Eagle Materials Inc. (EXP) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents mixed signals: strong strategic plans with modernization projects and price increases, but challenges in Wallboard demand and competitive pressures in Texas. The Q&A reveals consistent Wallboard shipment declines and uncertain price stabilization, while management avoids clear guidance on Cement pricing. The sentiment is neutral as positive long-term strategies are balanced by near-term demand challenges and competitive pressures.
Key Financial Performance
Revenue $556 million, down slightly from the prior year. The decrease reflects lower wallboard and paperboard sales volume, partially offset by higher cement sales volume and the contribution from the recently acquired Aggregates business.
Earnings Per Share (EPS) $3.22, down 10% from the third quarter of fiscal 2025. The decrease reflects lower net earnings, mostly the result of lower wallboard sales volume, offset by a 5% reduction in fully diluted shares due to the share buyback program.
Heavy Materials Sector Revenue Up 11%, driven primarily by a 9% increase in cement sales volume and a 22% increase in concrete and aggregates revenue. Aggregate sales volume was up 81% to a record 1.6 million tons, reflecting a 34% increase in organic aggregates sales volume and the contribution from the recently acquired Aggregates business.
Light Materials Sector Revenue Decreased 16% to $203 million, reflecting lower wallboard and recycled paperboard sales volume and a 5% decline in wallboard sales prices. Operating earnings in the sector were down 25% to $73 million, primarily because of lower wallboard sales volume and prices.
Operating Cash Flow Increased 5% to $512 million during the first 9 months of the fiscal year.
Capital Spending Increased to $295 million, mostly associated with the modernization and expansion of the Mountain Cement plant in Laramie, Wyoming, and the modernization of the Duke, Oklahoma Wallboard plant.
Shareholder Returns Nearly $150 million returned to shareholders through quarterly dividend payments and the repurchase of approximately 648,000 shares of common stock during the fiscal third quarter.
Net Debt-to-EBITDA Leverage Ratio 1.8x, providing financial flexibility.
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Operating Highlights
Recycling Initiatives: American Gypsum is recycling 100% of waste wallboard back into production, except at the Duke facility, which will also reach 100% post-modernization.
Modernization Projects: Modernization of Mountain Cement plant and Duke Wallboard facility to lower costs and improve competitive position.
Heavy Materials Growth: Cement and Aggregates sales volumes grew, supported by federal, state, and local infrastructure spending and nonresidential end markets.
Price Increases: Announced price increases for cement in most markets for Q1 2026.
Operational Flexibility: Using network of Cement plants to meet customer needs during downtime at Mountain Cement kilns.
Cost Management: Initiatives to convert waste streams into revenue streams, such as reclaiming old waste streams for raw materials and repurposing non-wallboard grade paper.
Financial Discipline: Issued $750 million in 10-year senior notes to align capital structure with investments in modernization projects.
Shareholder Returns: Returned nearly $150 million to shareholders through dividends and share repurchases.
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Risk or Challenges
Mixed Construction Environment: The company is operating in a mixed construction environment, which could impact demand for its products and overall profitability.
Residential Construction Challenges: Residential construction, which drives wallboard volumes, is facing affordability issues, leading to lower sales volumes and prices for wallboard.
Economic Cycle Uncertainty: The company acknowledges fluctuations in demand due to economic cycles, which could impact its operations and financial performance.
Increased Costs Due to Plant Downtime: Downtime at the Mountain Cement kilns has led to increased costs, highlighting the need for modernization projects.
Lower Wallboard and Paperboard Sales: The company experienced a 16% decrease in revenue in the Light Materials sector due to lower wallboard and recycled paperboard sales volume and a 5% decline in wallboard sales prices.
Capital Expenditure Requirements: Significant capital spending is required for the modernization and expansion of the Mountain Cement plant and Duke Wallboard facility, which could strain financial resources.
Competitive Pressures: Price increases in the Cement sector have been announced, but competitive pressures could impact the company's ability to maintain or grow market share.
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Guidance & Outlook
Modernization of Mountain Cement Plant: The Laramie, Wyoming Cement plant is expected to go through commissioning late in calendar year 2026. This investment aims to lower the cost structure, strengthen the competitive position, and deliver a strong return on investment.
