Earnings call transcript Q1 2024

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Operator

Good day, everyone and welcome to Eagle Materials First Quarter of Fiscal 2024 Earnings Conference Call. This call is being recorded.

At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. sir. ahead, go please Haack,

Michael Haack

Thank you. for This Materials call to Michael morning. first quarter Welcome our XXXX. Eagle of Haack. conference Good fiscal is year

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

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

included end For press release. at our further please is the to information, of refer this disclosure also which

pleased by year our to I to start strong and discuss fiscal quarter me saying another a am record Let start XXXX. how

by by million gross points, dividends. This increased net earnings repurchases share quarter, expanded EPS and revenue and and we XXX basis generated shareholders through XX% margin returned record adjusted to $XX

performance variety environment, position about us have a U.S. economy low-cost conditions. market several where headlines how benefits the economic for Our the dominated producer quarters, across questions demonstrates current of in our

the but achieving our went many only over employees the that times not of make You've we the heard me for quarter say position dedication ability low-cost to their results years, and into ultimately execution our Eagle the a that to you have people. all want difference. this thank maintain by producer time industry-leading on relies the had past Therefore, I

as and out best of I part for each employees care fundamental for culture. a watch could is Eagle summarize culture our safety where Eagle one other. Safety the

well safety miss a to industry safety that before average. issues rate continues successful issues below Eagle report reportable indicators been they set address reporting to total in near in safety the have We maintaining I'm the happen. to identifies industry that leading happy system incident our using minimizing benchmark

me side. turn by more a versus on the to basis well, and our the past XX% specifics our heavy performance and Both performed let Concrete year this quarter. with first revenue combined businesses Now Cement growing on quarter, starting prior Aggregates

continues industry every the demand to Eagle's near from wet robust sold-out network business supply remains Cement construction It noted Western slower to this and in which outpacing network did season led plant that very is states. cement that Our quarter fiscal start position. experience in should be these to weather over our benefit a in a

does of increase. favorable well as or a wet for project means reminder, a demand proved has delayed our cement a price a backdrop that pricing interrupted, weather supply-demand XX% is imply timing as year-over-year destruction. -- the As favorable it not The dynamics realized business we generally

price last call, on X July mentioned As have our in we announced about cement we increase half our a markets.

We market continue quarters additional to determine price conditions the implement over when or increases. to we coming monitor if

over and increase maintenance reduced will facility. planned costs outage our in venture work XXXX maintenance joint completed be July at but during improved which will negatively need this XXXX, in extended the our addressed ongoing venture The facility at resulted issues outage outage quarter in was equipment that by past increased fiscal of Lehigh, Texas an During first operation this affected year. line reliability the again additional outage to extended joint production. fiscal Equipment time in the

priority is Eagle. for both Cement Aggregates and a Growing strategic our businesses

is purchase Materials terminal at market. another our Environmental California, we of Cement help minimize stewardship in Eagle As in our previously completed announced, our Northern position priority competitive strengthening the to COX this import footprint.

cement the plants. are of increased fuels alternative our We use exploring at

Cement construction-grade cement Portland to laser-focused or production Limestone are We PLC. our transitioning on

position across carbon our production our clinker makes our go near network. the further PLC supporting intensity footprint and sold-out reduces of cement our

manufactured our the cement for of by We construction-grade mark cement this XX% are we I'm that our PLC for proud converting or network. to quarter, say XXXX. plant passed to cement blended to PLC extremely XXX% targeting

past Now rapid the along in would let light me many rise believe wallboard rates interest with turn to led demand to the this side. quarter housing on performance year, drop last the dramatically demand. Over

