Eagle Materials(EXP) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal year 2025 revenue reached a record $2,300 million, up slightly from the prior year, primarily due to higher prices across all business lines, partially offset by lower sales volume in Cement and Concrete and Aggregates [22][24] - Diluted earnings per share for the full fiscal year increased 1% to $13.77, driven by a reduced share count from the share repurchase program [22][23] - Fourth quarter revenue decreased 1% to $470 million, mainly due to lower Cement and Gypsum Wallboard sales volumes, offset by higher prices [22][23] Business Line Data and Key Metrics Changes - Heavy materials sector revenue declined 2% to $1,400 million, reflecting a 5% decrease in cement sales volume, partially offset by higher sales prices [24] - Light materials sector revenue increased 3% to $969 million, driven by higher wallboard sales prices and record recycled paperboard sales volume [25] Market Data and Key Metrics Changes - The cement sector experienced no material disruption in public infrastructure project funding, with healthy bidding activities reported by customers [16][17] - Residential market pressures from high mortgage rates and housing affordability challenges continue, but there is pent-up demand for new housing [17][19] Company Strategy and Development Direction - The company is focused on health, safety, sustainability, and strategic investments to enhance operational efficiency and competitive positioning [20][21] - Significant capital investments include the modernization of the Mountain Cement plant and the Duke wallboard facility, expected to enhance capacity and efficiency [26][28] Management's Comments on Operating Environment and Future Outlook - Management noted that adverse weather impacted fourth quarter performance but underlying fundamentals in the sector remain solid [16][19] - There is optimism regarding a rebound in single-family housing starts, with expectations that demand and supply dynamics will support business growth in the coming years [17][19] Other Important Information - The company completed over $175 million in M&A transactions and returned $332 million to shareholders through share repurchases and dividends [14][29] - The appointment of David Rush to the Board of Directors was announced, bringing valuable industry experience [20][21] Q&A Session Summary Question: Capital deployment philosophy for modernization and expansion projects - Management emphasized a focus on high return projects with internal hurdle rates of 15% cash on cash after tax [31][33] Question: Alternative fuels utilization in cement operations - Management discussed the use of tires and other alternative fuels to improve cost management and reduce CO2 emissions [35][37] Question: Wallboard pricing trends and freight costs - Management indicated that higher freight costs contributed to sequential pricing declines, but a price increase is planned for spring [41][42] Question: Demand outlook for private non-residential markets - Management noted steady demand in private non-residential sectors, with large multi-year projects contributing to growth [49][50] Question: Cement pricing and cost visibility - Management expects to improve margins over the next year, despite some cost pressures, with a focus on volume recovery [54][56] Question: Production downtimes during Duke Wallboard facility modernization - Existing lines will continue to operate until the new line is complete, similar to the Mountain Cement project [82][83] Question: Future acquisition plans in aggregates - Management remains open to pursuing aggregate acquisitions that align with strategic criteria and offer strong financial returns [84]