Eagle Materials Q1 2026 Earnings Call Transcript

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July 29, 2025

Key Takeaways

  • Positive Sentiment: Record Q1 results with revenue of $634.7 million and diluted EPS of $3.76 achieved despite challenging weather conditions.
  • Positive Sentiment: Cement volumes rose year-over-year for the first time since December 2023, backed by healthy DOT budgets and accelerating infrastructure awards, setting the stage for improved pricing as industry capacity utilization remains high.
  • Positive Sentiment: Early achievement of the 2030 midterm cement CO₂ intensity goal, enhanced sustainability reporting and strategic investments in low-carbon materials underscore ongoing environmental progress.
  • Positive Sentiment: Major modernization projects at the Laramie cement plant and Duke wallboard facility are on budget and schedule, supported by disciplined capital spending and opportunistic share repurchases.
  • Negative Sentiment: Wallboard volumes remain subdued amid housing affordability challenges, with consumption at late-1990s levels and a full recovery dependent on lower interest rates or home prices.
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Earnings Conference Call
Eagle Materials Q1 2026
00:00 / 00:00

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Operator

Good day, everyone, and welcome to the Eagle Materials First Quarter of Fiscal twenty twenty six 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. Hack, please go ahead, sir.

Michael Haack
CEO, President & Director at Eagle Materials

Thank you, Chuck. Good morning. Welcome to Eagle Materials conference call for our 2026. This is Michael Hack. Joining me today are Craig Kessler, our chief financial officer, and Alex Haddock, senior vice president of investor relations, strategy, and corporate development.

Michael Haack
CEO, President & Director at Eagle Materials

There will be a slide presentation made in connection with this call. To 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.

Michael Haack
CEO, President & Director at Eagle Materials

Thank you for joining us today. I'm pleased to report that we had a solid start to our fiscal year 2026. We generated record first quarter revenue of $634,700,000 and diluted net earnings per share of $3.76, despite challenging weather conditions across many of our cement, concrete, and aggregate markets. Throughout our history, our low cost producer position and operational focus has helped us weather tougher periods in the cycle and capture the benefits of stronger conditions. Regardless of specific near term conditions, our operations maintain the same disciplined focus every quarter and every year.

Michael Haack
CEO, President & Director at Eagle Materials

Improving our operational metrics is always a key priority, and this long term multi cycle approach to operational improvement is an important competitive advantage for Eagle material. For me, that all starts with our safety performance. I'm pleased we continued our safety progress, maintaining our total recordable incident rate well below the industry average and near our all time record as a company. And as always, we aim to do better to establish our safety culture so it is self sustaining. The progress we've made is tangible, and I'm grateful to our employees for their relentless efforts.

Michael Haack
CEO, President & Director at Eagle Materials

We've also made substantial progress on our sustainability initiative. Capturing the economic benefits of being a low cost producer means sustainability has always been part of our operational DNA. We're always looking for ways to do more with less. Over the last five plus years, we have expanded our investments that offer us good return focused on improving our sustainability. I think our progress is evidenced in our results across several initiatives, which can be found in our newly published updated sustainability report.

Michael Haack
CEO, President & Director at Eagle Materials

To highlight just a few examples, we met our 2,030 midterm cement COE CO two E intensity goal early. This does not mean we are done. We'll continue to focus on efforts so we can improve this metric, operate more efficiently, and provide a return to our investors. We continue to enhance our reporting. For example, in our most recent report, we separate cement GHG emissions by fuel and process for the first time.

Michael Haack
CEO, President & Director at Eagle Materials

We also made investment in Terra c o two as a lead investor to further our efforts to produce low carbon supplementary cementitious material to help meet the expected future demand for cement more broadly. Overall, I'm pleased with our progress and believe we still are in the early innings and will show further improvements. With that, let me turn to a few comments on our business environment. First, from a demand perspective, despite headline macroeconomic and policy uncertainty, we saw stable order trends across each of our major business lines. Our aggregate volumes improved meaningfully year over year, both from the integration of our two recently acquired quarries and on an organic basis.

