE%20AND%20AGGREGATES) This subsection analyzes the Concrete and Aggregates segment's revenue, sales volumes, pricing, and operating earnings, including acquisition impacts Concrete and Aggregates Segment Performance (Three Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue, as reported | $69,613 | $52,750 | 32% | | Sales Volume (M Cubic Yards Concrete) | 451 | 398 | 13% | | Sales Volume (M Tons Aggregate) | 912 | 481 | 90% | | Average Net Sales Price (Concrete - Per Cubic Yard) | $134.28 | $120.15 | 12% | | Average Net Sales Price (Aggregates - Per Ton) | $10.87 | $10.40 | 5% | | Operating Earnings | $7,276 | $7,539 | (3)% | Concrete and Aggregates Segment Performance (Six Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue, as reported | $131,231 | $97,504 | 35% | | Sales Volume (M Cubic Yards Concrete) | 857 | 746 | 15% | | Sales Volume (M Tons Aggregate) | 1,707 | 842 | 103% | | Average Net Sales Price (Concrete - Per Cubic Yard) | $131.65 | $119.23 | 10% | | Average Net Sales Price (Aggregates - Per Ton) | $11.05 | $10.20 | 8% | | Operating Earnings | $13,008 | $12,883 | 1% | - Revenue increased **32%** (three months) and **35%** (six months), significantly boosted by the ConAgg Acquisition, which contributed **$13.9 million** and **$24.9 million**, respectively[143](index=143&type=chunk)[145](index=145&type=chunk) - Operating Earnings decreased **3%** (three months) and increased **1%** (six months), impacted by increased operating costs (materials and delivery) partially offset by higher gross sales prices[144](index=144&type=chunk)[146](index=146&type=chunk) [Light Materials - Gypsum Wallboard](index=31&type=section&id=GYPSUM%20WALLBOARD) This subsection presents the Gypsum Wallboard segment's revenue, sales volume, average net sales price, and operating earnings performance Gypsum Wallboard Segment Performance (Three Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :------------------------------ | :----------- | :----------- | :--------- | | Gross Revenue, as reported | $224,638 | $172,985 | 30% | | Sales Volume (MMSF) | 783 | 736 | 6% | | Average Net Sales Price, per MSF | $233.70 | $190.93 | 22% | | Operating Earnings | $89,761 | $66,331 | 35% | Gypsum Wallboard Segment Performance (Six Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :------------------------------ | :----------- | :----------- | :--------- | | Gross Revenue, as reported | $440,965 | $339,252 | 30% | | Sales Volume (MMSF) | 1,581 | 1,499 | 5% | | Average Net Sales Price, per MSF | $226.07 | $183.73 | 23% | | Operating Earnings | $173,829 | $129,584 | 34% | - Revenue increased **30%** for both the three and six months ended September 30, 2022, driven by higher gross sales prices and sales volume[149](index=149&type=chunk)[151](index=151&type=chunk) - Operating Earnings increased **35%** (three months) and **34%** (six months), primarily due to higher gross sales prices and sales volume, partially offset by increased operating costs (freight, energy, and raw materials)[150](index=150&type=chunk)[152](index=152&type=chunk) [Light Materials - Recycled Paperboard](index=32&type=section&id=RECYCLED%20PAPERBOARD) This subsection details the Recycled Paperboard segment's revenue, sales volume, average net sales price, and operating earnings Recycled Paperboard Segment Performance (Three Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :-------------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue (incl. intersegment) | $53,673 | $47,798 | 12% | | Sales Volume (M Tons) | 85 | 87 | (2)% | | Average Net Sales Price, per ton | $603.62 | $524.54 | 15% | | Operating Earnings | $5,579 | $981 | 469% | Recycled Paperboard Segment Performance (Six Months Ended Sep 30) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change (%) | | :-------------------------------------- | :----------- | :----------- | :--------- | | Gross Revenue (incl. intersegment) | $107,746 | $91,065 | 18% | | Sales Volume (M Tons) | 169 | 171 | (1)% | | Average Net Sales Price, per ton | $607.73 | $511.76 | 19% | | Operating Earnings | $9,395 | $4,318 | 118% | - Revenue increased **12%** (three months) and **18%** (six months) primarily due to higher gross sales prices from long-term sales agreements, despite a slight decrease in sales volume[155](index=155&type=chunk)[157](index=157&type=chunk) - Operating Earnings increased significantly by **469%** (three months) and **118%** (six months), driven by higher gross sales prices, partially offset by increased input costs (energy, chemicals, freight, and fiber)[156](index=156&type=chunk)[158](index=158&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights key accounting policies and estimates requiring significant management judgment, such as those for long-lived assets and business combinations - The Company's critical accounting policies requiring significant judgment include those related to long-lived assets, goodwill, and business combinations[161](index=161&type=chunk) - Management reviews the application of accounting policies and estimates with the Audit Committee and independent registered public accounting firm[161](index=161&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's ability to generate and manage cash, fund operations, and meet financial obligations, including debt and capital expenditures - The Company believes it has access to sufficient financial resources to fund its business, operations, contractual obligations, capital expenditures, and debt service for at least the next twelve months[163](index=163&type=chunk)[178](index=178&type=chunk) [Cash Flow](index=34&type=section&id=Cash%20Flow) This subsection analyzes the company's cash flows from operating, investing, and financing activities, and changes in cash and equivalents Summary of Cash Flows (Six Months Ended Sep 30, thousands) | Cash Flow Activity | Sep 30, 2022 | Sep 30, 2021 | | :----------------------------------------------- | :----------- | :----------- | | Net Cash Provided by Operating Activities | $300,445 | $261,462 | | Net Cash Used in Investing Activities | ($201,700) | ($26,777) | | Net Cash Used in Financing Activities | ($34,021) | ($457,991) | | Net Increase (Decrease) in Cash and Cash Equivalents | $64,724 | ($223,306) | - Net Cash Provided by Operating Activities increased by **$38.9 million** to **$300.4 million**, primarily due to higher Net Earnings[165](index=165&type=chunk) - Net Cash Used in Investing Activities increased by **$174.9 million** to **$201.7 million**, mainly due to **$158.5 million** for the ConAgg and Terminal Acquisitions[170](index=170&type=chunk) - Net Cash Used In Financing Activities decreased by **$424.0 million** to **$34.0 million**, primarily due to higher net borrowings and lower amounts paid for early debt termination, debt issuance costs, and share repurchases[171](index=171&type=chunk) - The debt-to-capitalization ratio and net-debt-to-capitalization ratio were **49.7%** and **47.8%**, respectively, at September 30, 2022, up from **45.6%** and **45.1%** at March 31, 2022[172](index=172&type=chunk) [Debt Financing Activities](index=35&type=section&id=Debt%20Financing%20Activities) This subsection details the company's revolving credit facility, available borrowings, and compliance with debt covenants - The Revolving Credit Facility has a borrowing capacity of **$750.0 million**, with **$543.6 million** available borrowings at September 30, 2022, net of outstanding letters of credit[174](index=174&type=chunk) - The Company has no off-balance sheet debt or outstanding debt guarantees[174](index=174&type=chunk) - Future liquidity and capital requirements may vary based on market conditions in the construction industry, compliance with debt covenants, competition, and general economic factors[178](index=178&type=chunk) [Dividends](index=36&type=section&id=Dividends) This subsection provides information on dividends paid to stockholders and the company's dividend policy Dividends Paid to Stockholders (Six Months Ended Sep 30, thousands) | Metric | Sep 30, 2022 | Sep 30, 2021 | | :--------------- | :----------- | :----------- | | Dividends Paid | $19,149 | $10,547 | - The Company reinstated its quarterly dividend on May 19, 2021, with each payment subject to Board of Directors' review and approval[181](index=181&type=chunk) [Share Repurchases](index=36&type=section&id=Share%20Repurchases) This subsection details the company's share repurchase programs, including authorized amounts and shares purchased - On May 17, 2022, the Board authorized an additional **7.5 million** share repurchases, bringing the cumulative total to **55.9 million** shares since April 1994[182](index=182&type=chunk) - Through September 30, 2022, approximately **46.8 million** shares have been repurchased[182](index=182&type=chunk) Share