Q1 2022 Eagle Materials Inc Earnings Call

[music].

Good day, everyone and welcome to Eagle materials first quarter of fiscal 2022 earnings Conference call. This call is being recorded at this time I would like to turn the call over.

Of Eagle's, President and Chief Executive Officer, Mr. Michael Haack, Mr. Haack. Please go ahead Sir.

Thank you Josh.

Welcome to Eagle materials conference call for our first quarter for fiscal 2022.

This is Michael hack joining me today are Craig Kesler, our Chief Financial Officer.

And Bob Stewart Executive Vice President of strategy corporate development and communications.

And we're glad and you could be with US today, there will be a slide presentation made in connection with this call to access. It. Please go to Eagle materials Dot com and click on the link to the web cast.

Officer.

You're accessing the slides. Please note that the first slide covers our cautionary disclosure regarding forward looking statements made during this call.

These statements are subject to risks and uncertainties and could cause the results to differ from those discussed during the call for.

For further information please refer to.

<unk> disclosure, which is also included at the end of our press release.

I'll begin today with some perspectives about our business environment, 1 that is continuing to improve.

Residential construction represents the most important single demand driver for us driving around 80% of the.

To this day for gypsum wallboard and about 30% of the demand for cement.

The outlook for housing starts, especially single family starts which are particularly important for wallboard demand remains strong.

As long as mortgage interest rates stay and the lower quartile by historic standards.

<unk> this should be largely sustainable.

As we have been under building against underlying demand and the U S for over a decade.

This under building has led to a record shortage of homes at the same time that household formations have been increasing.

Repair and remodeling is a very.

An important component of residential construction and.

And it is healthy component of the underlying demand engine.

With a financial boost from recent federal stimulus and strong house price appreciation.

Owners are continuing to invest and.

And the upkeep and improvement of their homes.

<unk>.

Homeowners also seem to be undertaking larger discretionary renovations.

And in many cases were deferred during the pandemic uncertainties.

People are buying homes and record numbers and I should emphasize where availability allows.

And the knock on.

On effect for repair and remodel is significant.

Whether it's getting a home and tiptop condition to sell we're personalizing the home after purchase.

As a demand relationship between home buying and repair and remodeling.

It was notable that President Biden said this month and he planned to make.

And our historic investment and and affordable housing by building and rehabilitating more than 2 million homes.

The National Association of Realtors, and said that there is a cumulative demand supply gap of $6.8 million homes.

The loss of existing units.

And through demolition natural disaster, where functional obsolescence has contributed to the shortfall along with the underproduction of new housing units.

These intentions if acted upon represent upside to our already robust outlook for gypsum wallboard.

Cement demand is driven most heavily by infrastructure there is on.

Also been a lot of discussion about president and <unk> intentions around federal funding for infrastructure.

And this is needed and it is of course welcome.

Implementation were further challenged U S cement supply and many parts.

Brass, which is already straining to meet current demand.

It is also important to emphasize as I have and the past that the lion's share of funding for infrastructure comes from state not federal government.

There was quite a bit of concern about state budgets being impacted by the pandemic.

And as we shared and the prior earnings calls.

Our analysis of sources of state funding suggest the impact would not be as great as some feared and especially in the U S Heartland and states and which we operate.

As it turned out state and local revenues are in fact healthy.

The Eagle, we remain virtually sold out of our manufactured cement.

Our entire U S. Heartland system is now starting to attention more than it has over the last decade.

I would emphasize that our cement volumes this quarter were slightly impacted by wet weather and not by the lessening of demand.

The point.

And this is at the demand picture is robust today for both of our businesses.

The factors driving this strength should be sustainable at least through the mid term.

That is the demand side now let me spend some time on the supply side.

I want to start the supply side discussion with some comments I made and the last.

And each call as I think they are important to reiterate.

The first item is around the diminishing supply of synthetic gypsum and the eastern half of the U S.

This is due to less burning of coal as Powerplants change fuel sources from coal to natural gas.

And from there outright closure of coal.

Fired power plants.

