EXP - Earnings call transcript Q1 2019

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Operator

Good day, everyone, and welcome to Eagle Materials' First Quarter of Fiscal 2019 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and CEO, Mr. Dave Powers. Mr. sir. ahead, go please Powers,

David Powers

today. Thanks, Jimmy. Materials' Fiscal welcome Eagle with all, We're morning Call for to us be Conference could of that and our glad to you Good First XXXX. Quarter

on and eaglematerials.com Joining me today will link Development Executive To Craig the with Kesler, be Corporate it, and a President Strategy, go Communications. made access Bob in this webcast. Financial of connection the our Vice and Stewart, Chief are click Officer; to There slide please to presentation call.

during While you're to first this disclosure statements accessing that from the note the subject that discussed results during and risk slides, regarding call. slide the please cause call. made are differ could cautionary covers statements uncertainties These our to forward-looking those

please importantly which to For earnings our the This refer included at press disclosure, quarter. good as of pleased are morning, had XX%. I'm in to and also that this end revenues all, is our we release. All a quarterly very up record further report information,

be for results be Eagle. Our will thesis to this and base-case that consistent prior one that our profitability like seen with cycle decades, one will are and increase in relatively construction than well-positioned flatter a players overall longer supportive business

Cement Our and altitude, deck this steady in often climb. on and quarter our three major course, business Wallboard show to and now gaining business on cadence earnings is with growth, lines somewhat different clearly no Proppants ready exception, and

mill volumes prices about that XX%, notwithstanding freight substantially $X Let factors on per around each. propelled earnings up nets. and higher. a were headwinds me Quarterly Strong say positive earnings few our in were words of Wallboard thousand

is cash, that implemented put good of should to use. indeed, Wallboard it business price we good generate July We mid-term would which and this outlook American of to we the XX. quarter, lot see results the believe a Next very Gypsum for on the increase intend

in million OCC a of almost sold and result and is out plant operating Paperboard improved earnings operating posted $XX Our lower efficiencies as prices.

affected were plant the was Fairborn, year no routine Our shortly Ohio quarterly at the this ago maintenance. quarter of took our by the acquisition. timing a after in comparable Cement There because we outage results outage

was start There be volume monthly notable several strong do for Midwest of overall in of quarter irregular that volumes second quarterly a growth April. work recognizing Cement delays the at individual were in We the half flat after continue, to volumes markets quarter. some affected overall can expect trend the Our and times. in

a the Backlog business, although smaller the and were the Additionally, those to quarter, markets the from are during posture our bid customers our past commencement work quarter. during our volumes, encouraging. and part of in Concrete our lower price relatively reflecting Aggregates timing push of of

with our processing We We meaningful first on train Proppants completed up to low-cost, at is results. expansion and both Our budget. a now poised on deliver is build our of play any and Utica, a set that The business XX. business flexibility sand for. out serve high-quality schedule Wisconsin tie spoken available of Illinois mines that's ahead with our accomplishment. ribbon shipped and unit majority shale to to July sand sand the can under Illinois planned We

over forward investments return our XX% regard, here price and note, million it's important you final heavy we worth shares to with to quarter small progress. million represent U.S. they share for market, average robust, - to consistent I in updated up repurchased growing. site In This our shares earnings and provides value year, $XX Eagle that Eagle expect only we substantial look over us on other sand an flows over continue our shareholders. Although flexibility $XX are the meaningful last comparatively to with And in keeping be compared last time. aspirations a of the our be in creating frac cash noting and our of this an $XXX.