Repurchase Activity (Year-to-Date September 30, 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | | :-------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | | Quarter 1 Totals | 884,000 | $124.00 | | | Quarter 2 Totals | 840,000 | $119.98 | | | Year-to-Date Totals | 1,724,000 | $122.04 | 9,098,992 | [Capital Expenditures](index=37&type=section&id=Capital%20Expenditures) This subsection outlines capital expenditures by category and provides projections for future investment Capital Expenditures by Category (thousands) | Category | 2022 (Six Months) | 2021 (Six Months) | | :------------------------------------ | :---------------- | :---------------- | | Land and Quarries | $10,157 | $1,378 | | Plants | $21,944 | $22,480 | | Buildings, Machinery, and Equipment | $11,148 | $2,919 | | Total Capital Expenditures | $43,249 | $26,777 | - Capital expenditures for fiscal 2023 are expected to range from **$110.0 million** to **$120.0 million**, allocated across both Heavy Materials and Light Materials sectors[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily related to fluctuations in interest rates on its variable-rate debt and commodity price changes for key inputs, and its strategies to manage these risks - The Company is exposed to market risks from interest rate fluctuations on its Revolving Credit Facility and Term Loan; a hypothetical **100 basis point** increase would raise annual interest expense by approximately **$4.0 million**[191](index=191&type=chunk) - The Company is subject to commodity risk from price changes in coal, coke, natural gas, and power, and attempts to limit exposure by entering into contracts or increasing the use of alternative fuels[192](index=192&type=chunk) - At present, the Company does not utilize derivative financial instruments[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, ensuring timely and accurate financial reporting - The Company has established a system of disclosure controls and procedures designed to ensure timely and accurate reporting of information required by the Securities Exchange Act of 1934[193](index=193&type=chunk) - Based on an evaluation, the CEO and CFO concluded that these disclosure controls and procedures were effective as of September 30, 2022[193](index=193&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, mine safety, and exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, but management believes the ultimate outcome of any currently pending legal proceeding will not have a material effect on its consolidated financial condition, results of operations, or liquidity - The Company may be involved in litigation or other legal proceedings related to worker safety, environmental matters, commercial contracts, and other business activities[195](index=195&type=chunk) - Management believes that the ultimate outcome of any currently pending legal proceeding will not have a material effect on the Company's consolidated financial condition, results of operations, or liquidity[195](index=195&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive discussion of risk factors in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022, for factors that could impact its operations, financial condition, and liquidity - For information regarding factors that could impact the Company's results of operations, financial condition, and liquidity, refer to Part 1. Item 1A. Risk Factors in the Annual Report on Form 10-K for the fiscal year ended March 31, 2022[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The required disclosure for unregistered sales of equity securities and use of proceeds is incorporated by reference from the "Share Repurchases" section within Management's Discussion and Analysis of Financial Condition and Results of Operations - The disclosure required under this Item is included in the "Share Repurchases" section of "Management's Discussion and Analysis of Results of Operations and Financial Condition" in this Quarterly Report on Form 10-Q[198](index=198&type=chunk) [Item 4. Mine Safety Information](index=40&type=section&id=Item%204.