NYSE:EXP Eagle Materials Q3 2024 Earnings Report $230.67 -4.23 (-1.80%) Closing price 05/6/2025 03:59 PM EasternExtended Trading$230.40 -0.26 (-0.11%) As of 04:41 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Eagle Materials EPS ResultsActual EPS$3.72Consensus EPS $3.56Beat/MissBeat by +$0.16One Year Ago EPSN/AEagle Materials Revenue ResultsActual Revenue$558.83 millionExpected Revenue$537.23 millionBeat/MissBeat by +$21.60 millionYoY Revenue GrowthN/AEagle Materials Announcement DetailsQuarterQ3 2024Date1/25/2024TimeN/AConference Call DateThursday, January 25, 2024Conference Call Time8:30AM ETUpcoming EarningsEagle Materials' Q4 2025 earnings is scheduled for Tuesday, May 20, 2025, with a conference call scheduled at 9:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q4 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Eagle Materials Q3 2024 Earnings Call TranscriptProvided by QuartrJanuary 25, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day, everyone, and welcome to Eagle Materials Third Quarter of Fiscal 20 24 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Hack. Mr. Operator00:00:16Hack, please go ahead, sir. Speaker 100:00:19Thank you. Good morning. Welcome to Eagle Materials' conference call for our Q3 of fiscal year This is Michael Hack. Joining me today are Craig Kessler, our Chief Financial Officer and Alex Haddock, Vice President of Investor Relations, Strategy and Corporate Development. There will be a slide presentation made in connection with this call. Speaker 100:00:42To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, Please note that the first slide covers our cautionary disclosure regarding forward looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release. Let me start out by saying that I'm excited to report on another quarter of superior execution at Eagle Materials. Speaker 100:01:20Few financial results that I want to highlight from our 3rd quarter are record revenue of $559,000,000 up 9%. Gross profit margin increased 130 basis points to 32.3%. Adjusted EPS was up 16% to $3.72 and we returned $106,000,000 to shareholders through stock repurchases and the quarterly dividend. These results would not be attainable without the over 2,600 fantastic employees at Eagle Materials that make the company successful through their safe, hard work and dedication to customer satisfaction. Each of you contributes to the results I'm proud to report on. Speaker 100:02:07Thank you. Because of these impressive results, Eagle Materials continued to produce strong cash flows. Over the years, We have been very clear as to how we will use the free cash flow generated from our operations. Our investment priorities have been consistent for years and will continue to remain so, they consist of 3 main components. 1st is to maintain or widen our low cost producer strategy by keeping our facilities in like new condition. Speaker 100:02:402nd is to grow the company with emphasis on expanding the heavy materials segment through acquisitions or investments that increase existing capacity. And 3rd, when investment opportunities do not meet Our disciplined return on investment criteria, we prudently return excess cash to shareholders. In the 1st 9 months of fiscal year 2024, we have returned an impressive total of $276,000,000 of cash to shareholders through share repurchases and dividends. Our ability to execute our investment priorities relies on the long term sustainability of our businesses. A business is not just the hard assets of the equipment, but consists of our most vital asset, the people operating the plants, their safety and ensuring we are good stewards of the environment. Speaker 100:03:33We have made and continue to make progress in these areas and I'd like to spend a little time highlighting a few items here. In 2023, we're able to sustain our total recordable injury rate well below industry averages. Any incident is one too many and we will continue to strive for 0 incidents, but I am proud of the work that was done to sustain our step change in TRIR from previous years. Environmentally, we continue to make significant gains on our transition to blended cements. This quarter, our blended cements accounted for over 75% of our manufactured sales volume. Speaker 100:04:15These cement lower our CO2 content per ton of material enable us to extend our clinker capacity. We also announced agreements with Terra CO2 granting us exclusive rights to use Terra's technology to produce low carbon supplementary the potential to lower the carbon intensity of our cementitious materials and will enable us to fulfill the increased cement demand in today's virtually sold out market, especially as other SCMs like fly ash continue to decrease in availability. We look forward to highlighting these achievements and much more in our updated sustainability report to be published later this quarter. In the report, you will see significant progress from Eagle, both in what we are doing for our businesses, but also in how we are reporting that progress. With that, let me turn to the specifics on the quarter starting with the Heavy Materials business. Speaker 100:05:23Our heavy materials performance this quarter continued to benefit from favorable business conditions. Public infrastructure spending is robust. The bulk of the United States investment in roads, bridges and highways comes from the state and local level and tax receipts continue to be strong, while state budgets remain healthy. In addition, increased infrastructure spending from the federal IIJA funds should increase noticeably for the next several years. Private nonresidential spending also continues to provide demand tailwinds for our business. Speaker 100:05:59While certain pockets of non residential construction such as warehousing may be a drag on the total spending, The outlook from heavy industrial projects in manufacturing construction give us confidence in the visibility for our cement business. The passing of the CHIPS Act and Inflation Reduction Act has led to meaningful increase in heavy industrial projects focused on computer, electric and on shoring of other manufacturing. Signs also suggest residential construction may have bottomed. From these facts, our demand outlook remains positive and we will continue to focus on executing to provide materials for our customers. Turning to the supply side dynamics for heavy, we still see no meaningful supply additions for the cement industry on the horizon. Speaker 100:06:53Blended cement products, while important for making clinker go further, will not add enough U. S. Cement capacity to alter the supply demand fundamentals. Imports are increasingly required to meet U. S. Speaker 100:07:05Demand as they have been in the past. Since we are well positioned low cost heartland producer, Eagle remains generally insulated from imports as transportation is very expensive and is expected to remain so. Against this supply demand backdrop, half of our markets are implementing a January 1 price increase, while the other half of our markets have announced an April 1 price increase. Now let me turn to the light side of our business. This quarter, our light materials business held steady in an uncertain environment. Speaker 100:07:41Gypsum Wallboard continues to benefit from a long tail Construction backlog that has kept demand steadier than expected and construction across the South where much of our footprint is has held up particularly well. The near term outlook remains dynamic with the latter half of our fiscal third quarter seeing constructive market conditions for housing and wallboard demand given the drop in interest rates. In the medium term, The direction of the U. S. Monetary policy and its effect on mortgage rates remains uncertain and will dictate the big component of the demand picture. Speaker 100:08:21While we expect multifamily housing starts in construction to drop off, single family housing starts are recovering