Modernization of Duke Wallboard Facility: The Duke, Oklahoma facility is expected to be commissioned in the second half of calendar 2027. This project will also lower the cost structure and improve competitive positioning.
Heavy Materials Business Outlook: Cement and Aggregates sales volumes grew last quarter, and the company expects continued support from federal, state, and local infrastructure spending, as well as growth in key nonresidential end markets. Price increases have been announced for the first quarter of calendar 2026 in most markets.
Wallboard Business Outlook: Residential construction, which drives wallboard volumes, remains challenged due to affordability issues in the homebuilding industry. However, recent housing policy announcements and more accommodative monetary and fiscal policies may support new home construction in the U.S.
Capital Expenditures: Total capital spending for fiscal 2026 is expected to range between $430 million and $450 million, primarily driven by the modernization and expansion projects at the Mountain Cement plant and Duke Wallboard facility.
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Shareholder Return Plan
Dividend Payment: During the fiscal third quarter, the company returned nearly $150 million to shareholders through dividends and share repurchases.
Share Repurchase Program: Approximately 648,000 shares of common stock were repurchased during the fiscal third quarter. In the first 9 months of fiscal 2026, 1.4 million shares (4% of outstanding shares) were repurchased. The company has 3.3 million shares remaining under the current repurchase authorization.
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Key Q&A
Q:Can you discuss the demand for Cement and whether it is widespread across markets or isolated to specific geographies?
A:The demand for Cement is broad-based across markets. Optimism remains around infrastructure and nonresidential markets as we head into calendar '26, though trends are hard to determine in January and February due to winter weather.
Q:What is driving the margins in Cement, and were there any unusual factors impacting them?
A:Margins were impacted by increased raw material costs, but maintenance and fuel costs were largely in line. No significant unusual factors were noted.
Q:What is the outlook for Wallboard pricing in the near term?
A:Wallboard pricing saw a sequential decline of about 3%, which is not surprising given the residential market. Prices are expected to remain range-bound, with potential upside as housing recovers.
Q:Are there any regions outperforming in Wallboard shipments, or is the decline consistent across the footprint?
A:The decline in Wallboard shipments was consistent across regions, with the company's performance aligning with regional trends.
Q:What is the status of the Lehigh JV and its profit contribution?
A:The Lehigh JV plant is performing better, but Texas remains a challenging market due to pricing and demand pressures. Competitive pressures in Texas have offset some operational improvements.
Q:How are the proposed Cement price increases progressing, and is weather impacting their implementation?
A:Cement price increases are spread across the first months of calendar '26. Weather may push some increases to spring, but volume momentum supports incremental pricing opportunities.
Q:What is the impact of natural gas costs on Wallboard and Cement?
A:Natural gas costs primarily impact Wallboard, with over 50% hedged through the winter. Cement relies more on solid fuels, so natural gas price spikes have limited impact.
Q:What portion of the Wallboard business is repair and remodel, and what trends are observed in this segment?
A:Repair and remodel account for about one-third of Wallboard demand. This segment is steadier and has shown low single-digit growth over the years.
Q:Have winter storms impacted operations?
A:Facilities were well-prepared for extreme cold temperatures, with no significant operational disruptions reported.
Q:What are the observations on Cement imports, particularly in Texas and California?
A:Imports impact markets near the coast, but Texas faces additional structural changes due to ownership shifts in production facilities, leading to competitive pressures.
Q:Why was the CapEx forecast lowered, and is there any change in spending priorities?
A:The CapEx forecast was lowered due to timing of large projects and prioritization of sustaining capital. There is no change in spending priorities.
Q:What is the approach to capital allocation post the November bond deal?
A:The company focuses on growth through M&A and organic projects, maintaining a disciplined approach to valuation. Share repurchases are also part of the capital return strategy.
Q:What are the factors affecting Wallboard margins, and can they stabilize at Q3 levels?
A:Wallboard margins are influenced by moderated price declines and stable costs for raw materials and natural gas. Margins are expected to remain stable even in a challenging residential market.
