Eagle Materials(EXP) - 2025 Q4 - Annual Report

Part I Item 1. Business The company is a leading US manufacturer of heavy construction and light building materials, focusing on low-cost production and strategic growth - The company is a leading U.S. manufacturer of heavy construction products like Portland Cement and light building materials like Gypsum Wallboard, operating through a network of over 70 facilities in 21 states[12] - Key competitive strengths include strategically located plants, a decentralized operating structure, substantial raw material reserves, production flexibility, and a position as a low-cost producer[15][16][17] - Capital allocation priorities are growth investments, maintaining a low-cost position, and returning cash to shareholders, with $1.8 billion returned over the past five years[32] - The company had approximately 2,500 employees as of March 31, 2025, with about 600 unionized hourly workers[41] - In fiscal 2025, all business segments recorded a total recorded incident rate (TRIR) average that was lower than the applicable industry average, highlighting a strong safety performance[43] Fiscal 2025 Financial Highlights | Metric | Value | Change vs FY2024 | | :--- | :--- | :--- | | Revenue | $2.3 billion | Up slightly (Record) | | Net Earnings | $463.4 million | Down 3% | | Diluted EPS | $13.77 | Up 1% (Record) | | Share Repurchases | 1.2 million shares ($298.0M) | - | - Strategic highlights for FY2025 include acquisitions in Kentucky and Pennsylvania, the start-up of a new slag-cement facility in Texas, and the commencement of major modernization and expansion projects in Wyoming and Oklahoma[34][38][40] Fiscal 2025 Revenue and Earnings by Business Segment | Sector | Business Segment | Revenue ($ millions) | Operating Earnings ($ millions) | | :--- | :--- | :--- | :--- | | Heavy Materials | Cement | $1,053.6 | $319.5 | | | Concrete and Aggregates | $237.7 | $(8.8) | | Light Materials | Gypsum Wallboard | $846.5 | $350.8 | | | Recycled Paperboard | $122.7 | $38.1 | Item 1A. Risk Factors The company is exposed to risks from construction industry cycles, regulations, commodity prices, operational challenges, and cybersecurity threats - Industry Risks: Demand is tied to the cyclical construction industry, government funding for public projects, and seasonal weather patterns[133][136][140] - Regulatory & Legal Risks: Operations are subject to extensive and costly environmental, health, and safety regulations, with potential impacts from climate change legislation[143][148][157] - Financial & Operational Risks: The business is capital-intensive and faces risks from rising input costs, transportation availability, and debt covenants[167][173][177] - Cybersecurity Risks: The company is vulnerable to cyber attacks and data breaches that could negatively impact operations and result in liability[163][164] - Growth & Strategic Risks: The company may face challenges in identifying and integrating acquisitions and completing capital projects on time or within budget[191][196] Item 1B. Unresolved Staff Comments The company reports that there are no unresolved comments from the SEC Staff - There are no unresolved Staff comments[200] Item 1C. Cybersecurity The company maintains a comprehensive cybersecurity program and has experienced no material incidents to date - The company's cybersecurity risk management is integrated into its broader risk management framework and overseen by the Director of Information Security[202][207] - The Audit Committee of the Board of Directors is responsible for overseeing cyber risk and receives quarterly updates[209] - To the company's knowledge, it has not been subject to any cybersecurity incidents that have materially affected its business, operations, or financial standing[205] Item 2. Properties The company owns and leases numerous facilities with substantial, long-term mineral reserves ensuring operational viability Limestone Reserves and Resources (as of March 31, 2025) | Category | Tons (millions) | | :--- | :--- | | Proven & Probable Reserves | 321.2 | | Measured & Indicated Resources | 728.4 | Aggregate Reserves and Resources (as of March 31, 2025) | Category | Tons (millions) | | :--- | :--- | | Proven & Probable Reserves | 191.7 | | Measured & Indicated Resources | 212.6 | Gypsum Reserves and Resources (as of March 31, 2025) | Category | Tons (millions) | | :--- | :--- | | Proven & Probable Reserves | 67.2 | | Measured & Indicated Resources | 149.7 | Item 3. Legal Proceedings The company is involved in ordinary course legal proceedings, none of which are expected to have a material financial impact - Management believes that the ultimate outcome of any currently pending legal proceedings will not have a material effect on the company's consolidated financial condition[236] - The company is in litigation with the EPA over the disapproval of State Implementation Plans (SIPs) for several states related to ozone standards[237] Item 4. Mine Safety Disclosures Mine safety violation information is included in Exhibit 95 of the Form 10-K report - Information concerning mine safety violations required by the Dodd-Frank Act is included in Exhibit 95 to this Annual Report[239] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's stock trades on the NYSE, and it maintains an active share repurchase program with significant remaining authorization Share Repurchases by Fiscal Year | Fiscal Year | Shares Repurchased | Average Price | Total Cost | | :--- | :--- | :--- | :--- | | 2025 | 1,214,173 | $245.67 | ~$298.3M | | 2024 | 1,863,534 | $184.21 | ~$343.3M | | 2023 | 3,075,788 | $126.05 | ~$387.7M | - As of March 31, 2025, a total of approximately 4.7 million shares remain available for repurchase under the Board's authorization[242] Item 6. Reserved This item is not required - Not required[250] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2025 saw record revenue amid resilient markets, with significant investments in growth projects and a strong liquidity position - The macroeconomic environment is viewed as constructive, with cement demand expected to remain steady due to infrastructure spending from the IIJA[262] - Residential construction activity has remained steady, supported by a chronic housing shortage, though a full recovery is not expected until mortgage rates decline[263] - Cost outlook for fiscal 2026 includes stable to slightly increasing freight costs and continued