Now results. discuss financial let it to over the Craig me to turn

Craig Kesler

Operating Eagle's the and the higher reflecting you, record plant our Concrete $XXX comparability declined with X% outage net Eagle's after our had Cement, versus slightly quarterly of Heavy sales shortly ended from impacted Dave. highlights a XX%. nearly our offset the increase first volume. all earnings Timing the no includes $X.XX. Therefore, prices of lower record quarter Aggregates Concrete volume plant. XX% revenue earnings of the an next which facility cement XX, quarter and sales We share outage the to completed our prior at per by results. improved million, improved last of across sales were a Thank Revenue our Aggregates sector, purchase XXXX. businesses. maintenance was prior and slide year, results of partially improved segments. pricing outage in This Fairborn quarter was Materials of of the the first the June there of an year, Fairborn

was to the the prior to amount and prior flow the the low-cost spending equipment, to million. segments. first complete in improved fiber in XX% improvement incurred quarter Capital Moving and lower replace to comparative sales of frac and volume drying to reflecting and includes facility primarily our quarter capital. from our The Improved capabilities Operating and in cash to operating increased volume. distribution Paperboard enhance continue in existing sectors, net to improve XX% a as which reflecting and Wallboard Oil included during quarterly sales net facility Proppants improve increased reflecting higher improvement million, well of sales year, earnings investments improved Materials XX% Light from year, working Eagle's sales costs Illinois. XX% our new our quarterly as Gas prices recycle This operations. $XX and $XX our costs. during due prices earnings Light up start-up Eagle's Quarterly sand revenue the drove during loss Utica, Wallboard million, operating to $XX volume Wallboard lower the revenue. Illinois, Materials improved an XX%

through During and generation of low-cost over competitive, reflects highly of combination the to share returned dividends. results our flow earnings a slide of shareholders This net cash the position. last quarter, repurchases Eagle XX% our

was attending call. debt-to-cap XX, Our XX% for question-and-answer Jimmy, now at ratio today's to we'll the move you Thank June XXXX. session.

Operator

[Operator Instructions].

Our first comes with Stephens. question from Trey Grooms

Trey Grooms

but the expect impacting Dave, to delays, some I looking know of, things, kind First, Materials quarter. in on mentioned see you just timing other at work would Heavy as delays, out quicker these And trying what in than for worked Or of themselves also is we side. you as the there, that of that? be and those - the backlog thinking kind to of delays on be encouraging. kind you of, get a kind of, some Midwest And Just the creep - we volume side into acceleration the sense current quarter? the should far about business. mentioned should that where

David Powers

No, out make. we work to expect quarter these over delays not couple a next the year themselves One of does quarters.

And quarter-for-quarter sometimes, about But continued do and and for positive. volumes Cement fluctuate for remains down. up go our very long-term the business and month-to-month these growth overall thesis

Trey Grooms

Or some be well? the going side mentioned there - those delays impacting delays is to Were talking wholly just - primarily that the other Midwest. And impacted on as or things on, is some about. of Because the Okay. clear, owned? you're you JV

David Powers

in the were owned. it was A the weather lot of Midwest. wholly affecting They

we're you As in out. know, Texas, sold

and sold the of is we're maximizing plant out, imports. Our amount

So do there's Texas. not in much more we can

Trey Grooms

it? in Okay. mean, of the anticipation on to have inventory I then in And wouldn't maintenance much volume though, to of some I in clear, outage but impact the would really period, clear. just be for think Fairborn, have guys would just be you that, that an built

David Powers

It had volume. on no impact

Trey Grooms

Okay. And then on freight.

been you for obviously, issue that's, an So guys.

really any the we're Any months. update be far seem it side into on the be to more expecting up like call, even XX%, impact of something freight be should rates as like the the shook on there? mill you like looks lot across in out and looking about a maybe How change think. it think, in the Wallboard kind that that I the to just net? summer on Wallboard the Craig, I board side? as thinking to we neighborhood, flatbed last on It's - that now of Looked mentioned, freight XX% but than as up,

Craig Kesler

No, Trey.