With a diminishing supply as synthetic gypsum existing synthetic wallboard plants will be limited and their ability to fully utilize their current capacity increased capacity or build new capacity.

Conversely, almost all equals plants have many.

Net earnings with raw materials supply, which are primarily own natural gypsum deposits.

We are largely insulated from the direct effects of this diminishing synthetic gypsum trend.

All our plants are also and are positioned to indirectly benefit from the supply dynamics at this trend creates.

Dec and this way it is notable that the gypsum wallboard industry is increasingly looking more like the cement industry.

The second point, we discussed and the last call was around the significant regulatory and capital barriers to use cement capacity expansion.

Whether.

The existing facilities or through or the <unk> through the construction of new ones.

This is why and the face of increasing demand and with industry capacity now nearing full utilization.

Clinker capacity and the number of cement kilns and.

Not only not expanded since.

Whether it doesn't turn on.

Since the clinker capacity and the number of cement kilns.

And actually been reduced and the U S.

Against this backdrop high cost imports are increasingly required to serve U S coastal markets.

Eagle is well positioned and the heartland and the U S away from the coasts.

2000, and here to Eagle will be positively impacted from this trend.

These imports also carry with them a much larger carbon footprint and even the most inefficient domestic cement producers.

This carbon footprint is not only from their in country manufacturing processes.

But also from the logistics associated with delivering their product to their end user customer.

It is worth a reminder, that eagle operate some of the most modern and efficient plants and the U S and all of our plants operate within established stringent U S environmental limits.

If you'd.

I would like to learn more about our ambitious <unk> materials agenda, and our role and creating a net zero carbon future I'd invite you to review our recently released environmental and social disclosure report featured on our website.

And Eagle, we're exceptionally well positioned to take advantage of opportunities.

At this current business environment provides us.

Our balance sheet is strong, giving us substantial financial firepower when growth opportunities arise.

We have also restarted our share repurchase program and completed the issuance of 2.5% 10 year senior notes that will further.

<unk> strength and Eagle's capital structure.

In short as we stated in past quarters favorable favorable demand outlooks.

Constrained U S manufacturing supply capability and limited practical substitutes for our products and both of our businesses.

And up to a very bright future for Eagle materials.

With that let me turn it over to Craig to discuss the financials.

Thank you Michael.

First quarter revenue was a record $476 million and an increase of 11% from the prior year.

The increase reflects higher wallboard and cement sales.

Texas as well as increased wallboard and paperboard sales volume.

First quarter earnings per share was $2.25, that's a 3% decrease from the prior year. However, the prior year included a 93 per share gain from the sale of our northern California businesses.

Turning now.

<unk> segment performance.

This next slide shows the results and our heavy materials sector, which includes our cement and concrete and aggregates segments.

Revenue in the sector increased 3% driven by the increase and cement sales prices and the <unk>.

Price increases range from 6 to $8 per ton and were effective and most.

Most markets in early April.

These price increases were partially offset by lower cement sales volume, which was largely the result of heavy rainfall in Texas and reduced inventory levels across our cement network.

Operating earnings increased 3% again, reflecting higher cement prices, which were partially offset by.

Higher maintenance spending and the first quarter of fiscal 2022.

As we mentioned and the earnings release during the initial stages of the pandemic last year, we modified the timing and extent of our annual maintenance outages, and we had lower than normal maintenance expense last year.

However, this year, we completed full outages.

<unk> at each facility during the quarter, which increased maintenance spending during the quarter, the impact and the shift and timing and extent of the outages was approximately $10 million.

Moving to the light materials sector on the next slide.

Revenue and our light materials sector increased 25%.

Reflecting higher wallboard sales volume and prices.

Operating earnings and the sector increased 51% to $67 million.

Reflecting higher net sales prices and volume.

Partially offset by higher input costs, namely recycled fiber costs and energy, However, wallboard margins improved to 38.

And versus 32% and the prior year.

Looking now at our cash flow, which remains strong.

During the first quarter operating cash flow increased 17% to $111 million.

Reflecting strong earnings and disciplined working capital management.

Capital spending declines.

Climbed $12 million.