nicely, especially in the South and homebuilders are reporting favorable outlooks. The longer term housing deficiency in the U. S. Will need to be addressed through new home construction. The wallboard demand backdrop continues to be set against supply constraints that are fundamentally changing our business. Speaker 100:08:49As the availability of synthetic gypsum continues to diminish, The approximately 50% of the wallboard industry designed to use synthetic gypsum faces raw material challenges, Challenges from which Eagle is generally insulated given the surety of raw material we maintain at all of our wallboard plants. The result of the synthetic gypsum shortages is a steepened industry cost curve and crimped industry capacity. We do not see any improvement in cost or capacity in the medium term. Against these market conditions, we recently announced a wallboard price for February 1. Given these structural and operational dynamics, we believe our heavy and light materials businesses look increasingly similar. Speaker 100:09:41Structurally, as I have discussed, supply side dynamics mean capacity remains constrained for both cement and wallbore, although for different reasons. On the demand side, each business is supported by long term demographic driven tailwinds that should provide meaningful growth. Operationally, Our 2 core businesses are well defined, well established and well positioned. Each uses mine minerals that have many decades of owned reserves. And each are in cyclical sectors, so cycle management skills are important. Speaker 100:10:22We have proven for decades that operating through the up and down of the cycle is where we excel. In all, the combined businesses produce meaningful free cash flow, keeping our balance sheet healthy and positioning us to capitalize on growth opportunities when they come. With that, I'll turn it over to Craig to go through our financial results in more detail. Speaker 200:10:46Thank you, Michael. 3rd quarter revenue was a record $559,000,000 an increase of 9% from the prior year. The increase reflects higher cement sales volume and prices and contribution from the recently acquired import terminal in Stockton, California, partially offset by lower wallboard sales volume and prices. Excluding the Stockton acquisition, revenue was up 7%. Again, this past quarter, we generated record EPS. Speaker 200:11:173rd quarter earnings per share was $3.72 That's a 16% increase from the prior year and represents the 10th consecutive quarter of year over year improvement. This quarter's increase was driven by higher earnings and a 5% reduction in fully diluted shares due to our buyback program. Turning now to segment performance highlighted on the next slide. In our heavy materials sector, which includes our cement and concrete and aggregate segments, Revenue was up 18% to $366,000,000 This revenue growth was driven primarily by an increase in cement sales prices that were implemented earlier this year, higher cement sales volume and the contribution from the recently acquired cement import terminal in Northern California. Operating earnings were up 43%, primarily because of increased cement prices and sales volume. Speaker 200:12:15Cement prices increased 13% and sales volume was up 7%. Given the strong market conditions that Michael discussed, We've announced another round of price increases for the first half of calendar twenty twenty four. Moving to the light material sector on the next slide. Revenue in our light material sector decreased 4%, reflecting lower wallboard sales volume and prices, partially offset by record recycled paperboard sales volume, which was up 9% in the quarter. One comment on our wallboard sales price this quarter. Speaker 200:12:53With wallboard sales volume coming in stronger than we had anticipated, We had a catch up in our customer rebate program this quarter that impacted our quarterly average wallboard sales price. Excluding the catch up, our wallboard sales price decline would have been about half sequentially. Operating earnings in the sector declined 13% $83,000,000 reflecting lower wallboard sales volume and prices. Looking now at our cash flow. As Michael discussed, we continue to generate strong cash flow and allocate capital in a disciplined way. Speaker 200:13:29During the 1st 9 months of our fiscal year, operating cash flow was up 4% to $501,000,000 Capital spending increased to $88,000,000 and we acquired the cement import terminal in Stockton, California for $55,000,000 We repurchased approximately 1,500,000 shares or 4% of our outstanding for $249,000,000 In addition to paying our quarterly dividends, returning a total of $276,000,000 to shareholders during the 1st 9 months of the fiscal year. We have approximately 6,300,000 shares remaining under our current repurchase authorization. Finally, we also used our strong cash flow to strengthen our balance sheet. Let's look at our capital structure. At December 31, 2023, our net debt to cap ratio was 43% and our net debt to EBITDA leverage ratio was 1.2x. Speaker 200:14:29We ended the quarter with $49,000,000 of cash on hand. Total committed liquidity at the end of the quarter was approximately $684,000,000 and we have no meaningful near term debt maturities giving us substantial financial flexibility. Thank you for attending today's call. Rocco, we'll now move to the question and answer session. Operator00:14:52Thank you. And today's first question comes from Trey Grooms with Stephens. Please go ahead. Speaker 300:15:17Hey, good morning, everyone. Thanks for taking my question. Wallboard volume clearly came in a little bit better, looks to maybe even seen a little bit of an inflection here in the quarter. First, is that primarily the impact of single family starts beginning to show up? And as we kind of look Into the next few quarters, would you expect to see volume continue to get better here? Speaker 200:15:46Yes. Thanks, Trey. So I would say, yes, look, as I said in my comments, I think wallboard volumes came in stronger throughout the entire year, not just this quarter. I think for the calendar year 2023 volume was 27,000,000,000 square feet, not that far off of the pace for calendar 22. So overall, I would say, things sales volume for wallboard was stronger than anticipated. Speaker 200:16:13And as you say, you've looked at the housing numbers coming the orders coming out of the homebuilders for the last three quarters or more. And they've certainly seen a pickup in their order books, which would translate eventually into wallboard volume. There's a little bit of a lag between the start or really an order to a start and then ultimately to wallboard consumption. Our best guess is that's more of a calendar 2024 event. So I don't know that we've actually seen that turn yet in the actual volume, but would anticipate that given the increase in orders. Speaker 200:16:48And as Michael mentioned, That's why we put out a February price increase in wallboard as we start we think we're going to be pretty busy into calendar 2024. Speaker 300:17:00Thanks for that, Craig. And I wanted to touch on that as well. So thank you for bringing up the price increase here. The Wallboard margins were down, and I understand volume and price were both slightly down in the quarter. But Maybe if you could talk about a little bit more into the drivers there on the margin declines. Speaker 300:17:21And clearly, the February price increase comes at A good time given some of the headwinds you're seeing on the margin. Any color on magnitude or geographically if it's widespread or just any other color you could give us around that increase? Speaker 200:17:39Yes. The February increase is slated for across the country. A little too early for us to speculate on exact dollar amounts and region by region. But again, given the volume strength And utilization rates are still pretty high. We're going to be moving forward with it. Speaker 200:18:01You did