in highlighted trucking release, XX% as to we rates high. very last expected. range Freight be and to the press that rates continue XX% utilization As quarter up in included we gone have

your push You're best underneath the to tell railroads doing as the it business, Cement and and radius facility. some just frac frankly, you have do best we it the business but shipping as shrinking And And business, But well. can, that the and you your Wallboard so keep it the - the well. offset in of to you rails highlighted to - which you, increases. continued the not umbrella the freight try start sand I'll for impacts order of pricing

meet the think guys needs that. So best And your and you can you're have customer I to that where the a of bill, doing well. done minimizing good freight our as you job very trying can,

Trey Grooms

similar you July be being of, not Wallboard strictly to in should net - just [indiscernible] account that taking we thinking that were kind else impact, the And XX? freight, all the equal, taking what any impact not is Yes. to, on are any - we into else Again, if increase equal, mill from all about? quarter, $X just MSF into per guys

Craig Kesler

right, That's Yes. right. that's

Trey Grooms

But XX July Okay. any on increase? color I give but higher the increase, timing you any went costs And can or magnitude color. on was other you on just color so response just the forth. give on that guys it's us us that it any and to with then fright, out in lastly, can just you and other and - understand

David Powers

We it, offset We've determined increase additional the overhead. into the two of and marketplace, as always it, good to this more we Price we but is been since pretty our good. July costs at and in feel last customers in than it, feel we - weeks feel two really freight XX, about up weeks. of stage expect today, our invoicing the

Operator

from with D.A. Davidson. And our question next Bill Newby comes

William Newby

off about, kind another today. later last considering this Bill I are calendar guess, I question, in Brent or further year guys Newby you for of how year? one on price Wallboard any Thielman this mean, of, guess, that thinking Is I - you increases there are just, Cement? piggybacking

David Powers

we to one do, forward. that will when We've going made customers. we communicate no of directly businesses either our regarding And decisions those on price

William Newby

on Okay, for up talk frac Proppants that potential fair enough. I some about business, at fiscal profitability hit point to guess, - can I this guess, business and you Utica year? with the the And running. fiscal

Craig Kesler

up here late business July. Yes, June, early that Bill, started

facility operating have doesn't It our earnings near to And so acquired that a that give does on little the depreciation an too the level But quantitative depletion improvement. profitability be specifics. in early an of business will Wisconsin. and

for profitability the business to improve term. for in look we here that So near fairly the

William Newby

guess, profit to I mean, year? is it fair business I - say that hit as a to whole, this goal I net is that, Proppants that guess, is the

Craig Kesler

that about is direction. It trending X.X again, change million, to We're is from a cash in business of capacity at tons And improve. going in level, the flow right network. flow doubling business, new have certainly will cash million the to - earnings And, and that not that generation the this X.X facility this running Illinois continues of effectively the the but the we looking adding meaningful to business. the just with be been

Operator

comes question Citi. And with Schrier our next from Scott

Scott Schrier

of like quickly there regional mix net? the Cement had that impacted anything you and about of in First mill was question Fairborn hit Cement pricing. $X.XX sound freight out It on pricing. Was that anything just didn't there understanding

David Powers

but Every in overall, X.X% experienced And were of took market. a it freight market from we probably we little from price of variation market's us. to little different, X.X%, a and up away bit

Craig Kesler

get Scott. I'd to months. We add you summer when this And into typically the that, see

season. the certainly, a much construction pull have, stronger markets during northern You have the that

market, And improved look to average. it's some how overall greater change to have increase. the would the markets tell And so I as we you look really than actually at Cement at price in the market individually, you,

very so some what does that impact geographic that's have overall just we've But seen You the consistent. historically, mix average.