And as Michael mentioned, we restarted our share repurchase program during the quarter and returned $62 million to shareholders during the quarter, which.

Which equated to approximately 426000 shares.

And finally, a look at our capital structure.

Eagle is June 30 capital.

Capital structure remained about flat with year end and at June 30, 30, <unk>, our net debt to cap ratio was 34% and our net debt to EBITDA leverage ratio was 1.2 times.

We ended the quarter with $307 million of cash on hand.

Subsequent to the quarter, we completed.

Financing of our capital structure, which included issuing $750 million of 10 year senior notes with an interest rate of 2.5% <unk>.

Extending our bank credit facility 5 years.

Hanging off the bank term loan and retiring our 2026 senior notes the.

The results.

<unk> of these actions provide eagle with a low cost long dated capital structure with significant liquidity.

Thank you for attending today's call, we will now move to the question and answer session Josh.

Thank you as a reminder to ask a question you will need to press star 1 on your telephone.

To withdraw your question from per pound Keith Please stand from Hollywood.

Q&A Rosner.

Our first question comes from Trey Grooms with Stephens you May proceed with your question.

Hey, good morning, everyone and congrats on a nice quarter.

Thanks.

No.

The first 1 is.

And I'll follow on on the Texas weather I mean, clearly impacted the JV.

But I think weather has started to clear up there and so are you expecting a bounce back here and JV volumes and the 10-Q.

Yes, yes, Trey you know everything is dependent on weather.

And at that time of year and as you said, it's been drier down there as its drive the demand strength.

Is there.

As I said and the comments it was nothing to do with the demand driver on there as we dry out we'll be seeing on a cement shipments resume.

As for pace.

And kind of sticking with.

And whether I V.

And I believe on the last call you had mentioned.

You had mentioned a midyear price increase in that market is that still on track and.

Are there any other.

And markets, where you could have midyear increases.

And Smith.

Yes.

Currently in process of implementing that cement price increase we mentioned last time.

As for other markets out there, we continue to evaluate other markets and.

Determine.

If we will implement a price increase at those markets at any time depending on.

<unk>.

Our cost structure demand and supply.

Levers there.

Okay.

That makes sense, so I guess on the margins.

Clearly training and in the right direction and.

And.

Obviously pricing is playing a role here.

And.

And Craig you talked about or mentioned briefly a couple of things that youre seeing there on the cost for iron ore.

<unk> and energy specifically, but.

Could you give us a little bit more detail on.

And what Youre seeing on the cost per on both sides of the business as far as.

Inflation and maybe.

And maybe any.

More detail you can give us around that.

Yes, Trey so on the cement side.

Again, we largely control our primary raw materials into the cement business.

Sure.

Our fuel costs and electricity costs are pretty consistent and so we didn't see much there what we did see and this quarter specific.

Specifically was the timing and magnitude of the outages at the cement plants a year ago, we have modified the timing and extent just to deal with those early days of the Covid shutdowns and.

And so we're back to a little bit and more normal pace. So we actually should see that benefit and the second half of the year.

Because.

Some of those outages into last year's second half on the wallboard side.

And again, it's a paper costs, while they are going up.

They're not dramatic and at the paper mill level, we ended up passing those costs through and how we do that on a quarterly lag basis.

And so sometimes it takes us a quarter to catch up with the pricing, but we pass the vast majority of that through.

The other thing we are watching as freight we saw freight costs go up this quarter and.

And it's something we're watching very closely.

On that front.

We'd move Craig.

And obviously, Texas.

And important market you guys have a terminal there.

Strong market from a demand standpoint.

Excluding the weather impact, obviously, but strong market from a demand standpoint, it's the it sold out what what role is the freight.

Having and the increasing freight costs having.

They are in that market as far as imports are concerned.

Yes, I would make the statement and more broadly than just Texas, but.

Ocean, So you've got domestic freight, which is railroads and trucks, which has gone up.

And then you think about ocean freight rates, which have gone up considerably and the last 6 to 9 months and that is imports are necessary necessary to fill the void.

As demand outstrips supply and.

They've generally been high cost imports with the higher cost of ocean freight rates those <unk>.

