What Eagle Materials (EXP) Said on Its Q2 Earnings Call

Key Points

• Record Q2 revenue rose 2% to $653 million, driven by record cement sales volume and higher wallboard and recycled paperboard volumes, but EPS fell 14% to $3.63 as operating costs increased.
• Infrastructure spending and large private nonresidential projects supported cement demand, with Eagle anticipating growth in 2027 and announcing cement price increases of about $10–$15 per ton. Higher diesel and freight costs weighed on heavy-materials earnings, while weak housing and lower wallboard prices pressured light-materials earnings.
• Eagle maintained its fiscal 2027 capital-spending outlook of $490 million to $525 million, largely for plant modernizations, and expects spending to fall significantly in fiscal 2028, boosting free cash flow. It also repurchased $62 million of shares in the quarter and continues to assess acquisitions, particularly in aggregates.

Eagle Materials NYSE: EXP reported record revenue for its fiscal 2027 second quarter, but higher diesel and freight costs weighed on earnings across its businesses.

Revenue rose 2% from a year earlier to $653 million, supported by record cement sales volume and higher wallboard and recycled paperboard volumes, Chief Financial Officer Craig Kesler said on the company’s earnings call. Earnings per share fell 14% to $3.63 as operating costs increased.

Chief Executive Officer Michael Haack said the company’s businesses performed well in a challenging environment, while warning that elevated diesel prices and freight rates remain near-term headwinds. Eagle repurchased $62 million of shares during the quarter and ended the period with a net debt-to-adjusted EBITDA ratio of 2.1 times.

Infrastructure Supports Cement Demand

Revenue in Eagle’s heavy materials sector, which includes cement, concrete and aggregates, increased 2%. Kesler said cement volume benefited from infrastructure spending and large private nonresidential projects. Sector operating earnings fell 12%, primarily because of higher freight and raw material costs.

Kesler said public infrastructure accounts for about half of cement demand, with data centers also contributing meaningfully in Eagle’s markets. He said the company sees an opportunity for growth in calendar 2027, led by public infrastructure and private nonresidential construction, while residential activity remains slower.

Haack said Eagle has communicated cement and aggregates price increases in most markets effective Jan. 1, 2027. Kesler said announced cement increases range from about $10 to $15 per ton, depending on the market.

Diesel accounted for more than half of the company’s cost increase in the latest quarter, Kesler said. He added that purchased raw material costs were affected roughly equally by higher purchase quantities and the freight needed to bring those materials in.

Wallboard Market Remains Challenged

Light materials revenue rose 2% to $216 million as higher wallboard and recycled paperboard volumes partly offset lower wallboard prices. Operating earnings in the sector declined 13% to $68 million, primarily because of lower net wallboard selling prices, which Kesler said were significantly affected by freight costs.

Haack said high interest rates are likely to continue limiting residential construction and wallboard demand in the near term. Kesler said housing and wallboard consumption remain below historical trends and that a significant pickup in activity would require a much greater improvement in affordability.

Plant Modernizations on Track

Eagle expects construction of its modernized Mountain Cement plant in Laramie, Wyoming, to be substantially complete by its next quarterly earnings call. Haack said commissioning the plant should take about two quarters after construction is complete.

The existing plant, which uses equipment dating to the 1960s, experienced another disruption in October, unrelated to issues resolved in July, Haack said. Eagle has shipped cement from its broader network to support customers. During commissioning, the company can also run the old plant’s two kilns if needed, although bringing in additional cement could increase freight costs.

Haack said many of the modernization’s cost savings should benefit Mountain Cement’s margins by the later part of fiscal 2028. Achieving the full 25% cost savings will require selling the new plant’s full capacity, which he said will take several years.

Construction and commissioning of the Duke, Oklahoma, wallboard modernization are expected to finish about a year after the Laramie project. Kesler said construction at Duke is on track for completion in mid-fiscal 2028.

Spending to Peak This Fiscal Year

Eagle spent $250 million on capital expenditures in the first half of fiscal 2027, largely on the two plant projects. It maintained its full-year capital spending outlook of $490 million to $525 million. Haack said spending should decline significantly in fiscal 2028 after construction at Laramie is finished, increasing free cash flow.

First-half operating cash flow rose 7% to $364 million, while the company returned $162 million through dividends and the repurchase of approximately 711,000 shares. At Sept. 30, Eagle had $241 million in cash and nearly $1 billion in total committed liquidity, Kesler said.

Haack said Eagle continues to explore acquisitions in its core businesses, with a particularly robust pipeline in aggregates. He said investments must strengthen the company’s footprint and low-cost position and meet its financial return requirements; otherwise, Eagle will continue to buy back shares opportunistically.

About Eagle Materials (NYSE:EXP)

Eagle Materials Inc NYSE: EXP is a U.S.-based manufacturer of building materials used in residential, commercial, infrastructure and industrial construction. The company's principal products include cement, gypsum wallboard, concrete and aggregates.

Its cement business produces and distributes Portland cement and related cement products, while its gypsum wallboard business supplies panels used in interior construction. Eagle Materials also provides ready-mixed concrete and construction aggregates, including crushed stone, sand and gravel, for building and infrastructure projects.

The company traces its history to Centex Construction Products, which was spun off from Centex Corporation in 1994 and later adopted the Eagle Materials name.

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