Scott Schrier

you X% any how of been increase Wallboard put it. could prebuy? a then And context Got the from much have of can behind

David Powers

XX is time, The been considerably June substantially million million and us, for could foot prebuy, early increases. less have July, We're periods. was in in to which than late prior estimating down from prebought XX this prior somewhere between,

Craig Kesler

to this point that get recovered, general has building it's other the you hard piece to when from really as increasing to Scott, prebuy home is, distinguish activity.

to one was you it thing at very years it prebuy look ago, could So and see clearly.

improvement You're a construction seeing see improvement just masking the is the business. you nice residential - across activity in all that

Scott Schrier

frac on being about Utica. I incremental way same more volumes for know of the spoken think the that Is to sand. And XX% it. spoke about I in there? you still from Got one the the past, demand around think

David Powers

how we at it. exactly That's look

Operator

from Sachs. Jerry with And our comes Goldman Revich next question

Benjamin Burud

This is Ben Burud on for Jerry.

to get of market of are you the in seeing the things your views, specifically public what Just will, wanted well year, if for the nonres? as end back as guys private side construction guys you half

David Powers

the both side this Our customers tell a Wallboard at have pretty Cement us from the and point. good they backlog, side

In terms in I our of bidding increased us, customers and specifically those commercial - in we're Texas, roadwork, have X are Colorado mean, areas. telling activity they

hear customers, half about good pretty from of we feel what upon the we based year. second So the

Benjamin Burud

going conditions on now, give can us and update an right those are of forward? on actions environment? guys And then M&A thoughts you you the any viewing How type

Craig Kesler

Yes.

in the had up on to able of right, continue a look current question specifics, from of few We, we very perspective, any optimistic minimize have pretty will returns return those. a being obviously, won't to this - those. example this we be good and the we and fortunate Fairborn at good won't to our cash follow balance certainly, on continue some last requirements just have opportunities been M&A be, flow, been activity. a but We've We've through environment. The opportunities, about follow and years. talk to We sheet a in - that. in number with

those So hurdle look and Eagle, the to find through meet and opportunities grow to don't our continue we'll continue them rates. to extent opportunities to

done we've external repurchase the that program. within balanced other growth is thing share historically our The

XXX,XXX saw this repurchased over you stock. we As of quarter, shares past

So balance we'll opportunistic. things. two it's And those a of remain pretty

Benjamin Burud

Are headcount? Is inflation. an guys we labor? we talked you finally, And plants? about Can freight your one spend that in ramping any on issue minute of

Craig Kesler

a not cost any is major our to input businesses. labor Fortunately, of

employees X,XXX for company. X,XXX, got size You've this

and hire is able the need, So not major we a folks are cost just to labor component. we that

Operator

And Stifel. with our next Stanley Elliott question comes from

Stanley Elliott

things the Bernalillo that to perspective that's a trying is markets from and restarted talk September, up it you just about be you've since running? that a may little was kind or to little take how able Could other And progressing. - maybe, to really bit plant? flavor been get in How best-practice of, back on

David Powers

just peaker it now it and the day the we It's and we Well, plant for started started September. shift us. only. When at last It's running we're are well. days, running mast. orders up it, a up plant run there, We five half ship

structure, very So where - running we're and We're We're running pleased running we're really the we're well. just a few I like efficient. cost products. at. with and It's

Stanley Elliott

risk level? And the the volumes the - those we've for? the we're some or Perfect. there with freight the with, seen any You've anything either on - of, rails, then delays frac you what are of piece kind with to of that is the delays spoken XX% lines at seeing sand along

David Powers

in base fleets do that will I some another, little we up a think causing have bit one from the And of have into bit increasing. a but one cause business, and overall overall, days orders at ebb little when of of the But us these little shipments. might come us, I flow, is of and in, a bit in moving freed there's We in risk customers that some is do lag. a look railroad a a it little congestion delays. get there's are for - which that delay

Stanley Elliott

the has the environment. heavy fairly then you like lastly, And M&A bit past? more on across Craig, the broad, think side talked there that focus is been little a about we opportunistic in it's or there Perfect. Should the

Craig Kesler

Yes.

side on the us, light about the We of of our and desire We wallboard the the materials towards side. - is continue point generated company. this the flow more and we've paperboard, going with to in been activity cycle, generally the have cash grow for and but heavy I been significant to think, very returns are clear the at good, be heavy to

Operator

with Thalhimer from our question Thompson comes And Adam next Davis.