point out Some cost pressures, OCC prices, while they had been lower during most of calendar 2023, we have seen a recent uptick and recycled fiber prices. And so that will start to impact in the next quarter or 2. And then in terms of the price for this past quarter, As I mentioned in my comments, we had because volumes were better, we had our rebate programs needed to get caught up in the last part of the calendar year. And so really if you were to exclude that catch up, the price, cadence has been very similar for the last several months. Speaker 300:18:41Yes. Okay. That's helpful. I appreciate it. Craig, I'll turn it over. Speaker 300:18:44Thank you. Operator00:18:47Thank you. And our next question today from Anthony Pettinari with Citi. Please go ahead. Speaker 400:18:54Good morning. Good morning. You talked about cement hikes. I think half of your regions in January 1 and half in April 1, if I got that right. Is there any way to Any color you can give there? Speaker 100:19:19Yes. Really when you look at the staggering of The increases, if you remember in last year, we had several price increases and some of them were at different times on the second price increase. So really this is more on the cadence of where these price increases are falling For our customers and everything, if they got one in the later half of the year, they're not in the January timeframe, they're in the April timeframe with it. As for consistency, it's very similar to what Craig was saying on the wallboard side. Nationally, as everybody knows, we've been in a sold out condition across the nation with it. Speaker 100:20:06So it's going to be increases pretty much across the nation for our cement businesses with it. And we as also with the well board, as you know, it's too early for us to speculate on what those numbers are. We're working with our customers right now and then you'll see those results as we report the next quarter. Speaker 400:20:27Okay. Okay. That's helpful. And then I guess maybe switching gears, can you talk a little bit more about the Terra agreement? And I guess in the announcement, It says that you have sort of the right to build the SCM plants, and that those could produce each 240,000 tons per year. Speaker 400:20:47In terms of timeline, implementation, capital investment, I was just wondering if you can give us any more kind of details on how this agreement is expected to play out? Speaker 100:20:57Yes. No, I'm happy to talk about the Terra Businesses with you today. We as a company look at a lot of different technologies out there that help us provide product to our customers and also reduce our CO2 footprint through some blended products. You know, we've been talking a lot about blended products here over the last year, so we've increased that quite a bit. Tara was a great partner that we wanted to work with us as Eagle don't necessarily have a research and development Armed with it, and we rely sometimes on some outside experts in that field to help us there and we've been very happy with the what Terra has brought to the table. Speaker 100:21:48They have done a bunch of research on a product that we feel is very beneficial for us. What I do want to caution in a way is that They are working on their 1st commercial scale facility right now. So we're still a little ways away from having that commercial production, But we're working with them really daily between our engineering teams and their engineering teams on how we bring that to the market. They do have One facility they are building, that they're doing with another partner that they have And that is in process of being constructed on a commercial grade. We are kind of watching that closely. Speaker 100:22:34So we know when we could pull the I feel confident on pulling the trigger on building our own facilities with Terra with it. So in the meantime, we're going to work with them, still work on the making this a commercially viable product, which they feel in doing. And so we're still several quarters out from having and potentially several years out from having a commercially available plant running to deliver that 240,000 tons that we put in the press release. But all indications are very favorable in their product and their performance and the testing we've done in the cement manufacturing. Speaker 200:23:17Anthony, I might just add one thing to that. In terms of the capital investments, as Michael mentioned, I would not anticipate that being in our fiscal 25%. And then in terms of a profitability, look, I would just say, We believe this will more than meet our investment hurdle rates and return criteria. So very excited about it, but it is still a ways off for us. Speaker 400:23:45Okay. That's very helpful. I'll turn it over. Operator00:23:49And our next question today comes from Jerry Revich with Goldman Sachs. Please go ahead. Speaker 500:23:55Hi, good morning everyone. This is Jatin Khanna on behalf of Jerry Ravitch. Could you please talk about the potential for new margin highs for cement amid rising replacement costs and slowing input costs in the coming quarters? Speaker 200:24:11Could you repeat the first part of that question? Speaker 500:24:15Yes, sure. Could you please talk about the potential for new margin highs for cement? How may I drive replacement costs and slowing input costs? Thank you. Speaker 200:24:22Yes. No, look, it's very consistent with what we've talked about for several years now. We've improved the cement network at Eagle through large M and A over the last decade or so. And the assets that we've acquired have been high quality assets. And so again, then it gets the backdrop of Very limited supply response to improving demand. Speaker 200:24:50You have diminishing alternative materials like fly ash. And so that's led to an environment where we've been able to achieve good pricing. And so yes, we've seen margins improve very nicely and quarter is in line with that. As we look forward into fiscal 2025, we've talked many times over the last several quarters about We would expect to see some lower energy prices, especially around fuel. So we would expect over the rest of the cycle, we should continue to be able to expand margins across our cement network. Speaker 500:25:28Thanks very much. I'll pass it on. Operator00:25:31Thank you. And our next question today comes from Kevin Gainey with Thompson Davis. Please go ahead. Speaker 600:25:39Hey guys, it's Kevin on for Adam. I actually maybe wanted to talk a little bit about the California import terminal. Seems to be performing well. And have those assets been absorbed into the network easily? And How are they performing versus kind of when you guys bought them? Speaker 100:25:58Yes. That asset was a fantastic fit into our operation as we We discussed previously with it, they were absorbed very quickly into the operation and to support that Western market and to support our plants on that side and satisfy our customers' demand. We'll continue to integrate that. However, It's actually came up very fast and very efficiently and it's supporting our markets very well. Speaker 600:26:31Good to hear. And then maybe if you guys wanted to go Just on cement margins a little more. Do you what gives you guys the confidence in sustaining that looking forward? Speaker 200:26:47Yes. And just to be clear, we look at our margin profile, whether you want to call it a trailing 12 months or on an annual period. You certainly have quarters where you'll have our major maintenance outages like we'll have in the June quarter. And So we're really talking about annual margins. And look, it comes from a foundation of high quality assets, low cost position in very good markets. Speaker 200:27:15Michael has alluded to many times, we're relatively insulated from imports, so we're more in the Heartland part of the country. And so given the market conditions where demand is outpacing supply, that generally provides a pricing power to the manufacturers