Q:Is there optimism for Wallboard volume stabilization or growth in late calendar '26?
A:While there is optimism for meaningful recovery when homebuilding rebounds, it is too early to predict stabilization or growth in late calendar '26.
Q:Are there any regions outside Texas facing elevated price competition in Cement?
A:No significant price competition is observed outside Texas. Price increases have been announced in most markets, with timing dependent on customer discussions.
Q:Are Wallboard price declines due to destocking or normal demand trends?
A:Price declines are attributed to normal demand trends rather than destocking, with prices remaining range-bound.
Q:Have customer relationships changed due to ownership shifts in Pro distribution?
A:It is too early to determine if ownership shifts in Pro distribution have changed customer relationships or procurement conversations.
Q:Did the company take extra downtime in Wallboard production due to lower volumes?
A:Production is matched with sales opportunities, with shifts modulated based on demand.
Q:When will Cement pricing for the year be determined?
A:Cement pricing will be determined based on customer discussions and market conditions, with updates provided quarterly.
Q:What are the announced Cement price increases and their expected realization?
A:Cement price increases of around $8 per ton have been announced for most markets, excluding Texas and the Far West, with realization expected between January and April.
Q:How did Wallboard demand trends progress through the fourth quarter, and is there momentum in Q1?
A:Wallboard demand trends were consistent in the second half of the year, aligning with homebuilder reports. Similar trends are expected in Q1.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the realization of Cement price increases, citing ongoing customer discussions and market conditions. Additionally, they did not provide a definitive outlook on Wallboard volume stabilization or growth in late calendar '26, stating it was too early to predict.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aggregates facility
Aggregates fine
Aggregates sale
American Gypsum
Cement decade
Cement kiln
Cement plant
Drew Eagle
Duke Oklahoma
Eagle control
Eagle industry
Eagle way
Foundational standard
Mountain Cement
Wyoming Cement
condition
construction environment
cost producer
cycle
efficiency capacity
end market
focus
health safety
job
modernization project
need
paper
people
plant Duke
policy
producer position
production process
profitability
progress
reliability
support
waste stream
EXP Transcript
Eagle Materials Inc. (EXP) Q3 2026 Earnings Call Transcript
Unknown1-29
The earnings call summary presents mixed signals: strong strategic plans with modernization projects and price increases, but challenges in Wallboard demand and competitive pressures in Texas. The Q&A reveals consistent Wallboard shipment declines and uncertain price stabilization, while management avoids clear guidance on Cement pricing. The sentiment is neutral as positive long-term strategies are balanced by near-term demand challenges and competitive pressures.
Eagle Materials Inc. (EXP) Q2 2026 Earnings Call Transcript
Unknown10-30
The earnings call reveals mixed signals: strong cement and aggregate volumes but declining Wallboard performance and operating cash flow. The Q&A highlights stable pricing in a challenging demand environment, cautious optimism for cement, and unclear responses on volume sustainability. While share repurchases and dividend payments are positive, the lack of clear guidance on volume trends and the impact of seasonality tempers optimism. Overall, the sentiment is neutral, reflecting a balance between positive and negative factors.
Eagle Materials Inc. (EXP) Q1 2026 Earnings Call Transcript
Unknown7-29
Despite record revenue and increased EPS, operating earnings in key sectors declined. The Q&A reveals stable but not improving cost trends, and management's evasive responses on regional dynamics may indicate uncertainties. Share repurchases and dividends are positives, but increased capital spending and debt levels balance this out. Overall, mixed signals suggest a neutral stock price movement.
Eagle Materials Inc. (NYSE:EXP) Q4 2025 Earnings Call Transcript
Unknown5-21
The earnings call presents mixed signals: despite a decline in EPS and heavy materials revenue, there's a positive outlook with increased wallboard sales and strategic acquisitions. The Q&A reveals management's focus on long-term growth and strategic investments, yet lacks clarity in some responses. Share repurchases and a strong capital structure are positive, but adverse weather and maintenance costs weigh on short-term results. Without market cap data, the prediction leans neutral, as positive and negative factors balance out.
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EXP Report
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