%20Mine%20Safety%20Information) Information concerning mine safety violations and other regulatory matters is provided in Exhibit 95 to this Form 10-Q, as required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act - Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q[199](index=199&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including director compensation documents, certifications from the Chief Executive Officer and Chief Financial Officer, mine safety disclosures, and XBRL-related documents - Exhibits include Director Compensation Summary, Form of Director Restricted Stock Agreement, Form of Director Stock Option Agreement, CEO and CFO certifications, Mine Safety Disclosure, and Inline XBRL documents[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Signatures](index=42&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive, financial, and accounting officers, certifying the report on October 26, 2022 - The report is signed by Michael R. Haack (President and CEO), D. Craig Kesler (Executive Vice President – Finance and Administration and CFO), and William R. Devlin (Senior Vice President – Controller and Chief Accounting Officer) on October 26, 2022[210](index=210&type=chunk)

Eagle Materials Inc. (NYSE:EXP) Q1 2023 Earnings Conference Call July 28, 2022 8:30 AM ET Company Participants Michael Haack - President and CEO Craig Kesler - CFO Bob Stewart - EVP, Strategy, Corporate Development and Communications Conference Call Participants Trey Grooms - Stevens Brent Thielman - D.A. Davidson Jerry Revich - Goldman Sachs Operator Good day, everyone, and welcome to Eagle Materials Q1 2023 Earnings Conference Call. Please note, this even is being recorded. I would like to turn the confer ...

July 28, 2022 First Quarter Fiscal 2023 Earnings Release and Conference Call Forward-Looking Statements Forward-Looking Statements. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates o ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Eagle Materials Inc. reported Q2 FY23 revenue of **$561.4 million**, an 18% increase, with net earnings up 10% to **$105.0 million**, driven by an acquisition and strong cash flow Consolidated Statements of Earnings (Three Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $561,387 | $475,770 | | Gross Profit | $150,866 | $126,511 | | Earnings before Income Taxes | $136,179 | $121,719 | | Net Earnings | $105,005 | $95,327 | | Diluted EPS | $2.75 | $2.25 | Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $547,139 | $442,727 | | Total Assets | $2,770,859 | $2,579,652 | | Long-term Debt | $1,119,582 | $938,265 | | Total Liabilities | $1,647,078 | $1,446,096 | | Total Stockholders' Equity | $1,123,781 | $1,133,556 | Consolidated Statements of Cash Flows (Three Months Ended June 30, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $124,802 | $111,121 | | Net Cash Used in Investing Activities | ($136,076) | ($11,935) | | Net Cash Provided by (Used in) Financing Activities | $60,139 | ($56,164) | | Net Increase in Cash | $48,865 | $43,022 | - On April 22, 2022, the company acquired a readymix concrete and aggregates business (ConAgg Acquisition) for approximately **$121.2 million**, funded through its revolving credit facility[26](index=26&type=chunk) Segment Revenue (Three Months Ended June 30, in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Cement | $284,516 | $270,255 | | Concrete and Aggregates | $61,618 | $44,754 | | Gypsum Wallboard | $216,327 | $166,267 | | Paperboard | $54,073 | $43,267 | Segment Operating Earnings (Three Months Ended June 30, in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Cement | $62,348 | $62,547 | | Concrete and Aggregates | $5,732 | $5,344 | | Gypsum Wallboard | $84,068 | $63,253 | | Paperboard | $3,816 | $3,337 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 fiscal 2023 saw **18% revenue growth** from higher prices and robust demand, particularly in Gypsum Wallboard, despite inflation and rising energy costs [Market Conditions and Outlook](index=22&type=section&id=Market%20Conditions%20and%20Outlook) Resilient end markets, strong demand for Cement and Gypsum Wallboard, but persistent cost headwinds from energy and freight are expected - The Cement business is in a near sold-out position, with demand expected to remain strong due to federal funding from the Infrastructure Investment and Jobs Act[101](index=101&type=chunk) - Gypsum Wallboard demand is supported by record home construction backlogs, though management acknowledges that quantitative tightening may impact future residential construction[102](index=102&type=chunk) - The company anticipates further increases in energy and freight costs in fiscal 2023, mitigating this by forward