and you've seen that the last couple of years and we've got incremental price increases announced for the first half of this year. And then on the cost side, it's an energy intensive business and energy prices certainly have stopped being as inflationary as they were a couple of years ago. So that's what gives us the confidence as we look at this business on an annual basis, why we think we can continue to improve margins. Speaker 600:28:04Sounds good. Appreciate the time guys. Operator00:28:08And our next question today comes from Phil Ng with Jefferies. Please go ahead. Speaker 700:28:13Hey guys. Appreciating you're pretty insulated from imports, Craig, as you mentioned, but there is the conflict in the Red Sea. You seeing any impact out there from imports, whether it's supply and pricing, will that and what that ultimately means for the markets you're in? Speaker 200:28:31Phil, no direct impact for us in terms of supply or anything coming across the ocean. But I think it does highlight the risk that imports have, that they are subject to Global issues, whether it's very specific events as you mentioned or others, that could impact timing of ships, the trips that they have to take longer trips that are more expensive. So that is the issue with why imports have a restricted ability to impact the U. S. Market. Speaker 700:29:07Are you seeing any upward pressure on import prices just given that dynamic in recent weeks? Speaker 200:29:13Ocean freight rates have kind of gone up and down over the last, call it, 6 to 9 months. Those are impacted by many things. Again, we're not as large of an importer as others are. So I can't say that we've seen any direct impact at this point. But I think your point is well made that there are some upward pressures on ocean freight rates. Speaker 700:29:38Okay. On the wallboard side, the quarter was obviously quite strong from a volume standpoint. Is any of that like tied to like pre buy? I know there was a fall price increase or any of your customers trying to hit these rebates. So my question is, Could there be hangover effect on the demand side for your March quarter? Speaker 700:29:56And then I guess bigger picture this year with rates potentially coming back, let's say, we get back to like 5.5%. How quickly do you see that kind of rippling through? I appreciate there's a lag, but like how quickly do you kind of see that inflection if you do see 1 on wallboard demand? Speaker 200:30:11Yes. We didn't see any sort of pre buy activity, those type of things. I think that is fundamental wallboard consumption. We look at our orders Post the quarter, we've been very happy with the environment and the order activity. So I don't I think it was pretty clean volume. Speaker 200:30:31Yes. In terms of the inflection point for interest rates and therefore the Benefit to housing, affordability and demand. As I mentioned earlier, There is a lag between a start to wallboard consumption. That was elongated post COVID because of some of the supply chain issues the homebuilders were dealing with. I think those issues have been, have eased over the last 18 months, let's call it. Speaker 200:31:02So You would expect to see going back to more of a normal timing in terms of call it 3 to 4 months from a start to wallboard consumption is typically what or historically what we've seen for how fast that flows back into the business. Speaker 700:31:19Okay. Super helpful. Really appreciate it. Operator00:31:22And our next question today comes from Keith Hughes with Truist. Please go ahead. Speaker 800:31:28Thank you. Questions on the volume of the JV. It was down in the quarter, it was up fairly easy comp in the prior year. I'm sure weather played some role here, but you just talk pace of business at the volume of the JV in the quarter? Speaker 100:31:43Yes. I'll take that question, Keith. Thank When we look at the JV, we had discussed earlier in the year that we had some older equipment At that JV that we, if you remember about a couple of quarters ago, we had a mill that we were struggling with a little bit and get a repair to that mill that we thought would carry us through the lead time and get the parts that we need for that mill. That mill actually had some Additional issues that it was still running fine, but from a safety perspective and standpoint, we wanted to make sure We took it down and addressed the issues that were happening, so we didn't have a catastrophic failure. So we did take a little bit more of an outage this cool glass quarter to address that. Speaker 100:32:35We have the parts for that mill on order. It's just the lead time on these heavy industrial parts and it's a part that typically doesn't wear out as much that we're going to have to replace. So it had a 18 to 24 month lead time with it. We're going to change that, those mill components out later on this year. The other thing I also wanted to highlight with Lehigh as I've talked about in previous quarters is what we have the secondary thing that caused us some issues throughout the year was a clinker cooler we have, which we are going to also address during this next year. Speaker 100:33:11So This next fiscal year, we will have a little bit more extended downtime to address those two issues. We're very confident that the plant Infrastructure other than these two components is very, very good. We just are getting to the end of life these components and they take a little bit of time to replace and to get the parts and to satisfy them. So we had a little bit more downtime in the quarter. Speaker 800:33:38Okay. It sounds like this is going to continue through really the next fiscal year. Is that fair to say? Speaker 100:33:43Yes. We're going to have an extended outage. We haven't defined when that outage is going to be yet because we want to ensure all the components are in, but it will happen sometime in this next fiscal year where we will have an extended outage probably a couple of weeks longer than a typical outage to address these two issues. Speaker 800:34:06And can you give us any kind of feel how much capacity at Texas Lehigh is affected by problems you're discussing? Speaker 200:34:14Yes, Keith, I don't know that I would say it's impacting the capacity. It's just the ability to ramp up to full production, As Michael said, post the installation of these the new equipment, we should be back to our ordinary level. Okay. Speaker 800:34:31All right. Thank you. Operator00:34:34Thank you. And ladies and gentlemen, this concludes our question and answer session. I'd like the conference back over to Michael Hack for any closing remarks. Speaker 100:34:42Thank you, Rocco. We entered the new calendar year committed to operate safely and responsibly and deliver excellent results for our customers and you, our shareholders. The outlook for Eagle is bright and we look forward to capitalizing on opportunities ahead. We're also excited to publish an updated an upgraded sustainability report and to discuss highlights when we meet again in May on the report and our full fiscal year 2024 results and progress on our strategic priorities. Thank you for joining us today. Operator00:35:16Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallEagle Materials Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Eagle Materials Earnings HeadlinesAnalysts Set Eagle Materials Inc. (NYSE:EXP) Price Target at $274.40May 1, 2025 | americanbankingnews.comEagle Materials price target lowered to $280 from $330 at TruistApril 26, 2025 | markets.businessinsider.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIEven though xAI is a private company, tech legend and angel investor Jeff Brown found a way for everyday folks like you… To partner with Elon on what he believes will be the biggest AI project of the century… Starting with as little as $500.May 7, 2025 | Brownstone Research (Ad)Demystifying Eagle Materials: Insights From 6 Analyst ReviewsApril 24, 2025 | benzinga.comEagle Materials: Further Upside Is JustifiedApril 23, 2025 | seekingalpha.comEagle Materials Schedules Fourth Quarter and Fiscal 2025 Earnings Release and Conference Call With Senior ManagementApril 22, 2025 | finance.yahoo.comSee More Eagle Materials Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Eagle Materials? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Eagle Materials and other key companies, straight to your email. Email Address About Eagle MaterialsEagle Materials (NYSE:EXP), through its subsidiaries, manufactures and sells heavy construction materials and light building materials in the United States. It operates in four segments: Cement, Concrete and Aggregates, Gypsum Wallboard, and Recycled Paperboard. The company engages in the mining of limestone for the manufacture, production, distribution, and sale of Portland cement, including Portland limestone cement; grinding and sale of slag; and mining of gypsum for the manufacture and sale of gypsum wallboards used to finish the interior walls and ceilings in residential, commercial, and industrial structures, as well as well as containerboard and lightweight packaging grades; manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; and mining and sale of aggregates, such as crushed stone, sand, and gravel. Its products are used in commercial and residential construction; public construction projects to build, expand, and repair roads and highways; and repair and remodel activities. The company was formerly known as Centex Construction Products, Inc. and changed its name to Eagle Materials, Inc. in January 2004. 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There are 9 speakers on the call. Operator00:00:00Good day, everyone, and welcome to Eagle Materials Third Quarter of Fiscal 20 24 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Hack. Mr. Operator00:00:16Hack, please go ahead, sir. Speaker 100:00:19Thank you. Good morning. Welcome to Eagle Materials' conference call for our Q3 of fiscal year This is Michael Hack. Joining me today are Craig Kessler, our Chief Financial Officer and Alex Haddock, Vice President of Investor Relations, Strategy and Corporate Development. There will be a slide presentation made in connection with this call. Speaker 100:00:42To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, Please note that the first slide covers our cautionary disclosure regarding forward looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release. Let me start out by saying that I'm excited to report on another quarter of superior execution at Eagle Materials. Speaker 100:01:20Few financial results that I want to highlight from our 3rd quarter are record revenue of $559,000,000 up 9%. Gross profit margin increased 130 basis points to 32.3%. Adjusted EPS was up 16% to $3.72 and we returned $106,000,000 to shareholders through stock repurchases and the quarterly dividend. These results would not be attainable without the over 2,600 fantastic employees at Eagle Materials that make the company successful through their safe, hard work and dedication to customer satisfaction. Each of you contributes to the results I'm proud to report on. Speaker 100:02:07Thank you. Because of these impressive results, Eagle Materials continued to produce strong cash flows. Over the years, We have been very clear as to how we will use the free cash flow generated from our operations. Our investment priorities have been consistent for years and will continue to remain so, they consist of 3 main components. 1st is to maintain or widen our low cost producer strategy by keeping our facilities in like new condition. Speaker 100:02:402nd is to grow the company with emphasis on expanding the heavy materials segment through acquisitions or investments that increase existing capacity. And 3rd, when investment opportunities do not meet Our disciplined return on investment criteria, we prudently return excess cash to shareholders. In the 1st 9 months of fiscal year 2024, we have returned an impressive total of $276,000,000 of cash to shareholders through share repurchases and dividends. Our ability to execute our investment priorities relies on the long term sustainability of our businesses. A business is not just the hard assets of the equipment, but consists of our most vital asset, the people operating the plants, their safety and ensuring we are good stewards of the environment. Speaker 100:03:33We have made and continue to make progress in these areas and I'd like to spend a little time highlighting a few items here. In 2023, we're able to sustain our total recordable injury rate well below industry averages. Any incident is one too many and we will continue to strive for 0 incidents, but I am proud of the work that was done to sustain our step change in TRIR from previous years. Environmentally, we continue to make significant gains on our transition to blended cements. This quarter, our blended cements accounted for over 75% of our manufactured sales volume. Speaker 100:04:15These cement lower our CO2 content per ton of material enable us to extend our clinker capacity. We also announced agreements with Terra CO2 granting us exclusive rights to use Terra's technology to produce low carbon supplementary the potential to lower the carbon intensity of our cementitious materials and will enable us to fulfill the increased cement demand in today's virtually sold out market, especially as other SCMs like fly ash continue to decrease in availability. We look forward to highlighting these achievements and much more in our updated sustainability report to be published later this quarter. In the report, you will see significant progress from Eagle, both in what we are doing for our businesses, but also in how we are reporting that progress. With that, let me turn to the specifics on the quarter starting with the Heavy Materials business. Speaker 100:05:23Our heavy materials performance this quarter continued to benefit from favorable business conditions. Public infrastructure spending is robust. The bulk of the United States investment in roads, bridges and highways comes from the state and local level and tax receipts continue to be strong, while state budgets remain healthy. In addition, increased infrastructure spending from the federal IIJA funds should increase noticeably for the next several years. Private nonresidential spending also continues to provide demand tailwinds for our business. Speaker 100:05:59While certain pockets of non residential construction such as warehousing may be a drag on the total spending, The outlook from heavy industrial projects in manufacturing construction give us confidence in the visibility for our cement business. The passing of the CHIPS Act and Inflation Reduction Act has led to meaningful increase in heavy industrial projects focused on computer, electric and on shoring of other manufacturing. Signs also suggest residential construction may have bottomed. From these facts, our demand outlook remains positive and we will continue to focus on executing to provide materials for our customers. Turning to the supply side dynamics for heavy, we still see no meaningful supply additions for the cement industry on the horizon. Speaker 100:06:53Blended cement products, while important for making clinker go further, will not add enough U. S. Cement capacity to alter the supply demand fundamentals. Imports are increasingly required to meet U. S. Speaker 100:07:05Demand as they have been in the past. Since we are well positioned low cost heartland producer, Eagle remains generally insulated from imports as transportation is very expensive and is expected to remain so. Against this supply demand backdrop, half of our markets are implementing a January 1 price increase, while the other half of our markets have announced an April 1 price increase. Now let me turn to the light side of our business. This quarter, our light materials business held steady in an uncertain