Eagle Materials(US:EXP)2025-10-30 13:30Financial Data and Key Metrics Changes - The company achieved record revenue of $639 million, up 2% from the prior year, driven by higher cement sales volume and contributions from recently acquired aggregates businesses [10] - Earnings per share (EPS) was $4.23, down 1% from the second quarter of fiscal 2025, reflecting lower net earnings primarily due to reduced wallboard sales volume [10] - Operating cash flow decreased 12% to $205 million, primarily due to working capital changes [12] Business Line Data and Key Metrics Changes - In the heavy materials sector, revenue increased by 11%, driven by increased cement sales volume and a 24% increase in concrete and aggregates revenue [10] - Record aggregates sales volume was up 103%, including contributions from recently acquired businesses, with organic aggregates sales volume up 35% [11] - The light materials sector saw a revenue decrease of 13% to $213 million, reflecting lower wallboard sales volume and a 2% decrease in wallboard sales prices [11] Market Data and Key Metrics Changes - Cement and aggregates volumes increased for the second consecutive quarter, with a favorable outlook for the remainder of the fiscal year due to unspent funds from the Infrastructure Investment and Jobs Act [5] - Wallboard volumes were impacted by reduced demand due to high interest rates and affordability challenges, with a noted stability in wallboard pricing [6] Company Strategy and Development Direction - The company is focused on long-term growth investments, including a $430 million modernization and expansion project at the Laramie, Wyoming cement plant, expected to be completed by the end of calendar 2026 [7][8] - The company is also modernizing the Duke, Oklahoma wallboard facility, which will lower production costs by about 20% [9] - The company continues to seek high growth, high return projects and is open to M&A opportunities that meet return criteria [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding cement and aggregates volume recovery, supported by infrastructure spending and private non-residential construction [20] - The company remains focused on long-term growth despite short-term challenges in the residential construction market affecting wallboard demand [6][7] - Management highlighted the importance of maintaining a balance between price and volume, emphasizing a preference for price stability [18] Other Important Information - The company repurchased approximately 396,000 shares for $89 million during the quarter, returning a total of $97 million to shareholders [12] - The capital spending for fiscal 2026 is expected to be in the range of $475 million to $500 million, with a projected decrease in spending for fiscal 2027 [34] Q&A Session Summary Question: Wallboard volume performance and demand drivers - Management noted a significant pullback in production from builders during July and August, impacting wallboard demand, but emphasized a long-term positive outlook due to underconsumption of wallboard in the U.S. [15][16] Question: Cement volume drivers and future expectations - Management indicated that cement volume growth is driven by infrastructure spending and private non-residential construction, with cautious optimism for continued positive trends [19][20] Question: Organic aggregates volume growth - The 35% growth in organic aggregates volume was attributed to both acquisitions and capital improvements in existing operations, with a focus on growing this segment over time [22][23] Question: Cement pricing and competitive pressures - Management acknowledged some price degradation in Texas but noted overall pricing stability in the majority of their markets, with announced price increases effective January 1, 2026 [27][29] Question: Capital expenditures and tax implications - Capital spending for fiscal 2026 is expected to be $475 million to $500 million, with significant tax benefits from accelerated depreciation on new projects [33][36]