• Revenue: $558 million, a slight decrease from the prior year.
• Earnings Per Share (EPS): $3.56, reflecting lower earnings offset by a 3% reduction in fully diluted shares.
• Heavy Materials Revenue: Declined 4% due to lower cement sales volume, partially offset by price increases.
• Light Materials Revenue: Increased 6% with higher wallboard and recycled paperboard sales volume and prices.
• Wallboard Sales Volume: Increased 2%.
• Recycled Paperboard Sales Volume: Increased 7%.
• Wallboard Prices: Increased 4%.
• Recycled Paperboard Prices: Increased 12%.
• Operating Earnings (Light Materials): Up 18% to $97 million.
• Operating Cash Flow: $486 million for the first nine months of the year.
• Capital Spending: Increased to $147 million, primarily for the Laramie, Wyoming cement plant project.
• Share Repurchase: Nearly 800,000 shares repurchased for $201 million.
• Net Debt-to-Cap Ratio: 40% as of December 31, 2024.
• Net Debt-to-EBITDA Leverage Ratio: 1.2 times.
• Total Committed Liquidity: Approximately $686 million.

• Warning! GuruFocus has detected 6 Warning Signs with EAT.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Eagle Materials Inc (NYSE:EXP) reported near-record third quarter revenue despite challenging weather conditions affecting cement volumes.
• The company achieved its lowest total recordable incident rate, highlighting a strong focus on safety.
• Significant progress was made on sustainability initiatives, including reducing CO2 intensity and water usage.
• The acquisition of Bullskin Stone & Lime aligns with Eagle's growth strategy, expanding its presence in Western Pennsylvania.
• Eagle Materials Inc (NYSE:EXP) continues to generate significant free cash flow, allowing for strategic investments and share buybacks.

Negative Points

• Cement volumes were down 7% due to record rainfall, impacting overall sales.
• Increased maintenance costs at cement plants affected quarterly earnings.
• The outlook for wallboard demand is uncertain due to fluctuating interest and mortgage rates.
• Third quarter revenue saw a slight decline compared to the previous year, driven by lower cement and aggregate sales volumes.
• The company faced a non-routine expense of $1.3 million related to business development and transaction activities.

Q & A Highlights

Q: Can you provide more details on the recent acquisitions, particularly Bullskin Stone & Lime, and your strategy for aggregates? A: Michael Haack, CEO, explained that Bullskin Stone & Lime is a pure-play aggregate asset that fits well within Eagle's current footprint, particularly in Pennsylvania. This acquisition aligns with their growth strategy, allowing them to serve regional customers better. Eagle is interested in deploying more capital into aggregates if high-quality assets become available at the right price.

Q: What are your expectations for wallboard demand given the current interest rate environment? A: Craig Kesler, CFO, noted that wallboard demand has been stable, with consumption levels consistent over the past four years. Despite affordability challenges, underlying demand remains due to low housing inventory. They expect consumption to increase as affordability improves.

Q: Can you update us on the wallboard price increase initially slated for November? A: Craig Kesler confirmed that a price increase is planned for early February. They are moving forward with this increase, although they did not speculate on the exact realization.

Q: How did maintenance costs impact cement margins, and what is the outlook for cement margins? A: Craig Kesler highlighted that maintenance projects at two cement plants increased costs by $8 million this quarter. However, these projects improve long-term reliability. They are optimistic about margins improving as weather conditions ease and infrastructure spending increases.

Q: How does the current wallboard pricing and margin environment compare to previous cycles, such as 2015? A: Craig Kesler explained that the industry has changed significantly, particularly with the shift away from synthetic gypsum due to coal plant closures. This has increased costs for competitors, while Eagle's strategic decisions have provided a structural advantage, supporting current margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.