environment. Speaker 100:07:41Gypsum Wallboard continues to benefit from a long tail Construction backlog that has kept demand steadier than expected and construction across the South where much of our footprint is has held up particularly well. The near term outlook remains dynamic with the latter half of our fiscal third quarter seeing constructive market conditions for housing and wallboard demand given the drop in interest rates. In the medium term, The direction of the U. S. Monetary policy and its effect on mortgage rates remains uncertain and will dictate the big component of the demand picture. Speaker 100:08:21While we expect multifamily housing starts in construction to drop off, single family housing starts are recovering nicely, especially in the South and homebuilders are reporting favorable outlooks. The longer term housing deficiency in the U. S. Will need to be addressed through new home construction. The wallboard demand backdrop continues to be set against supply constraints that are fundamentally changing our business. Speaker 100:08:49As the availability of synthetic gypsum continues to diminish, The approximately 50% of the wallboard industry designed to use synthetic gypsum faces raw material challenges, Challenges from which Eagle is generally insulated given the surety of raw material we maintain at all of our wallboard plants. The result of the synthetic gypsum shortages is a steepened industry cost curve and crimped industry capacity. We do not see any improvement in cost or capacity in the medium term. Against these market conditions, we recently announced a wallboard price for February 1. Given these structural and operational dynamics, we believe our heavy and light materials businesses look increasingly similar. Speaker 100:09:41Structurally, as I have discussed, supply side dynamics mean capacity remains constrained for both cement and wallbore, although for different reasons. On the demand side, each business is supported by long term demographic driven tailwinds that should provide meaningful growth. Operationally, Our 2 core businesses are well defined, well established and well positioned. Each uses mine minerals that have many decades of owned reserves. And each are in cyclical sectors, so cycle management skills are important. Speaker 100:10:22We have proven for decades that operating through the up and down of the cycle is where we excel. In all, the combined businesses produce meaningful free cash flow, keeping our balance sheet healthy and positioning us to capitalize on growth opportunities when they come. With that, I'll turn it over to Craig to go through our financial results in more detail. Speaker 200:10:46Thank you, Michael. 3rd quarter revenue was a record $559,000,000 an increase of 9% from the prior year. The increase reflects higher cement sales volume and prices and contribution from the recently acquired import terminal in Stockton, California, partially offset by lower wallboard sales volume and prices. Excluding the Stockton acquisition, revenue was up 7%. Again, this past quarter, we generated record EPS. Speaker 200:11:173rd quarter earnings per share was $3.72 That's a 16% increase from the prior year and represents the 10th consecutive quarter of year over year improvement. This quarter's increase was driven by higher earnings and a 5% reduction in fully diluted shares due to our buyback program. Turning now to segment performance highlighted on the next slide. In our heavy materials sector, which includes our cement and concrete and aggregate segments, Revenue was up 18% to $366,000,000 This revenue growth was driven primarily by an increase in cement sales prices that were implemented earlier this year, higher cement sales volume and the contribution from the recently acquired cement import terminal in Northern California. Operating earnings were up 43%, primarily because of increased cement prices and sales volume. Speaker 200:12:15Cement prices increased 13% and sales volume was up 7%. Given the strong market conditions that Michael discussed, We've announced another round of price increases for the first half of calendar twenty twenty four. Moving to the light material sector on the next slide. Revenue in our light material sector decreased 4%, reflecting lower wallboard sales volume and prices, partially offset by record recycled paperboard sales volume, which was up 9% in the quarter. One comment on our wallboard sales price this quarter. Speaker 200:12:53With wallboard sales volume coming in stronger than we had anticipated, We had a catch up in our customer rebate program this quarter that impacted our quarterly average wallboard sales price. Excluding the catch up, our wallboard sales price decline would have been about half sequentially. Operating earnings in the sector declined 13% $83,000,000 reflecting lower wallboard sales volume and prices. Looking now at our cash flow. As Michael discussed, we continue to generate strong cash flow and allocate capital in a disciplined way. Speaker 200:13:29During the 1st 9 months of our fiscal year, operating cash flow was up 4% to $501,000,000 Capital spending increased to $88,000,000 and we acquired the cement import terminal in Stockton, California for $55,000,000 We repurchased approximately 1,500,000 shares or 4% of our outstanding for $249,000,000 In addition to paying our quarterly dividends, returning a total of $276,000,000 to shareholders during the 1st 9 months of the fiscal year. We have approximately 6,300,000 shares remaining under our current repurchase authorization. Finally, we also used our strong cash flow to strengthen our balance sheet. Let's look at our capital structure. At December 31, 2023, our net debt to cap ratio was 43% and our net debt to EBITDA leverage ratio was 1.2x. Speaker 200:14:29We ended the quarter with $49,000,000 of cash on hand. Total committed liquidity at the end of the quarter was approximately $684,000,000 and we have no meaningful near term debt maturities giving us substantial financial flexibility. Thank you for attending today's call. Rocco, we'll now move to the question and answer session. Operator00:14:52Thank you. And today's first question comes from Trey Grooms with Stephens. Please go ahead. Speaker 300:15:17Hey, good morning, everyone. Thanks for taking my question. Wallboard volume clearly came in a little bit better, looks to maybe even seen a little bit of an inflection here in the quarter. First, is that primarily the impact of single family starts beginning to show up? And as we kind of look Into the next few quarters, would you expect to see volume continue to get better here? Speaker 200:15:46Yes. Thanks, Trey. So I would say, yes, look, as I said in my comments, I think wallboard volumes came in stronger throughout the entire year, not just this quarter. I think for the calendar year 2023 volume was 27,000,000,000 square feet, not that far off of the pace for calendar 22. So overall, I would say, things sales volume for wallboard was stronger than anticipated. Speaker 200:16:13And as you say, you've looked at the housing numbers coming the orders coming out of the homebuilders for the last three quarters or more. And they've certainly seen a pickup in their order books, which would translate eventually into wallboard volume. There's a little bit of a lag between the start or really an order to a start and then ultimately to wallboard consumption. Our best guess is that's more of a calendar 2024 event. So I don't know that we've actually seen that turn yet in the actual volume, but would anticipate that given the increase in orders. Speaker 200:16:48And as Michael mentioned, That's why we put out a February price increase in wallboard as we start we think we're going to be pretty busy into calendar 2024. Speaker 300:17:00Thanks for that, Craig. And I wanted to touch on that as well. So thank you for bringing up the price increase here. The Wallboard margins were down, and I understand