purchasing about **40% of its natural gas needs** at **$4.78 per mmbtu**[104](index=104&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 FY23 revenue grew **18% to $561.4 million**, net earnings rose **10% to $105.0 million**, driven by price increases across all segments - Overall revenue increased by **$85.6 million (18%)**, driven by a **$70.7 million** positive impact from higher sales prices and a **$3.9 million** impact from increased sales volume, with the ConAgg acquisition contributing **$11.0 million** in revenue[108](index=108&type=chunk) - Gross profit increased **19% to $150.9 million**, with the gross margin remaining stable at **27%** as higher sales prices were offset by increased operating costs[110](index=110&type=chunk) Cement Segment Performance (Q1 FY23 vs Q1 FY22) | Metric | Q1 FY23 | Q1 FY22 | Change | | :--- | :--- | :--- | :--- | | Revenue | $284.5M | $270.3M | +5% | | Sales Volume (M Tons) | 1.993 | 2.036 | -2% | | Avg. Net Sales Price/ton | $127.82 | $116.34 | +10% | | Operating Earnings | $62.3M | $62.5M | 0% | Gypsum Wallboard Segment Performance (Q1 FY23 vs Q1 FY22) | Metric | Q1 FY23 | Q1 FY22 | Change | | :--- | :--- | :--- | :--- | | Revenue | $216.3M | $166.3M | +30% | | Sales Volume (MMSF) | 798 | 763 | +5% | | Avg. Net Sales Price/MSF | $218.57 | $176.79 | +24% | | Operating Earnings | $84.1M | $63.3M | +33% | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Strong liquidity with **$124.8 million** operating cash flow, significant acquisition spending, and ongoing share repurchases - Net cash from operating activities increased by **$13.7 million to $124.8 million**, primarily due to higher net earnings[141](index=141&type=chunk) - The company had **$562.6 million** of available borrowings under its Revolving Credit Facility as of June 30, 2022[149](index=149&type=chunk) Share Repurchases (Three Months Ended June 30, 2022) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 884,000 | | Average Price Paid Per Share | $124.00 | | Total Cost | ~$109.6 million | | Shares Remaining for Repurchase | 9,938,992 | - Capital expenditures for fiscal 2023 are expected to range from **$110.0 million to $120.0 million**[159](index=159&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on its variable-rate debt and commodity price volatility, with mitigation strategies in place - The company is exposed to interest rate risk on its **$181.0 million** of borrowings under the Revolving Credit Facility and **$200.0 million** under the Term Loan[163](index=163&type=chunk) - A hypothetical **100 basis point increase** in interest rates on variable-rate debt would increase annual interest expense by approximately **$3.8 million**[163](index=163&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, confirmed the effectiveness of disclosure controls and procedures as of June 30, 2022 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[165](index=165&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to materially impact the company's financial condition, results of operations, or liquidity - Management believes that no currently pending legal proceedings will have a material effect on the company's consolidated financial condition[167](index=167&type=chunk) [Risk Factors](index=36&type=section&id=Item%201a.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for fiscal year ended March 31, 2022 - The report refers to the Risk Factors section in the Form 10-K for the fiscal year ended March 31, 2022, for information on factors that could impact the company[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details on share repurchases are incorporated by reference from the Management's Discussion and Analysis section of this report - This item incorporates by reference the 'Share Repurchases' section from the MD&A, which details the repurchase of **884,000 shares** for approximately **$109.6 million** during the quarter[170](index=170&type=chunk)[156](index=156&type=chunk) [Mine Safety Information](index=36&type=section&id=Item%204.%20Mine%20Safety%20Information) Mine safety disclosures, as required by the Dodd-Frank Act, are provided in Exhibit 95 of this Form 10-Q - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act are provided in Exhibit 95 of this report[171](index=171&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including credit agreements, compensation plans, and certifications