However, sales pricing is remained have resilient. factors. Wallboard This and from volume several

let's First, demand look the side. at

lows Our homes plants in in and of which stable the the construction. demand for for new increased Sunbelt near largest, an construction home in sale in Inventory recently. This are to has single-family permits most located are region strong. uptick reflected existing residential continues U.S. is be at which the all-time been in result

supply supply producers. and plants is the accessing retirement curve the of effective Coast abroad importing side, from natural having a industry it of for gypsum East U.S. As on effect of the by from increasing the by cost wallboard cost power the the significant synthetic supply capping and reduction for coal-fired gypsum

cost or material. controls structure the several proximity one are close can raw that in we of of supply. Eagle for we producer The of our wallboard decades access Eagle aspects. owns contract our at of synthetic decades Looking material utilized many many plants low-cost means has position, in plant advantaged all cost-effectively and which reserves our we gypsum

main a Our came OCC, costs, providing down freight energy tailwind. and sequentially,

are the and fundamentals starting and side. visibility multiyear Now heavy turn place the let to Demand concrete provide thoughts of on me some on in to cement year, aggregates. in balance the

We driven and to expect businesses infrastructure activity. remain heavy construction steady manufacturing by spending and for both industrial demand

geography the state from contract awards elevated our it is federal business spending. national government poised Infrastructure are the Eagle to highs of spending as is from well average and and operates States as cement matters. unprecedented awards being Nonresidential The sustained and manufacturing by ahead on projects. reaching infrastructure proving activity levels to is are spending robust benefiting overlay multi-decade and local benefit of that growth well in

being still past that first of we and of in a on that become past more That outlook business, near-term have But the XXXX. the wallboard true. than the in calendar said, stated side is respects, half things year heavy quarter unclear over few On the side. the the clear some the is

construction fact evidenced First units backlogs short units XX,XXX homebuilding just construction that This multifamily all-time support and had under total is the supply of is the all-time continued chain-driven record. in and under an an to construction June record in activity. is

the supply The home clear means demand up second inventory needed new building. is existing shortages on buyer support of levels. factor home The is that's housing construction overall home to effect becoming to prop lack of inventory new

confidence here While long in we to is term. have wallboard supply-demand the outlook the the mid increasing over difficult for scenario still predict, and

proven because summary, In I most Eagle's of track where it matters. am this year ahead record about encouraged

cycles. First, we know how to manage economic through

execute and wear we across counts can current it conditions. dynamic market that Our win results show

business cash Second, cash. are we that our flows generates impressive and of responsible stewards

generation flow of Our making our use always has been and of to cash flow. that businesses and focus the be sustain the on best how will capability cash

centralized core Our when them to to business. returning in investing to This growing through financial goals like capital cash they strategic allocation purchases in keep our dividends. and stock meet shareholders will and includes our new policies be around continue acquisitions our or have been plants or growing condition, through

that, of turn financial review for the With to Craig it our quarter. I'll over

Craig Kesler

Michael. you, Thank

a X% from record mentioned, quarter of $XXX prior increase an the year. As revenue million, first was

to higher and quarter. in terminal reflects strong both Northern EPS Excluding acquired in prices. The increase sales recently Wallboard record Cement X%. Cement California, during Cement performance was Wallboard the the contributed The up revenue and

was year. the increase a diluted share reduction a quarter earnings improved driven earnings from was to The in shares $X.XX, X% buyback program. by per XX% fully due prior First and increase our

$X.XX. EPS Excluding up quarter items first in adjusted highlighted the XX% was nonroutine the to release, earnings

Concrete performance, highlighted segment California. sales the prices to from Cement increased the and slide. acquired our on in which XX%, now Turning sector Heavy revenue year contribution In recently the implemented this terminal the driven in Aggregates by and segments, Materials includes earlier increase Northern our next and cement

quarter. Operating earnings primarily The forward and of our Texas an XX%, maintenance Michael maintenance as cement venture partially due outage cost programs extended increased were maintenance costs And at joint by we increased maintenance pull was maintenance reduced which at costs during because to of took production. increase X our cement which to our in in offset higher also up decision prices were the mentioned, facilities.