volume and price were both slightly down in the quarter. But Maybe if you could talk about a little bit more into the drivers there on the margin declines. Speaker 300:17:21And clearly, the February price increase comes at A good time given some of the headwinds you're seeing on the margin. Any color on magnitude or geographically if it's widespread or just any other color you could give us around that increase? Speaker 200:17:39Yes. The February increase is slated for across the country. A little too early for us to speculate on exact dollar amounts and region by region. But again, given the volume strength And utilization rates are still pretty high. We're going to be moving forward with it. Speaker 200:18:01You did point out Some cost pressures, OCC prices, while they had been lower during most of calendar 2023, we have seen a recent uptick and recycled fiber prices. And so that will start to impact in the next quarter or 2. And then in terms of the price for this past quarter, As I mentioned in my comments, we had because volumes were better, we had our rebate programs needed to get caught up in the last part of the calendar year. And so really if you were to exclude that catch up, the price, cadence has been very similar for the last several months. Speaker 300:18:41Yes. Okay. That's helpful. I appreciate it. Craig, I'll turn it over. Speaker 300:18:44Thank you. Operator00:18:47Thank you. And our next question today from Anthony Pettinari with Citi. Please go ahead. Speaker 400:18:54Good morning. Good morning. You talked about cement hikes. I think half of your regions in January 1 and half in April 1, if I got that right. Is there any way to Any color you can give there? Speaker 100:19:19Yes. Really when you look at the staggering of The increases, if you remember in last year, we had several price increases and some of them were at different times on the second price increase. So really this is more on the cadence of where these price increases are falling For our customers and everything, if they got one in the later half of the year, they're not in the January timeframe, they're in the April timeframe with it. As for consistency, it's very similar to what Craig was saying on the wallboard side. Nationally, as everybody knows, we've been in a sold out condition across the nation with it. Speaker 100:20:06So it's going to be increases pretty much across the nation for our cement businesses with it. And we as also with the well board, as you know, it's too early for us to speculate on what those numbers are. We're working with our customers right now and then you'll see those results as we report the next quarter. Speaker 400:20:27Okay. Okay. That's helpful. And then I guess maybe switching gears, can you talk a little bit more about the Terra agreement? And I guess in the announcement, It says that you have sort of the right to build the SCM plants, and that those could produce each 240,000 tons per year. Speaker 400:20:47In terms of timeline, implementation, capital investment, I was just wondering if you can give us any more kind of details on how this agreement is expected to play out? Speaker 100:20:57Yes. No, I'm happy to talk about the Terra Businesses with you today. We as a company look at a lot of different technologies out there that help us provide product to our customers and also reduce our CO2 footprint through some blended products. You know, we've been talking a lot about blended products here over the last year, so we've increased that quite a bit. Tara was a great partner that we wanted to work with us as Eagle don't necessarily have a research and development Armed with it, and we rely sometimes on some outside experts in that field to help us there and we've been very happy with the what Terra has brought to the table. Speaker 100:21:48They have done a bunch of research on a product that we feel is very beneficial for us. What I do want to caution in a way is that They are working on their 1st commercial scale facility right now. So we're still a little ways away from having that commercial production, But we're working with them really daily between our engineering teams and their engineering teams on how we bring that to the market. They do have One facility they are building, that they're doing with another partner that they have And that is in process of being constructed on a commercial grade. We are kind of watching that closely. Speaker 100:22:34So we know when we could pull the I feel confident on pulling the trigger on building our own facilities with Terra with it. So in the meantime, we're going to work with them, still work on the making this a commercially viable product, which they feel in doing. And so we're still several quarters out from having and potentially several years out from having a commercially available plant running to deliver that 240,000 tons that we put in the press release. But all indications are very favorable in their product and their performance and the testing we've done in the cement manufacturing. Speaker 200:23:17Anthony, I might just add one thing to that. In terms of the capital investments, as Michael mentioned, I would not anticipate that being in our fiscal 25%. And then in terms of a profitability, look, I would just say, We believe this will more than meet our investment hurdle rates and return criteria. So very excited about it, but it is still a ways off for us. Speaker 400:23:45Okay. That's very helpful. I'll turn it over. Operator00:23:49And our next question today comes from Jerry Revich with Goldman Sachs. Please go ahead. Speaker 500:23:55Hi, good morning everyone. This is Jatin Khanna on behalf of Jerry Ravitch. Could you please talk about the potential for new margin highs for cement amid rising replacement costs and slowing input costs in the coming quarters? Speaker 200:24:11Could you repeat the first part of that question? Speaker 500:24:15Yes, sure. Could you please talk about the potential for new margin highs for cement? How may I drive replacement costs and slowing input costs? Thank you. Speaker 200:24:22Yes. No, look, it's very consistent with what we've talked about for several years now. We've improved the cement network at Eagle through large M and A over the last decade or so. And the assets that we've acquired have been high quality assets. And so again, then it gets the backdrop of Very limited supply response to improving demand. Speaker 200:24:50You have diminishing alternative materials like fly ash. And so that's led to an environment where we've been able to achieve good pricing. And so yes, we've seen margins improve very nicely and quarter is in line with that. As we look forward into fiscal 2025, we've talked many times over the last several quarters about We would expect to see some lower energy prices, especially around fuel. So we would expect over the rest of the cycle, we should continue to be able to expand margins across our cement network. Speaker 500:25:28Thanks very much. I'll pass it on. Operator00:25:31Thank you. And our next question today comes from Kevin Gainey with Thompson Davis. Please go ahead. Speaker 600:25:39Hey guys, it's Kevin on for Adam. I actually maybe wanted to talk a little bit about the California import terminal. Seems to be performing well. And have those assets been absorbed into the network easily? And How are they performing versus kind of when you guys bought them? Speaker 100:25:58Yes. That asset was a fantastic fit into our operation as we We discussed previously with it, they were absorbed very quickly into the operation and to support that Western market and to support our plants on that side and satisfy our customers' demand. We'll continue to integrate that. However, It's actually came up very fast and very efficiently and it's supporting our markets very well. Speaker 600:26:31Good to hear. And then maybe if you guys wanted to go Just on cement margins a little more. Do you what gives you guys the