EAGLE MATERIALS INC Q4 FY2025 earnings call

• Safety: Achieved the lowest total recordable injury rate (TRIR) in company history, with a 25% increase in hazard observations. Rollout of the Eagle Safe program to advance safety culture.
• Financial Performance: Fourth consecutive year of record financial results, with $2.3 billion in fiscal year revenue and $13.77 earnings per share (EPS).
• Sustainability: On track to complete a $22 million wastewater treatment facility upgrade at the papermill, reducing water consumption by 50%; Cement plant projects include alternative fuel feeders and expanded recycled tire use.
• Capital Deployments: Acquired two aggregates operations, commissioned the Texas Lehigh slag facility, continued the Mountain Cement plant expansion, and announced a $330 million modernization of the Duke gypsum wallboard facility.

In the Heavy Materials sector (comprising Cement, Concrete, and Aggregates), annual revenue decreased 2% to $1.4 billion. This decline was due to lower cement sales volume, though partially offset by higher sales prices. The two acquired aggregates businesses contributed approximately $12 million to annual revenue. Annual operating earnings in the heavy materials sector dropped 11% to $311 million, again reflecting lower sales volume but offset in part by higher cement prices. During the fourth quarter, Heavy Materials operating earnings plunged 50% to $18.3 million due to adverse weather and maintenance impacts. In the Light Materials sector, annual revenue rose 3% to $969 million, fueled by higher wallboard sales prices and record recycled paperboard sales volume. Annual operating earnings increased 3% to $389 million, driven by higher wallboard prices, record paperboard volume, and lower energy and freight costs.

• Total company capital spending in fiscal 2026 is expected to range from $475 million to $525 million, including the Mountain Cement and Duke Wallboard projects.
• The Duke Wallboard modernization is scheduled to start later in the year, and the Mountain Cement plant is expected to complete late in 2026 or early 2027.

• Weather Impact: Adverse weather in the fourth quarter disrupted Cement, Concrete, and Aggregates operations, causing production interruptions and operational impacts estimated at $4 million to $5 million.
• Economic Uncertainty: Broader economic conditions, including tariff outcomes, pose potential risks to business performance.

Q: How do you philosophically think about deploying capital into modernization expansion efforts?

A: We invest in assets and markets we know, with high-return hurdles, targeting 15% cash-on-cash after-tax returns. Projects like Mountain Cement and Duke Wallboard improve our competitive position.

Q: Wallboard pricing down sequentially, how about like-for-like trend?

A: Exit price was not far off the quarterly average, with a price increase planned for spring. Freight costs were a major factor in the sequential decline.

Q: Cement pricing and cost visibility over next 3-6 months?

A: Energy costs have been flat, and margins are expected to improve, though the exact cadence is driven by volume outlook.

Q: Aggregates deal pipeline and plans for fiscal 2026?

A: Aggregates deals are cyclical; we look for opportunities that fit our criteria, tying into our network and providing strong financial returns.