Adam Thalhimer

quarter. thoughts the in impressive potential the the really get just are as to continued year margin wanted expansion for margins Wallboard The on I your unfolds.

David Powers

do with the see that Wallboard expect many, well would very we would and that paper And way in they're very we expect peaked for many mill this the past we to quarter, overcome before, consistent years. some the been what able their Adam, there where and have side, on yet They've to performing we business. again. And those. They the but expansion from performed margins. headwinds quite continued we're think freight and we of get can not

Adam Thalhimer

the point? your this be this potential a call, Okay. we But mid-year not last increase would on select what price about And at talked then, thoughts in the markets, for widespread. cement on

David Powers

have point. we this evaluating right But now. We're no at made that decisions

Adam Thalhimer

Okay. pricing, during the for us give you how any can it to And Wallboard kind color then of with regards quarter? trended

David Powers

was just flat. We it really relatively another. No, It way was little one or pretty movement solid. had very

Craig Kesler

at Yes, impact flat from were effectively take if freight the you effectively, you if is them where look in out the quarter. March we sequentially, pricing

Adam Thalhimer

Okay. then one housekeeping. me, just kind And a of from last

recurring? other revenue that line, The is

Craig Kesler

business that into Yes. there. we that It's up remain Certainly, as smaller will year, would the But acquired last roll business. Wildcat, well. there

Adam Thalhimer

revenue Roughly run profit, think? of same and the you rate

Craig Kesler

That's right.

Operator

And our from next with comes question Jefferies. Ng Phil

Philip Ng

about? have of in better a little is to accelerate? can But Freight could year, level you any that for or manage a clearly the everyone. the rest you're initiatives off more that And there headwind of color Is how out it? do starting you to thinking actually provide kind

David Powers

a predict, of for the balance the or of probably dollar rates through we've to an on freight the But so We our year. extra know most hard sure. year. negotiated It's up to but don't for we expect side Wallboard

Philip Ng

Midwest of to some appreciate that any - prebuy Appreciating Any XQ? it. Cement, Wallboard delay in in fiscal there's trends impact July seeing from on effect if and for color Got want any hangover the in and Cement for in Wallboard? just you're

David Powers

just give Wallboard. Well, insight a you I'll on little

The than it just the weeks all, have as trends first are less. month the - been more expected were prebuy, two little the And two last We we sold in could July a all strong. of weeks But of the make. possibly of outstanding. because bit

Philip Ng

business, of just rest actually just to that that's given market. that, dynamics, your and the if actually shipping Curious heard helpful. any shorter how on that Wallboard, And through that the Okay, and producers channel it as some has of some the reacted we've has led the tightened of freight initiatives the least distances well? at seen of on you've these

David Powers

to shorter as and forward. freight distances our go the well. us experience attempting of We're many ship as working customers well. reduce And with That's as bills we are our

Philip Ng

seeing And just Okay. how - a one freight a want given less just on than a impact. is. market one Are an me. I tight get last price, front? On was seeing you competition? if more little had would you're for certainly in have general, that any the curious But impact thought, Cement, sense to little we just

David Powers

seeing when basically little more first It's We're little the at part of But on months softer. I year price, was a competition. just decided when tighter the bit little a now. a look was six it it ago

Operator

comes question Josh from next Wilson our And with Raymond James.

Joshua Wilson

to a wanted I results more. into the Concrete dig little

the and how firmness impact on an having price mentioned on in volume? forward? going decide between balance And What thoughts volumes. are You do your that pricing you your your

David Powers

business. business, our backlog we improvement appears a a always sacrificing And one - did And between of during backorders percentage quarter. our way. today, just it's past get of quarter, as all our or and attempt Well, the to three two ended some up And along of margin at during to job it's pretty the small volume balance our good total price. locations. be the we of But

Joshua Wilson

at there's allocation? update And on are history, on then times can currently talk your what you and standing versus give whether any going Wallboard, lead an of regarding us

David Powers

customers, As service we're of lead like good in We're times. today, a and have good I we our a where position I like to backlog. at.