Michael Haack
CEO, President & Director at Eagle Materials

Our cement volumes also improved year over year, which is especially impressive given the major weather disruptions in several of our cement market. This is the first quarter since December 2023 that we've seen a year over year increase in cement sales volumes. Our heavyside customers continue to express cautious optimism for their business outlooks as DOT state budgets remain healthy and infrastructure awards accelerate. Against this backdrop, once cement sales volumes rebound from the slower than anticipated consumption we had in calendar 2023 and 2024, we believe the high capacity utilization rates across the cement industry should also lead to an improved pricing environment. Our near term outlook on volumes for the wallboard business remains more subdued.

Michael Haack
CEO, President & Director at Eagle Materials

Single family new home building constraints persist, primarily driven by affordability challenges for the new home buyer. For wallboard volumes to recover, interest rates and or home prices will need to come down to aid buyer demand more broadly. However, putting the current environment into context, annual consumption of wallboard sits at levels akin to the late nineteen nineties when The US had a much lower population base, and despite the tougher residential construction environment, our wallboard business has performed exceptionally well. Even against a softer demand environment, we have been able to maintain our margin profile across our businesses given our operational advantages. Our cement footprint is more modern than prior cycles, thanks to strategic acquisitions.

Michael Haack
CEO, President & Director at Eagle Materials

And in cement and wallboard, structural constraints on adding supply remain. We believe long term demand fundamentals favor the consumption of our products. US infrastructure assets in The US US housing stock continue to age, and the replenishment of our roads, bridges, and homes will require cement, concrete, and aggregates in wallboard. That is why as we look out over the next three to five years, we believe we can continue to grow and expand our margins further. We also continue to prudently invest our substantial excess free cash flow.

Michael Haack
CEO, President & Director at Eagle Materials

I recently visited our Laramie, Wyoming cement plant, and I'm happy with the progress we are making on modernizing and expanding the plant. The project remains on budget and on schedule for late calendar twenty twenty six commissioning. Construction for our Duke, Oklahoma wallboard plant modernization will also commence this summer, and we have already begun purchasing major equipment. Both projects highlight our investment philosophy well. We plan to continue to seek strategic projects, whether acquisitions or organic opportunities that meet our financial return criteria, position our company for the next forty years or more.

Michael Haack
CEO, President & Director at Eagle Materials

Alongside these projects, we plan to continue to invest in our company through opportunistic share repurchases as well. There's a lot of meaningful value creating work underway at Eagle Materials, and I'm excited to share our progress along the way. With that, Craig, I'll pass it over to you.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Thank you, Michael. As mentioned, first quarter revenue was a record $635,000,000 an increase of 4%. The increase primarily reflects higher cement and wallboard sales volume, as well as the contribution from the recently acquired aggregates businesses. Excluding the acquired businesses, consolidated revenue was up 2%. First quarter earnings per share were down 5% to $3.76 The decrease was driven by lower earnings, mostly in cement as a result of higher operating costs, partially offset by a 3% reduction in fully diluted shares due to our share buyback program.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

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 5%, driven primarily by increased cement sales volume and a 21% increase in concrete and aggregates revenue. Aggregates sales volume was up 117%, including the contribution from the recently acquired aggregates businesses. Organic aggregates sales volume was up 29%. Operating earnings in the sector were down 5%, primarily because of the impact of lower production volumes on fixed costs, as well as increased raw material costs.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Moving to the light materials sector on the next slide. First quarter revenue in our light materials sector increased 1%, reflecting higher wallboard sales volume, partially offset by lower wallboard sales prices. Operating earnings in the sector were down slightly, reflecting lower net sales prices, partially offset by lower input costs, primarily for recycled fiber. Looking now at our cash flow, we continue to generate substantial cash flow and allocate capital in a disciplined way. In the first quarter, operating cash flow increased by 3% to $137,000,000 reflecting improved working capital management.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Capital spending increased to $76,000,000 as we continued to invest in and improve our operation. Most of the increase was associated with the modernization and expansion of our mountain cement plant and equipment purchases for the project to modernize our Duke, Oklahoma wallboard facility. These two projects, as well as our sustaining capital spending, we continue to expect total company capital spending in fiscal twenty twenty six to be in the range of $475,000,000 to $525,000,000 We repurchased 358,000 shares of our common stock for $79,000,000 and paid our quarterly dividend, returning $87,000,000 to shareholders during the first quarter. We have 4,300,000.0 shares remaining under our current repurchase authorization. Finally, a look at our capital structure, which continues to give us significant financial flexibility.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

