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 September 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- ...

Financial Data and Key Metrics Changes - The company reported record revenue of $602 million for Q1 2024, a 7% increase from the prior year, driven by higher Wallboard and Cement sales prices [36][15] - Net earnings expanded gross margin by 240 basis points, and adjusted EPS increased by 26% to $3.55, reflecting improved earnings and a 7% reduction in fully diluted shares due to the buyback program [2][15] - Operating earnings rose by 19%, primarily due to increased cement prices, which were partially offset by higher maintenance costs [16] Business Line Data and Key Metrics Changes - The Heavy Materials sector, which includes Cement and Concrete and Aggregates, saw revenue increase by 15%, driven by higher cement sales prices and contributions from a recently acquired terminal [37] - The Light Materials sector experienced a 2% decrease in revenue, attributed to lower Wallboard sales volume, although operating earnings increased by 12% due to higher net sales prices and lower input costs [17] Market Data and Key Metrics Changes - The cement business benefited from a favorable pricing backdrop, realizing a 15% year-over-year price increase, with a second round of price increases implemented in early July [7][38] - The company noted that infrastructure awards are at multi-decade highs, with strong demand for cement driven by federal and state spending [11][32] Company Strategy and Development Direction - The company aims to grow its Cement and Aggregates businesses, having completed the acquisition of a cement import terminal in Northern California to strengthen its competitive position [8][18] - Environmental stewardship is a priority, with plans to increase the use of alternative fuels and transition to Portland Limestone Cement (PLC), targeting 100% conversion by 2025 [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through economic cycles, highlighting a strong demand backdrop for cement and concrete due to infrastructure spending [13][32] - The near-term outlook for Wallboard remains unclear, but there is increasing confidence in the supply-demand scenario for the mid and long term due to housing supply shortages [34][33] Other Important Information - The company returned $83 million to shareholders through share repurchases and dividends during the quarter [18] - Operating cash flow increased by 12% to $140 million, reflecting improved earnings and working capital management [39] Q&A Session Summary Question: What is the outlook for Wallboard volume given the backlog of unfinished homes? - Management indicated that Wallboard sales volume has remained resilient, supported by a backlog of activity and improving order growth from homebuilders [42][43] Question: What is the expected impact of the joint venture's maintenance issues on future quarters? - Management confirmed that production levels have improved post-outage, and while additional work is planned for fiscal 2025, they are confident in the facility's performance for the current year [46] Question: Can you provide an update on the M&A pipeline and share buyback strategy? - The M&A pipeline remains robust, with strict criteria for investments, and the company is active in its share repurchase program due to strong cash generation [51] Question: How do you view the pricing environment for cement moving forward? - Management noted strong demand and limited supply response, suggesting a favorable pricing environment for the foreseeable future [55] Question: What drove the recent growth in cement volumes? - The growth was attributed to robust infrastructure spending and the company's sold-out position, with expectations for continued strong demand [57]

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 ...

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)

[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) 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 ...

Financial Data and Key Metrics Changes - Revenue for fiscal year 2022 increased by 15% to a record $1.9 billion, with gross profit margin rising by 270 basis points to 27.9% [7][24] - Earnings per share (EPS) from continuing operations rose by 14% to a record $9.14, with fourth quarter EPS up by 22% [8][25] - Operating cash flow for fiscal 2022 was $517 million, down 20% from the prior year due to timing of working capital [30] Business Line Data and Key Metrics Changes - Heavy Materials sector revenue increased by 6%, driven by higher cement sales volume and pricing, with operating earnings up by 10% [26] - Light Materials sector revenue surged by 27%, with operating earnings increasing by 42% to $274 million, reflecting improved wallboard sales volume and prices [29] Market Data and Key Metrics Changes - Demand for housing continues to outpace supply, with steady order trends across major business lines despite rising interest rates [21][22] - Public infrastructure spending is supported by improving state and local government revenues, with federal infrastructure spending expected to boost cement demand [22] Company Strategy and Development Direction - The company emphasizes resilience through owning manufacturing facilities and controlling raw materials, which has proven effective during supply chain disruptions [11][12] - A commitment to sustainability is highlighted by the introduction of limestone cement, which reduces carbon intensity and enhances clinker manufacturing capacity [15] - The company plans to increase capital spending to $115 million to $125 million in fiscal 2023 to expand production of Portland Limestone Cement [33] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about fiscal 2023, expecting it to be another record year, supported by midyear price increases in wallboard, cement, and aggregates [23] - The company is closely monitoring inflationary pressures on energy and transportation costs, with multiple price increases planned to offset these pressures [39][75] Other Important Information - The company returned $620 million to shareholders through share repurchases and dividends, with an additional 7.5 million shares authorized for repurchase [17][32] - The acquisition of an aggregates-led business in Colorado for $120 million is expected to complement existing operations and provide sustainable growth [12][33] Q&A Session Summary Question: How are you thinking about raw material and energy-related costs? - Management noted that OCC prices have plateaued and natural gas needs are partially hedged, indicating a cautious but optimistic outlook on margins [36][37][39] Question: How is housing demand expected to evolve? - Despite rising interest rates, management believes housing demand remains strong due to reasonable affordability and a lack of inventory [41][42] Question: Can you discuss wallboard volume trends? - Management indicated that previous volume declines were due to supply chain issues, but improvements are expected as these issues resolve [45][46] Question: How do you view wallboard margins in a potential downturn? - Management expressed confidence in their position due to controlled raw material costs and a strong supply contract, suggesting resilience in margins [50][52] Question: What are your thoughts on capital allocation in a recession? - The company is positioned to manage cycles and continue growth, with a focus on strategic opportunities and returning cash to shareholders [58][60] Question: Any updates on cement capacity and pricing? - Management confirmed multiple price increases due to tight market conditions and indicated ongoing projects to enhance cement production capacity [68][75]

Eagle Materials Inc.'s (NYSE:EXP) Q3 2022 Earnings Conference Call January 27, 2022 8:30 AM ET Company Participants Michael Haack – President and CEO Craig Kesler – Chief Financial Officer Conference Call Participants Trey Grooms – Stephens Brent Thielman – D.A. Davidson Adrian Huerta – JP Morgan Anthony Pettinari – Citi Jerry Revich – Goldman Sachs Josh Wilson – Raymond James Philip Ng – Jefferies Operator Good day, everyone and welcome to Eagle Materials, Third Quarter of fiscal 2022, Earnings Conferenc ...

January 27, 2022 Third Quarter Fiscal 2022 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, estimate ...