Eagle Materials Inc. Q4 FY2026 earnings call

• Safety and Operational Excellence

  • Maintained a 5-year average total recordable incident rate below the industry average
  • Increased near-miss hazard observations (a key leading safety indicator) by 24% in fiscal 2026
  • The recycled paperboard mill achieved record annual performance with high plant efficiency, supporting stable Light Materials margins
  • Strategic Capital Investment
  • Two major plant modernization and expansion projects are in progress: Mountain Cement (60% complete, commissioning expected late calendar 2026) and Duke, Oklahoma wallboard plant (30% complete, commissioning expected H2 2027)
  • These projects will lower long-term operating costs, improve plant reliability, expand capacity, and strengthen EGLE's low-cost competitive position
  • Maintains an average of 50 years of rolling raw material quarry reserves (limestone, gypsum, rock) via strategic land investments, creating sustainable cost and supply quality advantages
  • Strengthened the balance sheet via $750 million 10-year senior note issuance at 5% interest, used to repay near-term credit facility borrowings and improve debt maturity profile
  • Shareholder Capital Return
  • Returned $414 million total to shareholders in fiscal 2026: $382 million via share repurchases (1.7 million shares) and regular quarterly dividends
  • Ended fiscal 2026 with 2.9 million shares remaining under the current repurchase authorization
  • Industry Outlook
  • Maintains a through-the-cycle strategic view, focused on long-term structural tailwinds rather than short-term volatility
  • Long-term demand is supported by U.S. population growth, aging existing housing stock and infrastructure, and no scalable substitutes for core products, with industry-wide supply constraints limiting medium/long-term capacity additions
  • Current cement and aggregates demand is supported by public infrastructure spending (IIJA, healthy state budgets) and strong private non-residential construction, particularly data center development
  • Near-term wallboard demand faces housing affordability headwinds tied to high mortgage rates, but demand has held steady historically with relative price stability supported by industry supply constraints

Heavy Materials (cement, concrete, aggregates): Annual revenue increased 10% year-over-year, driven by an 8% increase in cement sales volume and 19% growth in concrete and aggregates revenue. Total aggregate sales volume hit a record 6.6 million tons, up 70% year-over-year (organic aggregate sales volume rose 24%) thanks to contributions from two recently acquired aggregate businesses. Operating earnings for the segment also increased 10% year-over-year, with growth offset slightly by a 1% decline in net cement sales prices. This segment contributed approximately 61.7% of total fiscal 2026 revenue.

Light Materials (wallboard, recycled paperboard): Annual revenue decreased 9% year-over-year to $881 million, driven by lower sales volume and a 4% decline in wallboard sales prices stemming from soft residential construction demand. Operating earnings for the segment fell 15% year-over-year to $331 million. This segment contributed approximately 38.3% of total fiscal 2026 revenue.

• Capital expenditures for fiscal 2027 are expected to range between $490 million and $525 million, representing the peak spending level for the two major plant modernization projects
  • Sustaining (maintenance) capital is expected to hit a $150 million annual run rate after both projects are completed by the back half of fiscal 2028; fiscal 2028 sustaining plus remaining project spending is expected to be ~$250 million
• Management expects positive cement volume momentum in its regional footprint for fiscal 2027, outperforming the projected national industry low single-digit decline, driven by infrastructure and data center demand
• The two major modernization projects are projected to deliver double-digit returns on capital, with full cost savings and incremental output contributions realized by fiscal 2029
• Cement price increases implemented April 1 across most markets are currently being executed, with a planned June 1 price increase for wallboard to offset higher freight costs
• Management expects the recycled paperboard mill's current solid profitability level to be sustainable long-term

• Short-term volatility and macroeconomic uncertainty, particularly for housing demand tied to high mortgage rates that limit home inventory turnover and new home construction
• Rising diesel and freight costs negatively impact net selling prices for both cement (terminal delivery) and wallboard (delivered pricing model), partially offsetting implemented price increases
• Global supply chain and energy market disruptions have pushed up ocean freight rates for the small volume of cement imports into EGLE's South Texas and Northern California markets, raising import costs
• Industry-wide capacity constraints and raw material challenges create ongoing margin pressure for the wallboard segment in the near term
• Any changes to federal infrastructure spending authorization could impact long-term public construction demand, though management views ongoing extension discussions as supportive overall

Q: What is driving current strong cement volume in EGLE's markets, and how is the April 2026 price increase being received ahead of peak construction season? / A: Strong volume is partially due to easy year-over-year comparisons from poor weather in last year's fourth quarter, but core underlying strength comes from healthy public infrastructure spending and booming private non-residential construction, particularly data centers across EGLE's regional footprint. Price increases went into effect April 1 across almost all markets, and the strong current volume environment is supportive for successful implementation, though higher freight costs will partially offset the net price gain on a company-wide basis.

Q: How large of a contribution is data center construction to current cement demand, and is this trend expected to continue? / A: Data center development is a very meaningful contributor to recent cement volume growth, alongside ongoing public infrastructure projects. Unlike traditional private non-residential construction (hotels, offices), data centers are a relatively new, fast-growing demand component that is still in early stages across most of EGLE's operating regions, with many projects still in initial development phases, so this support is expected to continue.

Q: After the current major CapEx cycle for the two plant modernizations is complete, what is EGLE's long-term capital allocation strategy, and is there an active M&A pipeline? / A: EGLE's core capital allocation framework will remain unchanged: prioritizing high-return organic and inorganic growth that meets strict financial criteria, maintaining all production assets in like-new condition, and returning excess cash to shareholders. Management always evaluates potential acquisitions that fit strategic goals and return requirements, but will remain patient and disciplined to only pursue deals that reinforce long-term through-the-cycle growth.

Q: What return can shareholders expect from the ~$760 million invested in the Mountain Cement and Duke wallboard modernization projects by fiscal 2029? / A: These are long-term strategic projects that combine incremental capacity expansion with major operating cost reductions: the older plants will see significant energy efficiency gains that permanently lower their cost structure. Management targets double-digit returns on these investments, and the full benefit of cost savings and incremental output will be realized by fiscal 2029 after both projects are fully commissioned and operational.