cement and with the XX% associated higher And demand of of The Given volume. half business revenue values step-up earnings pricing July and approximately in segment, operating Aggregates the second price a in aggregate sales strong markets. year on Concrete higher and we round $X.X to in improved costs of million the increases prior the Northern X% and inventory related the backdrop, within increased our also approximately Aggregates included early Colorado. implemented of acquisition

input costs million, the Light energy. earnings decreased prices. XX% the Wallboard recycled to sales freight to in sales fiber, Materials higher reflecting volume, by Moving next net partially lower X%, Operating increased sales $XX Wallboard lower offset Revenue and reflecting prices higher slide. sector sector and the for on

flow. at now Looking cash our

flow way. operating cash a continue reflecting capital allocate We In strong to increased improved spending $XXX to cash flow and increased capital million XX% management capital very to working in earnings the and million. $XX and quarter, generate first disciplined

$XX paid in repurchased the During million terminal shares $XX we with dividend we $XX price import our XXX,XXX acquisition a of returning Stockton, stock a quarterly and California, common to the cement for million purchase quarter, of completed and of also million shareholders. our

our have under repurchase million authorization. We remaining current shares X.X

ratio cash of hand. XX% structure Total Finally, debt debt-to-EBITDA us the XX, a We liquidity and no $XXX ended remained June we to At was our quarter which near-term $XX meaningful capital net quarter million ratio look the have committed of on approximately X.Xx. flexibility. net our end financial at significant and continues leverage million give the at debt-to-cap with at was maturities. our

to I'll it call. attending you. move We'll over Thank to the you Betsy, today's for question-and-answer now session. turn

Operator

question We Stephens. begin Instructions] with will first Trey question-and-answer [Operator session. comes today Grooms the from now The

Trey Grooms

touch on wanted Wallboard. I First, to

kind touch through Or quarter there from in that unfinished from could you volume down you waver And it that Is Wallboard fairly of maybe homes? this the backlog has quarter? progressed the especially at some stable on there then have in volume of see how I the if quarter? I especially all? was mean, driving at X%. kind Or still of it average? benefit So well, what's did the in mean, that of might outperformance kind held quarter, maybe

goes understanding a and into from the the of And and What timing seen you and when the a given far we uptick hearing in in start the we're then, maybe the volume? at see rebound Wallboard are it's bottoming, optimism homebuilders may as that kind murky, thinking given on process. starts Wallboard the between maybe there as Michael or we've lag least

Craig Kesler

the have where the Yes, said area Trey. activity resilient Good U.S. Look, the robust that most was volume questions. quarter, this the of last as also and elongated. backlog is that positioned in as in generally -- very cycle sales of construction of home remained Sunbelt a southern into the lot volume Look, in we've quarter market the I'd in we're out point half geographically, U.S. and

benefit regional really we So does see that pointed our out, good started level shortly homebuilder growth from as the you order some you've and position. thereafter. into at consumption wallboard turn to also But

the for a in their term, from near the homebuilders pretty resilient decent an order up So improving on sets environment. with intake outlook wallboard

Trey Grooms

Yes.

guess out, you Craig. On understood. gears to just Okay, around as there were this? to think into quarter? And that go And that some get kind cement, costs costs Or can understanding continue there here talked is going behind plants we wholly switching I X owned, to And next the that pointed the any seeing we saw maintenance you up I just as quantify Is there. so more way of the us? about maintenance. is you

Craig Kesler

of the No, network. maintenance that this quarter bulk do our the the we is across

it's in this. So contained

outages sure thing so April, this all and has maintaining can levels the or them subsequent at it May And quarter April Sometimes those this all year, into Michael frame, operate sold-out between we costs they're that a the and or the March maintenance through quarters. assets at making fall right you conditions, to season. that have keeping don't those it's construction it time -- quarter, as these fell full utilization do, highlighted, in

Operator

Thielman with Brent Davidson. from comes question next D.A. The

Brent Thielman

future about this a degree again question thinking in to the should JV, quarters. the impact on we what just Just be

to work more I fiscal XXXX. year? my reason fiscal that it in you I can do asset facility until this produce think is, question think historically needed levels you ramp some you any in can't next work get more that up? mentioned back of has done to Is is at guess the there