At June 30, our net debt to cap ratio remained at 46%, and our net debt to EBITDA leverage ratio was 1.6 times. We ended the quarter with $60,000,000 of cash on hand. Total committed liquidity at the end of the quarter was approximately $525,000,000 and we have no meaningful near term debt maturities. Thank you for attending today's call. We'll now move to the question and answer session. Thanks.

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Operator

And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Trey Grooms with Stephens. Please go ahead.

Trey Grooms
Managing Director at Stephens Inc

Hey, morning everyone. If you could maybe touch on wallboard here, I mean, you guys are clearly outperforming the market. Maybe touch on some of the drivers there and maybe what you're seeing on the demand front. Housing continues to be pretty weak, but you guys are outperforming there. So any color you could give us around that?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, Trey, look, I think some of it is our geographic position continues to do well. You've heard me say this many times, also looking at volumes on a trailing twelve month basis is important. Quarter to quarter, you could have weather issues, you could have projects that shift around. But we're happy with where our businesses are positioned, our facilities are in good condition, and the team's performing well. No doubt, and as Michael mentioned, the affordability issues continue to plague the housing industry, and wallboard volumes are still at very low levels in the grand scheme of things.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

So we like our position, and as we can improve the affordability issue in The United States, I think our business is positioned very, very well.

Trey Grooms
Managing Director at Stephens Inc

Okay, and then kind of sticking with wallboard, the margins there continue to be really good. Can you talk about anything on the cost front we should be kind of keeping our eye out for on the wallboard side? Any swings there or any changes that you're expecting on that front?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Look, natural gas has been range bound for quite some time now. It's a little over $3 have come down, I think they probably stabilized at this level for a little while. We're fortunate with our natural gypsum reserves and having plenty of those for many years, many decades. And so I don't see anything on the immediate horizon one way or the other on the cost side.

Trey Grooms
Managing Director at Stephens Inc

Alright, well, thanks for taking my questions. I'll pass it on and jump back in queue. Thank you.

Operator

The next question will come from Brian Brophy with Stifel. Please go ahead.

Brian Brophy
Brian Brophy
AVP at Stifel Financial Corp

Yes. Thanks. Good morning, everybody. JV operating earnings were a little bit lower than the Street was. I guess just curious to what extent that was a continuation of a drag from the slide facility ramp up.

Brian Brophy
Brian Brophy
AVP at Stifel Financial Corp

And just any update on how you guys are thinking about that ramp moving forward here?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, look, I think there were two things in the quarter. You hit on one of them certainly as we commissioned that facility during the winter and it's really in startup mode as we've gone through the spring and early summer. So that did continue to be a drag on earnings. The business is starting up and will continue to improve, I think, as we go along this year. The other point, and you see it in the release, sales volumes were down 12%.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Texas continued to see some weather issues across the whole state, and that certainly contributed to the decline in volumes.

Brian Brophy
Brian Brophy
AVP at Stifel Financial Corp

That's helpful. And then on the flip side, obviously, was a nice bounce back in profitability on the concrete and ag side. Is this a good run rate to think about margins moving forward in that segment? Or is there any kind of one off benefits to call out this quarter? Thanks.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, no one time issues or one time benefits. I would tell you, like many of these businesses that are outdoor sports, there will be some seasonality as you get into the December and certainly the March quarter. Here in the June and September quarter, those businesses performed well. We'd had some unique items last year that we had highlighted several times, I think we're past many of those. So you're right, business did perform very well. They'll have natural seasonality to it, but very happy.

