Eagle Materials (EXP) Q4 FY26 earnings call: guidance and Q&A

What were the key drivers for margin performance across segments this quarter?

Good cement volume flow-through, solid fuel supply agreements, and strong plant efficiencies across the enterprise, including a record year for the paper mill, contributed to strong margin performance.

“The plants really good plant efficiencies this quarter versus a year ago. And then on the light side, the wallboard business continues to perform very well. The paper mill had another record year for us. That plant is running very, very well. Those plant efficiencies across the enterprise really, you see the benefit in the margin profile that's being generated.”

asked by Trey Grooms · answered by D. Kesler

Can you elaborate on the drivers of cement volume strength and underlying demand moving into the peak construction season?

Cement volume strength was partly due to an easier comparison to last year's tough weather, but primarily driven by continued public infrastructure spending and strong private nonresidential activity, especially data centers, in their operating regions. They are optimistic for FY27.

“The underlying strength in public infrastructure remains positive with state budgets very healthy. And then the areas of private nonresidential construction, we mentioned data centers. Those have been very strong, especially in the regions in which we operate.”

asked by Trey Grooms · answered by D. Kesler

Can you quantify the impact of diesel and freight costs on both cement and Wallboard businesses?

For Wallboard, freight costs increased $2-$3 per unit, impacting the mill net price. For cement, freight to terminals saw a couple of dollars per ton inflation. Quarry operations also use diesel, but proximity minimizes impact, with delivery costs being more significant.

“Sequentially, we saw at least about a $2, maybe pushing $3 increase in freight costs. So that impacts what we call our mill net, our net sales price. So that's how diesel from a delivery basis impacts the Wallboard business. on cement is a little more nuanced because there's more of a combination of customer pickup and then which the customers would cover versus being delivering to our terminals for them to pick up. We cover the freight to the terminal. And then again, we saw some inflation there, a couple of dollars on a per ton basis.”

asked by Anthony Pettinari · answered by D. Kesler

What is the impact of data center demand on Q1 volumes, and how significant is it for your end markets?

Data center demand is very meaningful and a large contributor to improvement, with development just beginning in many markets. This represents a significant component of private nonresidential construction that is much more impactful than historically seen.

“It's definitely very meaningful. We mentioned two things with public infrastructure. We continue to see good activity there in our markets. But data centers were certainly a large contributor to the improvement. And I might add, I mean, it's not like we're in the last innings of the data center development. We -- just in the beginning in many of our markets, more soil stabilization and those type of activities.”

asked by Timna Tanners · answered by D. Kesler

What would maintenance CapEx be if the two large capital projects were excluded, and what is the perpetual run rate after their completion?

Fiscal '27 will be the peak CapEx year. Sustaining capital needs are in the $150 million annual run rate range after fiscal '28, with fiscal '28 likely around $250 million as the Duke plant finishes in the first half.

“What I call sustaining capital needs are in the $150 million range. I don't think we're -- that exact run rate for fiscal '28, we're probably still in the $250 million range with the Duke plant finishing in the first half of the year. But as you get into the back half of fiscal '28, absent some other significant project coming up, we would be at that $150 million annual run rate.”

asked by Adam Thalhimer · answered by D. Kesler

Given industry data anticipates low single-digit volume declines, should we expect positive cement volume growth for FY27 based on your momentum?

The company remains optimistic for positive volume momentum in its markets for FY27, citing its regional footprint outperforming national averages and continued underlying demand from infrastructure and data centers. While not expecting double-digit increases, they anticipate continued improvement.

“as we head into calendar '26, our fiscal '27, I think we remain optimistic about the underlying demand environment for the reasons we've discussed. So yes, we still look for a positive momentum in volume. Certainly, understanding the ACA has a different number. But again, it could be more of a national average type of issue. But as we look at our markets, we continue to see good momentum there.”

asked by Philip Ng · answered by D. Kesler

How is the company thinking about capital allocation and the M&A pipeline beyond the current heavy CapEx cycle?

Capital allocation priorities remain growth (primarily M&A at good value), maintaining assets in like-new condition, and returning cash to shareholders. The company will continue to be patient and disciplined in its inorganic and organic investments.

“We always look for M&A acquisitions as long as they make sense and meet our financial return criteria. So I think we've been clear and will remain clear on our capital allocation is always for growth, primarily as long as it comes at a good value. Maintaining our assets and like new condition and then returning cash to shareholders. That's been our hallmark for the last decade and will continue to be our hallmark of how we deploy our capital.”

asked by Timna Tanners · answered by Michael Haack