high maintenance and energy costs[265][267] - Cement operating earnings decreased 6% to $319.5 million, driven by lower sales volume and higher operating costs[282] - Gypsum Wallboard operating earnings increased 5% to $350.8 million, benefiting from higher sales prices and lower operating expenses[287] - Key critical accounting policies include impairment of long-lived assets, goodwill, and business combinations, with no goodwill impairment recognized in fiscal 2025[293][296][363] - Capital expenditures for fiscal 2026 are expected to range from $475.0 million to $525.0 million to fund major plant expansions[330] - As of March 31, 2025, the company had $1.25 billion in total debt and $540.1 million of available borrowings under its Revolving Credit Facility[322][405] - The debt-to-capitalization ratio was 46.1% at March 31, 2025, compared to 45.7% at March 31, 2024[319] Consolidated Results of Operations (Fiscal Year Ended March 31) | (in thousands, except per share) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $2,260,508 | $2,259,297 | 0% | | Gross Profit | $673,137 | $685,321 | (2)% | | Net Earnings | $463,416 | $477,639 | (3)% | | Diluted Earnings per Share | $13.77 | $13.61 | 1% | Summary of Cash Flows (Fiscal Year Ended March 31) | Cash Flow ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $548,548 | $563,938 | | Net Cash Used in Investing Activities | $(370,131) | $(175,358) | | Net Cash Used in Financing Activities | $(192,941) | $(368,897) | Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rate fluctuations and commodity price changes for key inputs - The company is exposed to interest rate risk on its variable-rate debt with a combined outstanding balance of $496.3 million at March 31, 2025[339] - A hypothetical 100 basis point increase in interest rates on outstanding variable-rate borrowings would increase annual interest expense by $5.0 million[339] - The company is subject to commodity risk from price changes in coal, natural gas, and power, and attempts to limit this exposure through contracts and alternative fuels[340] Item 8. Financial Statements and Supplementary Data This section contains the audited consolidated financial statements, notes, and the independent auditor's unqualified opinion - Acquisitions (Note B): In fiscal 2025, the company completed two acquisitions for a combined ~$174.9M, adding $77.3M to goodwill[388][390][395] - Indebtedness (Note F): As of March 31, 2025, total debt was $1.25 billion, consisting of a Revolving Credit Facility, a Term Loan, and Senior Unsecured Notes[405] - Equity Awards (Note K): The company granted various performance-based and time-vesting stock awards, with 1,344,678 shares available for future grants under its 2023 plan[443][456] - The auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of internal controls[476][477] - A Critical Audit Matter was identified related to the existence of raw materials and materials-in-progress inventory due to measurement complexity[482] Consolidated Statements of Earnings (Year Ended March 31) | (in thousands) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Revenue | $2,260,508 | $2,259,297 | $2,148,069 | | Gross Profit | $673,137 | $685,321 | $639,266 | | Net Earnings | $463,416 | $477,639 | $461,540 | | Diluted EPS | $13.77 | $13.61 | $12.46 | Consolidated Balance Sheets (As of March 31) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Current Assets | $668,657 | $627,693 | | Total Assets | $3,264,588 | $2,947,019 | | Total Current Liabilities | $245,004 | $239,409 | | Total Liabilities | $1,807,888 | $1,638,484 | | Total Stockholders' Equity | $1,456,700 | $1,308,535 | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None[484] Item 9A. Controls and Procedures Management and the independent auditor concluded that the company's disclosure controls and internal controls were effective - Based on an evaluation as of the end of the fiscal year, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[485] - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2025, based on the COSO 2013 framework[487] - The independent registered public accounting firm, Ernst & Young LLP, also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[490] Item 9B. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the fourth fiscal quarter - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal fourth quarter[497] Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - Not applicable[498] Part III Item 10. Directors, Executive Officers and Corporate Governance Required information is incorporated by reference from the 2025 Proxy Statement - The required information is incorporated by reference from the Company's 2025 Proxy Statement[500] - The company's code of ethics, "The Eagle Way – A Guide to Decision-Making on Business Conduct Issues," is published on its website[501] Item 11. Executive Compensation Required information is incorporated by reference from the 2025 Proxy Statement - The required information is incorporated by reference from the Company's 2025 Proxy Statement[503] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information is incorporated by reference, with details provided on equity compensation plans - The required information is incorporated by reference from the Company's 2025 Proxy Statement[504] Equity Compensation Plan Information as of March 31, 2025 | Plan Category | Securities to be issued upon exercise of outstanding options | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 184,233 | $95.75 | 1,344,678 | Item 13. Certain Relationships and Related Transactions, and Director Independence Required information is incorporated by reference from the 2025 Proxy Statement - The required information is incorporated by reference from the Company's 2025 Proxy Statement[507] Item 14. Principal Accounting Fees and Services Required information is incorporated by reference from the 2025 Proxy Statement - The required information is incorporated by reference from the Company's 2025 Proxy Statement[508] Part IV Item 15. Exhibits and Financial Statement Schedules This section lists all documents filed as part of the Form 10-K report, including financial statements and exhibits - This item lists the financial statements, financial statement schedules (omitted as not applicable), and exhibits filed as part of the report[509][510][511] Item 16. Form 10-K Summary The company provides no summary under this item - None[520]