Brian Brophy
Brian Brophy
AVP at Stifel Financial Corp

Thanks, I'll pass it on.

Operator

The next question will come from Anthony Pettinari with Citigroup. Please go ahead.

Anthony Pettinari
Anthony Pettinari
Research Analyst at Citigroup

Good morning.

Anthony Pettinari
Anthony Pettinari
Research Analyst at Citigroup

I was wondering with the strength you saw in cement volumes, if there was anything notable in terms of the cadence in the three months of the quarter and then maybe quarter to date here in July, whether I don't know the strength has built or there's any pattern there. And then I'm wondering if you could talk a little bit more about maybe some of the regional or state by state dynamics that you're seeing in the cement market.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, thanks Anthony. Look, like I would tell you, the volume cadence was pretty consistent throughout the quarter. And as we've highlighted for a while now, the underpinning of cement demand is driven by infrastructure spending. Those awards have continued to accelerate so feel good about where that business is from a volume perspective. I think it's been pretty consistent throughout the quarter and expect it to remain so, even in light of some weather pressures.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Michael mentioned that we had some areas of the country, especially in places like Oklahoma, where they saw a year's worth of rain in the first half of the year. So even with that environment, we continue to see a nice improvement in cement volumes, steady.

Anthony Pettinari
Anthony Pettinari
Research Analyst at Citigroup

Great, great. And is there any notable dynamic that you call out in the states that you serve, areas that are stronger or maybe weaker?

Michael Haack
CEO, President & Director at Eagle Materials

No, really, you know, if you look across the country, you know, it's pretty consistent across the country with it. We don't have anything that I'd call out as specific. That's a big deviation compared to any other location.

Anthony Pettinari
Anthony Pettinari
Research Analyst at Citigroup

Okay, that's helpful. I'll turn it over.

Operator

The next question will come from Adam Thalhimer with Thompson Davis. Please go ahead.

Adam Thalhimer
Director - Research at Thompson Davis & Co

Hey, good morning guys. Nice quarter.

Michael Haack
CEO, President & Director at Eagle Materials

Thanks Adam.

Adam Thalhimer
Director - Research at Thompson Davis & Co

Craig, can you give us any high level thoughts on wallboard volumes going forward?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, Adam, look, again, happy with how the business performed through the June. As well chronicled and we've discussed here a little bit, I mean housing has been under some pressure, given where interest rates are, just general affordability issues. So I don't see a major change one way or the other in wallboard demand, frankly. But it's kind of a hard crystal ball right now to figure out where home building is going. Certainly, think the spring selling season wasn't as strong as the home builders had hoped for.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

But still feel good about kind of the medium and longer term housing issue here in The US with, and we still feel like we're under built. And as long and we've got healthy consumers, healthy balance sheets, so when we do see affordability improve, I think that's when wallboard volumes can really meaningfully move forward.

Adam Thalhimer
Director - Research at Thompson Davis & Co

Okay. And then, on cement, I was curious if the the higher operating cost you called out, were those temporary in the quarter?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah. Adam, great question. You know, this is our quarter where we perform the vast majority of our annual maintenance programs. And production was lower during this quarter. And so on a per unit basis, lower production volume really hurts your fixed cost absorption.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

So pretty unique to this quarter. I wouldn't call out anything. Energy was pretty flat even both on a fuel and electricity basis. It was just really the lower production volumes associated with those annual maintenance programs.

Adam Thalhimer
Director - Research at Thompson Davis & Co

Got it. Thanks, Craig.

Operator

The next question will come from Philip Ng with Jefferies. Please go ahead.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Hey guys. On cement, Michael, I think if I heard you correctly, your commentary on the outlook, with capacity utilization high, you were pretty upbeat on cement prices. I don't know if that was a medium to longer term comment, but love to get your thoughts on how you're seeing cement prices evolve over the course of the year. It sounds like demand is reasonably good, but prices slipped modestly sequentially. So just kind of give us a lay of the land how you're thinking about cement prices this year.