Michael Haack

and Great what I'll walk bit kind it. a Lehigh of little through question appreciate did. and Texas I on we

of a our once look kind past other we year you X do Lehigh. go at some to outages struggled at of outage of We areas don't once If hoc. usually And we our ad we have the year. Killam into take bit a have little the equipment year, Texas really what some with is we a areas opportunity reliability and because manufacturing

took in So those. during issues past the when Those to we this the we're equipment we we on into knew have we planning had the take -- than of. were outage we to some so did a we that And we year, happen this went little to were to address at when identified care going prepared longer with though, we that expecting. address to time, needs outage that. what look next Also year,

in on we a specific things I how that long engineering really do extend the We few do don't have next will year timing have the be identified of all work. outage that until extended outage. our a we to have will

took little happy coming of you little the change while for very am operating system, while that exactly it as it a to it because we system outage, about how want is takes to. But what get a out new the I

July So little half first the of tougher. a was

of producing half the levels we been Second out that we've facility. at July, of expect

to on we where while coming for stand So facility with know outage have producing do what this we the very through planning, feel in year. we comfortable that we

Brent Thielman

be Maybe there price or of guess helpful. thoughts variables compare apples-to-apples on I really sort the impacts I other if the quarter, overall pricing? kind color and it mix market kind Any reported your fourth of that's Wallboard, reflective just of Okay, on to Is just consider? would of helpful. any to

Craig Kesler

X%, of couple think dollars. just a so Yes, I Brent, -- down a is price our

very resilient us past Wallboard for environment again, quarter. this So pricing

Brent Thielman

just Okay. And guess, gas. I nat Paperboard, then or thinking lower Craig on I lastly Michael, was

looking saw So else Anything the business that of consider tailwind the you of CC line business prices to or that bigger might be you quarter? a think the to kind in maybe margins as profitability and forward? about

Craig Kesler

was of lower Yes. as that lot year-over-year. you and up Profitability contribution a And significantly prices was said, from OCC a energy. lower

we charge long-term input we the pass, and As the based adjust supply we price that materials you raw on of know, agreements underneath those costs energy.

quarterly happy the that but And with facility nice so adjust we've pricing energy and on will some side. operating how that got tailwinds is

Operator

comes Citigroup. question from Anthony next The with Pettinari

Asher Sohnen

This Sohnen on for Anthony. Asher is

or we but destroying demand delayed You should largely over the just next maybe they're weather talked of not into quarter out quarters? wet the about Are delaying but next shipments? spread couple those -- about they think cadence pushed how the of

Craig Kesler

it's a Mountain of that But what on get June is yes, be And -- to and next couple say Yes. market the month region. read. you the wettest lot those either Colorado, the a The just that quarters or but is continues in very we're the really pushed. wettest of to about was of talking second jobs month quarter robust. upon hard record depending over

Asher Sohnen

Cement the XXXX. XXXX the -- and and compare last I contrast talked gears, inflation you Great. you roughly And and the to last cost switching quarter, able cost what with then side; both last just expecting year? saw fiscal size moderating about maybe in think some year in you're that on magnitude you Are inflation of Wallboard

Craig Kesler

Yes.

OCC So said down, year-over-year. in coming it came on the prepared and side, Wallboard natural on we a it that's sequentially, those input And comments, benefit our with down and was -- costs. saw freight we sequentially down also gas and

in the So cost lowers Wallboard business. actually, somewhat

of in energy those locked frame prices we during time bit but and 'XX. we we've fiscal experienced less a what this On late certainly nothing been and into like uptick fall, winter the saw quarter were fiscal our the for an 'XX, that saw that as side, inflationary saying, Cement largely little but

be may costs coming fiscal be some input other the going with thinking start the into other and to pet and about start you of wouldn't prices burn, 'XX, look way unreasonable coke that deflationary energy to fuels As for it forward we down. turning

Operator

from comes Jerry The Goldman next with Sachs. question Revich

Jatin Khanna

buyback consider generation Khanna us Jatin And cash leverage behalf your profile? would Can update what is you your Revich. accelerating pipeline? This you Jerry on the of on point M&A at and given