Becoming more and more expensive.

And with that ends up doing is shrinking the shipping radius.

For those imports and really keeping them closer to the coast. So it's just it's consistent with what we've seen historically.

Okay, 1 last 1 from me.

And it's nice.

<unk> you guys.

Reinstating or restarting.

On the buyback and.

Being out there repurchasing shares.

Can you tell us kind of talk a little bit about.

First a reminder, and kind of what you have on authorization and then secondly.

More high level kind of how.

Nice to see thinking about balancing that the buybacks with maybe some internal opportunities you may have or.

And possibly even M&A.

Look what I would tell you the capital allocation priorities have been consistent and served us very well and.

And 1 a.

Is to continue to.

The company and grow Eagle and a profitable way and as you've heard us say for years.

A very high barrier to entry for that growth and that is both a financial return criteria as well as the strategic criteria.

But that is the capital allocation number 1.

And B, which is very closely.

Growth is continuing to maintain our assets and like new condition.

And and keep our modern facilities and improve our low cost producer position.

To the extent there is additional free cash flow. After those we have historically return that cash to shareholders and we've done that generally through a share.

<unk> <unk> program, we did reinstitute, our quarterly cash dividend.

This year and it was payable and paid in July.

But from a from a significant return of cash flow, we've generally done that through our share repurchase program.

Those have been tried and true for many many years.

And we've taken out a considerable.

<unk> amount on the float.

For the last and the last 5 years 10 years or going back 20 years and.

And I would point out we've done all of that.

While we've tripled the size of the company, especially on the cement side and we've done it all with a balance sheet that still sits and a.

<unk> position and a little.

All over 1 times debt to EBITDA and that gives us a lot of opportunity for growth when those opportunities come our way.

So with that and I'd say from a share repurchase authorization, we got a considerable amount of shares that we can repurchase.

We're right around the 7 million share level.

At June 30th.

But more than enough opportunity for us.

Alright, that's it from me Thanks, guys nice work and good luck with the quarter.

Thanks, Greg.

Thank you. Our next question comes from Brent Thielman with D. A Davidson and company and we appreciate your question.

Okay, great. Thank you.

Just on cement dip and JV cement volume makes sense, just given that the inclement weather I was more curious about the flat to slightly lower sales volume and wholly owned it seems like a pretty tight demand environment right now and just the way you guys are describing it and decent decent weather elsewhere in the country and just wanted to get your thoughts around.

On that.

And we've talked about this a little bit and some of the past calls with it we did have a.

A substantial amount, we did and investment and our Sugar Creek facility and.

And we put in our grinding mill, there and we had some inventory that was in place last year that led us actually grew.

Brian that into finished.

<unk> and sell that and do an inventory reduction with it.

So what youre seeing and some of the areas with it is that on.

Our facilities, our manufacturing tonnage pretty much at the sold out levels with it and we don't have those levers to pull necessarily with those inventories and that being said we.

We continuously look for opportunities to expand any any 1 of our plants and get them.

And next clinker ton out of it that we can get out of it and we have several projects that we're looking at on how we do that across our facilities, but we are manufacturing sold out at this time.

Okay.

And.

And on wallboard.

I guess, how can we think about the June wallboard price hike, how much is reflected I guess this quarter and as we think about kind of the September quarter anything to suggest theres been sort of a higher level of pre buy.

And I guess associated with the April and June hikes.

Yeah, Brent look as it comes to pre buy activity.

That's largely come kind of come and gone with economic activity and specifically residential construction activity where it is.

It's a strong market demand environment for us.

And to your point, though we did implement.

And this price increase in June so it's partially reflected in this quarter's average price.

But there'll be some more upside.

We fully implemented or get the full effect of it and the September quarter.

Okay. That's helpful and then.

On the paper.

Per board.

Profit contribution you mentioned recycled fiber energy expenses and plan to that I guess, just kind of wondering if we're at an inflection point here.

Headwinds.

She gradually abate and we should see some better bottom line contributions here going forward.

Yes.

And on the.