confidence in sustaining that looking forward? Speaker 200:26:47Yes. And just to be clear, we look at our margin profile, whether you want to call it a trailing 12 months or on an annual period. You certainly have quarters where you'll have our major maintenance outages like we'll have in the June quarter. And So we're really talking about annual margins. And look, it comes from a foundation of high quality assets, low cost position in very good markets. Speaker 200:27:15Michael has alluded to many times, we're relatively insulated from imports, so we're more in the Heartland part of the country. And so given the market conditions where demand is outpacing supply, that generally provides a pricing power to the manufacturers and you've seen that the last couple of years and we've got incremental price increases announced for the first half of this year. And then on the cost side, it's an energy intensive business and energy prices certainly have stopped being as inflationary as they were a couple of years ago. So that's what gives us the confidence as we look at this business on an annual basis, why we think we can continue to improve margins. Speaker 600:28:04Sounds good. Appreciate the time guys. Operator00:28:08And our next question today comes from Phil Ng with Jefferies. Please go ahead. Speaker 700:28:13Hey guys. Appreciating you're pretty insulated from imports, Craig, as you mentioned, but there is the conflict in the Red Sea. You seeing any impact out there from imports, whether it's supply and pricing, will that and what that ultimately means for the markets you're in? Speaker 200:28:31Phil, no direct impact for us in terms of supply or anything coming across the ocean. But I think it does highlight the risk that imports have, that they are subject to Global issues, whether it's very specific events as you mentioned or others, that could impact timing of ships, the trips that they have to take longer trips that are more expensive. So that is the issue with why imports have a restricted ability to impact the U. S. Market. Speaker 700:29:07Are you seeing any upward pressure on import prices just given that dynamic in recent weeks? Speaker 200:29:13Ocean freight rates have kind of gone up and down over the last, call it, 6 to 9 months. Those are impacted by many things. Again, we're not as large of an importer as others are. So I can't say that we've seen any direct impact at this point. But I think your point is well made that there are some upward pressures on ocean freight rates. Speaker 700:29:38Okay. On the wallboard side, the quarter was obviously quite strong from a volume standpoint. Is any of that like tied to like pre buy? I know there was a fall price increase or any of your customers trying to hit these rebates. So my question is, Could there be hangover effect on the demand side for your March quarter? Speaker 700:29:56And then I guess bigger picture this year with rates potentially coming back, let's say, we get back to like 5.5%. How quickly do you see that kind of rippling through? I appreciate there's a lag, but like how quickly do you kind of see that inflection if you do see 1 on wallboard demand? Speaker 200:30:11Yes. We didn't see any sort of pre buy activity, those type of things. I think that is fundamental wallboard consumption. We look at our orders Post the quarter, we've been very happy with the environment and the order activity. So I don't I think it was pretty clean volume. Speaker 200:30:31Yes. In terms of the inflection point for interest rates and therefore the Benefit to housing, affordability and demand. As I mentioned earlier, There is a lag between a start to wallboard consumption. That was elongated post COVID because of some of the supply chain issues the homebuilders were dealing with. I think those issues have been, have eased over the last 18 months, let's call it. Speaker 200:31:02So You would expect to see going back to more of a normal timing in terms of call it 3 to 4 months from a start to wallboard consumption is typically what or historically what we've seen for how fast that flows back into the business. Speaker 700:31:19Okay. Super helpful. Really appreciate it. Operator00:31:22And our next question today comes from Keith Hughes with Truist. Please go ahead. Speaker 800:31:28Thank you. Questions on the volume of the JV. It was down in the quarter, it was up fairly easy comp in the prior year. I'm sure weather played some role here, but you just talk pace of business at the volume of the JV in the quarter? Speaker 100:31:43Yes. I'll take that question, Keith. Thank When we look at the JV, we had discussed earlier in the year that we had some older equipment At that JV that we, if you remember about a couple of quarters ago, we had a mill that we were struggling with a little bit and get a repair to that mill that we thought would carry us through the lead time and get the parts that we need for that mill. That mill actually had some Additional issues that it was still running fine, but from a safety perspective and standpoint, we wanted to make sure We took it down and addressed the issues that were happening, so we didn't have a catastrophic failure. So we did take a little bit more of an outage this cool glass quarter to address that. Speaker 100:32:35We have the parts for that mill on order. It's just the lead time on these heavy industrial parts and it's a part that typically doesn't wear out as much that we're going to have to replace. So it had a 18 to 24 month lead time with it. We're going to change that, those mill components out later on this year. The other thing I also wanted to highlight with Lehigh as I've talked about in previous quarters is what we have the secondary thing that caused us some issues throughout the year was a clinker cooler we have, which we are going to also address during this next year. Speaker 100:33:11So This next fiscal year, we will have a little bit more extended downtime to address those two issues. We're very confident that the plant Infrastructure other than these two components is very, very good. We just are getting to the end of life these components and they take a little bit of time to replace and to get the parts and to satisfy them. So we had a little bit more downtime in the quarter. Speaker 800:33:38Okay. It sounds like this is going to continue through really the next fiscal year. Is that fair to say? Speaker 100:33:43Yes. We're going to have an extended outage. We haven't defined when that outage is going to be yet because we want to ensure all the components are in, but it will happen sometime in this next fiscal year where we will have an extended outage probably a couple of weeks longer than a typical outage to address these two issues. Speaker 800:34:06And can you give us any kind of feel how much capacity at Texas Lehigh is affected by problems you're discussing? Speaker 200:34:14Yes, Keith, I don't know that I would say it's impacting the capacity. It's just the ability to ramp up to full production, As Michael said, post the installation of these the new equipment, we should be back to our ordinary level. Okay. Speaker 800:34:31All right. Thank you. Operator00:34:34Thank you. And ladies and gentlemen, this concludes our question and answer session. I'd like the conference back over to Michael Hack for any closing remarks. Speaker 100:34:42Thank you, Rocco. We entered the new calendar year committed to operate safely and responsibly and deliver excellent results for our customers and you, our shareholders. The outlook for Eagle is bright and we look forward to capitalizing on opportunities ahead. We're also excited to publish an updated an upgraded sustainability report and to discuss highlights when we meet again in May on the report and our full fiscal year 2024 results and progress on our strategic priorities. Thank you for joining us today. Operator00:35:16Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.Read morePowered by