Craig Kesler

that's very We've do at California. couple able the criteria strategic years, We to robust. disciplined how a return recently, so have find Balance Again, investments matters good in terminal criteria of in significant those a pipeline opportunities. lots the really continue to, very Eagle and we sheet do strict way? the we around of what question. that those amount import M&A been Northern for and capital The of investments. allocate is for is financial return over have a met they've last been position remains and Great cash. that generate Most very good requirements us. in projects There's

we opportunities of our we number to So meet rates. that know didn't on those also hurdle we but continue for a that passed investments look

that program And active last so do back share years. and in our over give then and repurchase our very that We generally cash the turn program been through we've we to share shareholders. repurchase several

Operator

The next question comes with Stifel. Elliott from Stanley

Stanley Elliott

some the normal the then other source. prepared on out about a lines, fuel those to be that And you of expectations in of in Michael, be larger Is what when more going remarks, all the sort capital? is of kind of side Or capital maintenance along that? talked of come terms that energy fuel the cost more would alternate sources we an of to of the shifting increase? kind

Michael Haack

We currently today. great a We've at alternative it's looking question. of time. with No, run this our plants been a for several long fuels

actually are at times. too, few and really is look look use -- a good very but at that we really coal then So what fuels. a against it coke a tweaking at also fuels we alternative alternative times, to doing the hedge some we COX fuels as those How at for increase reduction we're and at with financially the to what of do fuels system with the looking adding is alternative alternative of

to with use really the major minor that the for it investment fuels alternative are investments where over and been not working past us. we've these of They're So -- it. continue just investments year on they're we'll a sense makes maximize

Craig Kesler

I'll follow on comment. Stanley, up that

Just we it spending. with capital talked quarter last about

up quarter. saw $XX at million about You this it

this then investments the investments. So we to the the of range that in alternative continue year lot million $XXX are up PLC -- is to of facilities invest around of anticipating spending in And capital A fuel some these some $XXX million. and there. we of

to and year, As this can exit Michael PLC investments be remarks, to this quarter XX% we make increase that made we out in so we pointed some over as that. his progress more opening continue significant we'll

Stanley Elliott

That's larger investments of the being extended very interesting beyond the that then kind -- that. probably these just kind with an of not period even flow cash nature in over help you was should And that time, perspective, question. of from

the markets about very of say But the in looking think comes increase the a been price a on as demand whole we're second lot coming of have you cement how do kind on how a on, sold a and market. think shift second kind paradigm side to industry the or round pricing of round being It's as cement about at heavy and of a drivers to hard we good increases. Second, evolution basis? effectively, to really good with if the general demand out go-forward

Craig Kesler

But pointed not speculate business. question. starting out, too like And highway demand really Stanley, the even we funding build It's business. to a benefit really with just it's to the federal quite be the good strong you on continues to impacting much don't pricing.

housing visibility you're and around demand confidence the of lot a strong pickup level. see residential, of starts you housing even in environment, homebuilder the gives to some the around at this orders we that said, starting as multiyear So

high cadence, the should rates utilization diminishing to longer. good while. capacity, of it against predict for to we And generally a response, exact for can't strong meaningful just environment that And supply for products, very pricing. that's but whether because inability add or tell formula of quite of new a you environment. the availability that's backdrop remain all the alternative that's good So a points pricing The would demand limited

Operator

Thalhimer from comes with Davis. Adam next Thompson, question The

Adam Thalhimer

missed first So this late, had quarters. growth I'm to volumes, in dial on X sorry it and X but -- the if was cement or the I curious so I in

kind drove what curious Just opinion outlook in your of is? that and what the

Craig Kesler

of manufacturing quarters, just cement demand to last improving. we as to be a Look, continues in said, these couple industrial as I even with the be we've spending market outlook the the robust the environment. large on But mentioned sold residential. meaningful facilities we're And of out. continues infrastructure said demand that for part

just some today. those comps So a either were year-over-year simply just because down that existed inventory couple of or of quarters aren't very of simply unusual ago difficult years events that there levels weather

in but to think PLC kind demand. opportunity import in inorganic this new of we range some you're gives So a us the then upside will some give I that purchased us. terminal obviously, And growth for this California there. isn't us opportunities Northern surprise

Adam Thalhimer

as Wallboard pocket and Great. And was quarter. the in just the think the do which on guys? the long How you then June air pickup you permits about talked starts well. volume seen lasts side, for we've down you first