Paperboard, what's to remember too with that is we should see some leveling out and that but we also need to remember too that we have a quarter lag with passing on some of those costs with our contracts are structured so where you may see some noise and 1 quarter youll see that.

And the rebound of that noise and the next quarter on.

And.

And if it continues to go up you'll see noise and a couple of quarters in a row, but at the end of the day that that cost is.

Predominantly passed on through our contracts.

Okay. I appreciate you taking my questions best of luck.

Thank you our next question.

And <unk> comes from Adrian Huerta with Jpmorgan you May proceed with your question.

Hi, Thank you congrats to everyone and for the strong results with you on.

Cement.

There was a very strong quarter over quarter increase on cement prices was there any input from mix, because we havent heard and seen that.

And the increase of this magnitude.

Sequentially basis and via <unk>.

The second quarter and.

The second question Dave.

So I think before the prices and <unk>.

Mention that the ocean freight cost per hour and grew significantly and how you have you're starting to see cement prices in the coast the coastal regions increasing.

So on that versus that.

What we have seen with freight cost as well.

Yes. Thanks, Adrian on your first question not really a mix issue on the cement price increase but I will tell you a year ago as the pandemic was hitting we did push our price increases.

Generally it's been in April.

<unk>.

Day, 2 to June 1st so as Youre comparing year over year.

We have a full effect this quarter of the price increase so.

Up 7% year over year, I would suspect and the September and December quarters should absent anything else happening should should look more alike.

From <unk> to 6% increases as you get a more apples to apples comparison, and then look the only to your second question the only market, where we really participate or see exposure to imports is Texas. So we can't necessarily speak to the east or west coast necessarily but.

5 downwardly, we've seen some significant moves and and the cost of imports and and eventually that feeds through pete's through that system.

Thank you Mike.

On cement on a sequential basis and this quarter was up 3.2%.

And she has a pretty big number for the second quarter. So.

I was wondering if there was to me.

<unk>.

Income there.

Our price is always up from.

From the fourth quarter to our first quarter as we're implementing prices.

And April generally.

Alright, thank you.

Thank.

And.

Thank you. Our next question comes from Jerry Revich with Goldman Sachs. You May proceed with your question.

Yes, hi, good morning, everyone.

Michael really interesting comments about.

Wallboard industry structure, moving towards submit and your prepared remarks.

I'm wondering if you could just talk about what capital deployment opportunities you see for you folks in that area because you know over the past 10.

And plus years, you've been more focused on adding cement and I'm wondering if your comments signal on.

Opportunities for.

M&A or otherwise to grow the wallboard footprint.

Can you just expand on your opening comments in that area.

Yes, yes, and I appreciate the question Gerry.

And where the comments are focused around and see if you look back at the wallboard industry, especially over this last 3 or 4 years Youll see that there has been a consolidation and that industry too.

So.

With the consolidation and the industry and with the.

Still the capacity there is still capacity and that industry and we still have some capacity and the industry side.

Our main focus with this is to maximize our production out of those facilities be the low cost producer by.

And what our historic struck.

<unk> has been is.

Owning our raw material resources.

Keeping our plants and like new conditions and just.

Making sure we can produce as much as we can out of those facilities with it.

So the investment that we do on the capital allocation side.

There is really keeping those plants and like new condition and and.

And anything we need to do with any kind of logistics distribution side with just just making sure we can get to the customers we have today.

Okay, So youre not optimistic on M&A opportunities and wallboard.

Ward.

When I look at it.

I would never rule out anything with it we'll look at anything but.

With the consolidations that happened in that industry and in the past.

It is getting to be and more consolidated industry at this time.

Okay.

And Craig.

Can you talk about what was wallboard.

Aboard pricing exit rate and the quarter.

Yeah. We were we were ahead of where the quarterly average was.

We'll certainly give you that total number for the September quarter, when we get there, but we were north of the average.

Yes.

It's clear on the question is if you're willing to comment on order of magnitude.

It was meaningfully higher Jerry.

And and so we will give you the total number when we report the September quarter.

Okay, Thanks, Craig and then and cement pretty.

Well maintenance.

Outage this quarter.