Michael Haack
CEO, President & Director at Eagle Materials

For the question. When we look at it, if we look at the what I continue to focus on is kind of the midterm and the long term side of the market. And when we look at it, demand is staying pretty consistent and pretty stable. We're happy with the volumes we were able to ship. And as I stated earlier, it's pretty consistent across the country.

Michael Haack
CEO, President & Director at Eagle Materials

From what we're hearing from customers and everything, we think the demand profile in the mid term and the long term would be good, which would lead to more pricing potential in the future as those supply demand dynamics tighten with it. You know, in the shorter term time frame, you know, we have a good supply demand dynamic right now, but, you know, I think the shorter term I won't say it will be a little bit more challenging getting price increases through, but we'll be more pacing them, looking at the fall to see what we do and what we implement during that time frame. So really, what I'm looking for is the mid term and the long term that has really more potential and upside on that.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay. So if I'm interpreting you correctly, Michael, the spring increase, TBD, it's probably fairly muted and it kinda depends on how the demand backdrop, supply demand on fall kinda materializes and potentially that could give you some momentum on pricing for cement?

Michael Haack
CEO, President & Director at Eagle Materials

That's exactly correct, Phil.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay. Perfect. And, perhaps a question for you, Craig. With the, bill change out there and you guys are obviously making, real investments in both your cement and wall business. Anything to be mindful of from a cash flow standpoint and potentially cash tax implications?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

You hit the nail on the head, Phil. Yeah, from a P and L perspective, not a big change, but with the accelerated depreciation being extended, that should help reduce cash taxes paid. Not as significant here in fiscal twenty six, but when you consider a project like the Mountain Cement Modernization, a $430,000,000 investment expected to be put in place in fiscal twenty seven, that would be an immediate full deduction. So it would significantly lower our cash taxes paid. Then the following year, you'd have the Duke wallboard expansion project coming online in addition to your normal sustaining capital spending. Yeah, it'll be a nice boost to cash flow.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Is there a way to kind of size what that cash tax rate could look like in the next few years?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

You know, our our cash taxes paid frankly aren't that much different than our provision, so kind of the low twenties.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay.

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

And so, you know, pretax income, that could be a pretty meaningful number.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay. Alright. Thank you. Appreciate the color, guys.

Operator

The next question will come from Keith Hughes with Truist. Please go ahead.

Keith Hughes
Keith Hughes
Managing Director at Truist Securities

Thank you. I just want to shift over to wallboard pricing was down in the quarter. You talked about was there any mix impact on the numbers and what's in the near term what you think pricing will do?

Craig Kesler
Craig Kesler
EVP - Finance and Administration & CFO at Eagle Materials

Yeah, Keith, really the decline year over year, yes, sequentially pretty much flat. And so we'd already seen that decline really in the '24 and into our Q4. So been pretty range bound here with wallboard prices for quite some time. And I think our outlook is for a similar type of range bound until you have a meaningful move in volume.

Keith Hughes
Keith Hughes
Managing Director at Truist Securities

Okay, thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Mr. Michael Hack for any closing remarks. Please go ahead, sir.

Michael Haack
CEO, President & Director at Eagle Materials

Thank you, Chuck. The first quarter was a solid start to our year, which is a testament to our operational resilience. We have maintained our clear operational, strategic and financial goalpost even as the economy and construction conditions evolve. Eagle continues to position itself for growth throughout cycles, and we will keep focused on executing for outperformance. Thanks also for everyone for joining the call today.

Michael Haack
CEO, President & Director at Eagle Materials

We look forward to discussing our results again with you next quarter.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Executives
    • Craig Kesler
      Craig Kesler
      EVP - Finance and Administration & CFO
Analysts
    • Michael Haack
      CEO, President & Director at Eagle Materials
    • Trey Grooms
      Managing Director at Stephens Inc
    • Brian Brophy
      AVP at Stifel Financial Corp
    • Anthony Pettinari
      Research Analyst at Citigroup
    • Adam Thalhimer
      Director - Research at Thompson Davis & Co
    • Philip Ng
      Managing Director at Jefferies Financial Group
    • Keith Hughes
      Managing Director at Truist Securities
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