Eagle Materials Inc. Q3 FY2026 earnings call

• Safety is a top priority, with an annual safety conference held in December, maintaining an industry-leading safety record. - Plants are being maintained for reliability, efficiency, and capacity, with initiatives to convert waste streams into revenue streams. For example, Cement is reclaiming old waste streams for raw materials, Aggregates is using fines and overburden, Republic paper mill is repurposing paper, and American Gypsum is recycling 100% of waste wallboard. - Major projects like modernization of Mountain Cement plant and Duke Wallboard facility are ongoing, with progress made during the quarter. - Strong financial discipline, including issuing $750 million in 10-year senior notes, returning nearly $150 million to shareholders through dividends and share repurchases, and maintaining a strong balance sheet with a leverage ratio of 1.8x.

In the Heavy Materials sector, which includes Cement, Concrete, and Aggregates, revenue was up 11%. This was driven primarily by a 9% increase in cement sales volume and a 22% increase in concrete and aggregates revenue. Aggregate sales volume reached a record 1.6 million tons, an 81% increase, reflecting a 34% organic growth and the contribution from the recently acquired Aggregates business. Operating earnings in this sector were up 9%. The Light Materials sector, which includes Wallboard and paperboard, saw revenue decrease 16% to $203 million, due to lower wallboard and recycled paperboard sales volume and a 5% decline in wallboard sales prices. Operating earnings in this sector were down 25% primarily because of lower wallboard sales volume and prices.

• Total capital spending in fiscal 2026 is expected to be in the range of $430 million to $450 million. - Returned nearly $150 million to shareholders through dividends and share repurchases during the third quarter. - Leverage ratio remains at 1.8x, providing financial flexibility to navigate cycles.

• Market fluctuations in construction demand, affecting sales volumes and prices. - Raw material cost fluctuations, impacting margins. - Weather-related disruptions affecting operations and logistics. - Intense competition in certain regions, particularly Texas, affecting pricing and market share.

Q: About Cement volume and demand spread, D. Kesler responds it's broad-based across markets with optimism around infrastructure and nonresidential markets.

Q: On Cement margins, D. Kesler says costs were largely in line with some raw material costs up but maintenance and fuel costs in check.

Q: On Wallboard pricing, D. Kesler notes downward trend due to residential market, but prices range-bound.

Q: On Wallboard shipments consistency, D. Kesler says pretty consistent across regions.

Q: On Lehigh JV, Michael Haack says plant performing better but Texas had most pressure.

Q: On Cement price increases timing, D. Kesler says increases spread in first couple months of 2026, exact realization to be updated.

Q: On natural gas costs for Wallboard and Cement, D. Kesler says Wallboard has hedging in place, natural gas spikes due to winter but expected to come down.

Q: On Wallboard repair and remodel portion, D. Kesler says it's 1/3 of demand, steady growth.

Q: On CapEx lower numbers, D. Kesler says it's timing of large projects like Mountain Cement and Duke plant.

Q: On capital allocation, D. Kesler says focus on growth with high bar, balanced approach to share repurchases, M&A, and capital returns.

Q: On Wallboard margins stabilization, D. Kesler says margins moderated with cost structure, expecting good performance.

Q: On Wallboard volume stabilization, D. Kesler says optimism around asset positioning and cash flow, but choppiness in market.

Q: On Cement price competition in West, Michael Haack says most markets in good position, pricing determined regionally.

Q: On Wallboard price trends, D. Kesler says not destocking, perishable product, pricing range-bound.

Q: On Wallboard customer relationships with big box, D. Kesler says early to determine impact.

Q: On Wallboard downtime in December and March, D. Kesler says modulate production based on sales opportunity.

Q: On Cement pricing definitiveness, Michael Haack says dependent on customer conversations and market timing.

Q: On Cement price increases and historical realization, D. Kesler says price increases around $8/ton, timing between Jan-Apr, regional determination.