Craig Kesler

we're I again, a don't to be that pocket might resilient. been better road. it I sets demand environment with as is located, lull. orders continues improving, the are things But down -- up half call it U.S. things I'd But the an it, much air southern have the for again, call Look, of as for resilient. some of a and that said, in where And because know as the wallboard we of

Adam Thalhimer

specific Okay. is Or Aggregates going to a if lastly, were a And level forward? was volumes curious just project? then good And that above. I'm that way use

Craig Kesler

unique a had really We Yes. opportunity.

aggregates -- feeding the If in job but we I a quarry up So we opportunity of It I of or we were good same-store -- that with. had of Kentucky some but in done starting inorganic. our but kind pit. really XX% and selling sales of now a that And if even to cement there out just team -- are the were operating construction-grade were historically good has Kentucky sell to plant that. that aggregates was opened began out up is

Operator

question Jefferies. Phil Ng comes The from with next

Unidentified Analyst

[ph] for business. on on just This Phil. Collin cement I wanted start to the is actually

it You new additional kind definitely things But the of timing bit Cement made fully that difficult. and might of what capacity talk the could can opportunities have that ramped and little sold just from of a there? be volume you're out, clear after like volume about so getting growth import PLC both sort shipment the terminal, you look MAX those new of you

Craig Kesler

Yes. opportunity PLC is one mid-single-digit year two. of next opportunity, type growth a kind over the of or

seen, As will and progress significant of you've we've That into in production continue made expanding PLC. the year improving this 'XX as well.

very, manufacturing As necessary. very, of months. have that terminal, these guidance Nevada we on very for with quite business and too to the give volumes it some performance couple a make little a very happy with to investments owned very we've on Northern into of our the are but yet we've those well, whole early A lot been strategic been And we've as footprint. fit cement date. import it's Customers happy then just moved of that very

Unidentified Analyst

just us then just it how you That's And helpful for increase. to, early out the remind going about cement the color. magnitude pricing implementation on is that July July? And was maybe talk for? letters put the Great. price Can I think you

Craig Kesler

That some about And of our half some very Yes. and another late spring early of those It continued little unusual not our in as bit Western today, a rain. has it surprisingly, it's markets and you experienced as snow of think we said, And talked we double-digit about markets. a was markets. increase. winter,

a construction bit. of pushed just the season start back little the So

how not that sold didn't markets conditions and see generally the progressing. are pricing look, with second remain there. those But surprising the happy So again, and out the round is

Unidentified Analyst

And quarter, maybe year? pricing but Wallboard from Great. of the for just slippage you average know the the thinking where on rest you're my minimal comment talked pricing. you and on within how any question pricing about last the quarter-to-quarter is versus I about trended exited how just

Craig Kesler

exit to this that at year and close for pricing the but is quarterly don't the of average point. the to we'll The we price actions monitor Yes. pretty have rest any continue

Operator

[ph] Jonathan from comes question next with Truist. The

Unidentified Analyst

see morning. Hughes was bit Keith going this markets? I in for you on into infrastructure exactly am where wondering geographically maybe best if a I heavy mind more Eagle demand about the you wouldn't the detail little

Craig Kesler

know I you, tell I'd would average. would our that's I or the general, are other highlight footprint. They're very markets, across And all in stronger. I Jonathan, outpacing don't that well. broad-based X the say much it's area doing pretty our national

Unidentified Analyst

And quicker to kind kind see then I'm more states reading now funding as infrastructure realized, have of of be that spending, some pick the demand continues correctly? of you're expecting in right? Great. up these to been to growth that the build

Craig Kesler

That's Yes. right.

Operator

our any closing question-and-answer to I over turn for the remarks. Haack conference This concludes like back would Michael to session.

Michael Haack

Betsy. Thank joining forward Thank you. for you fall. Thank and you, you today the us in talking we to look to

Operator

has presentation. Thank conference you concluded. now The attending today's for

You may now disconnect.

Eagle Materials (EXP) 27 Jul 232024 Q1 Earnings call transcript