Joshua Wilson

may on what the the you how and Could in moving regarding parts potential then not in much color the Wallboard. about you a may or of, what, freight, little talked the key outlook move that Cement, going Cement some forward? cost was are give in freight And similar us sort bit

Craig Kesler

would on for predict any don't be Wallboard. quarter. this experienced see past other And we year. changes answer similar major the But to fairly The can't the We that increased Yes. we balance to anything freight. of some freight

Joshua Wilson

Got everything any the shifts look in next to that's much it. going Or of timings forward we be over And in is months, of as going in the downtime? in - out shifts outages? pretty terms the quarter XX the

Craig Kesler

Yes.

of on consistent in all so them to facilities, generally June our our see plant, that timeframe, this we'd going recently quarter. April-May being of cadence, this taken in Fairborn acquired same most so a be getting forward. are facilities So expect to that down

Operator

a have Trey with follow-up we question Grooms Stephens. And from

Trey Grooms

and behind housekeeping, sand Just that this. Or business, at quick we missed I is should start-up I'm frac sorry frac? all the kind the quarter any you expecting if of, in But pretty be guys? September linger costs the to, into well on

Craig Kesler

out. plant you're really in you're things some the up in the July, Yes, and late early aligning in then facility working kinks June started system, through

be in there'll fairly little get running should So up it July. bit a But smoothly. here and

Trey Grooms

just, expect about of that cadence would then of plant. standpoint, expectations? really ramped your that from just, sense not contribution that And to of, but the volume timing and full up thinking plant a get profitability quickly you EBIT necessarily on kind you Okay. to the from we Any where getting of, kind up how

Craig Kesler

pin Yes. facility In improve. month-to-month the to that profitability to of facility a we sense, the of year, the general not start-up, by or should flow. see quarter-to-quarter. start fairly it to meaningful quick start trying and We're But it's the should cash that end generate

Trey Grooms

color kind behind quarter, now with - you Or those a experienced of set uptick? that events some was to a of tighter one bit little now you are one there? months And any pricing. that just a things around more Dave's that then June of that things comment. seasonal you have things Cement around little comments asked are said Is - now. picked The Or in And and Okay. six weather just that with ago, yes, question earlier. follow-up implying up it was more

David Powers

this we At haven't any looking pricing year, of going But And time I picked forward. like we made the volumes mentioned, regarding yet the at have up. it. decisions are

Operator

And we Citi. from have Schrier follow-up Scott question a with

Craig Kesler

you are there? Scott,

Scott Schrier

Yes.

in follow-ups that any I how to at of you up margins business? stages. cycle one to performs it. of Sorry it it's think be wanted and about follow I'm indication over on cost Just how how contribution actually sand. that. know business? or we have frac on I look And the you If may Is early now of Wallboard? margins just about curious the structure Trey's contribution the the comparable Cement can think bracketing about the we

Craig Kesler

us Scott. a recently it's That's years, we've for improvement several business facility call question. have certainly and brand-new over very a a you, No, seen new back. last, an fair it, widely, margins and us. volume XX the months as pretty the I'll tell The for last came

that volume new So your strong from starting incrementals your on this are like zero. new a given incrementals, facility very start or whenever you business, you're basically a

profitability into depended starts that, the factor like that. the facility would as volume. pretty should moving That and other also be beyond of things But So market environments, significantly. the will margins that improve upon pricing and general some start-ups it

Operator

remarks. questions for Dave like no back this And, turn further Powers to in speakers, closing any to the time. I'm the at queue showing call I'd over

David Powers

We the thank you you to look in participation call, for forward in and fall. we talking all your the with

Operator

your all for conclude Everyone, day. today, program does great disconnect. a and and may have gentlemen, you this Ladies

Eagle Materials (EXP) 30 Jul 182019 Q1 Earnings call transcript