Can you talk about as we think about the year over year comparisons for cement margins over the balance of the year, which quarters does that $10 million free up.

As we think about the comps were.

Outage costs are going to be lower.

Sizes and 3 quarters.

Yes that had been most of it pushed into the September quarter, there was a little bit the blood into the December quarter last year, but we'll see the majority of it and the September quarter.

And Jerry just for a little color on that.

Whereas the whole reason was the pandemic on that I didn't feel comfortable taking down all.

All of our plants at 1 time during that timeframe. So so we've pushed these throughout the year and we want to get back to a normal schedule, where we have those.

And how we normally do it and the first part so thats why youre seeing and this change.

Very helpful context, Thank you.

Thank you. Our next question comes from Stanley Elliott with Stifel. You May proceed with your question.

Hey, good morning, guys. Thank you all for taking the call.

Could you talk a little bit about what youre seeing on the rest of the M&A environment on the on the heavy side.

Yes Stanley.

And the opportunities within.

Within really both businesses Michael highlighted on the on the wallboard side.

There are opportunistic that there arent.

A significant number of assets that are on the market at any given time.

And even when there are.

We've got that strict.

Criteria, both at a financial level and and strategic level. So.

We are constantly looking at opportunities out there.

Walked by more many more than we've executed on.

So we continue to the.

Pipeline and the number of opportunities are out there. We're just trying to make sure that we find.

Quality at the right value and that's what's most important to us and we've been very fortunate over the last decade that we've found a number of ways to invest and grow the company and and a very profitable way.

And that's going to continue to be the exercise that we go through.

Perfect and then as it relates to the cement.

On the right.

And your blended.

Different blends that are out there and you guys do a nice job with that is it reasonable for us to think that debt with adoption of some of these new blend some of the things you're doing that you can continue to kind of drive out low single digit volume growth, even though rent and effectively sold out sort of environment.

Yes.

Great question.

And yes that is a true fact that you stated there that's where we focus on right now.

And as you know.

How much additives, we could put in and still make ASTM specs. We also do some investments.

We're going through a investment right now to maximize our grind capacity.

<unk> with our clinker capacity to service markets during their peak times, which is an investment with a storage dome that we're putting out our fairborn facility with it which should get us some more potential into the next year of some extra product being available, but as he stated it's kind of a low single digits is where we're at on improving.

Yeah.

Our and our organic growth side with it.

But we look at every single plant and maximize every plant we can and we've been we have a great group of engineers and a great group of production people that have been able to do that for us.

Perfect and then lastly from me could you remind us if you will.

All have a program in place as it relates to the repurchases.

Yes, absolutely.

Absolutely Stanley so.

We've got as I said earlier, nearly 7 million shares under our repurchase authorization.

And we began repurchasing shares during this quarter it was about 400.

26000 shares.

And we generally do that through through open market purchases.

Perfect guys. Thank you very much for the time and best of luck.

Thanks, Dave.

Thank you. Our next question comes from Adam Palmer with Thompson Davis, You May proceed with your question.

Hey, good morning, guys great quarter.

And so I wanted to dig in a little bit on wallboard margins kind of what drove that increase from 32% to 38% and then how sustainable.

Is the Q1 result.

Yeah look at and we saw a pretty meaningful price move during the quarter I think prices were up 30 to $31 a thousand.

Because of the demand environment and much higher utilization rates.

And on the cost side, well, while we saw some increases around paper and energy.

We were able to raise prices ahead of that and continue to expand margins and and.

And look what I would.

I'd also comment that.

While we see some of these cost pressures on the energy side and pay per side.

And the nice thing and Michael made in his comments, we own decades worth of natural gypsum at the majority of our facilities and debt gypsum is close to the plants and it's a low cost raw materials.

And for us so.

We don't face some of the inflation pressures that you see and other industries and and maybe across other geographies.

Okay. And then you briefly mentioned freight also natural gas costs are up are there any is there anything else you're worried about there from a cost standpoint correct.

No again.

No.

Again, this isn't a labor intensive business and we own the decades worth of natural gypsum so and.

It's something we're keeping our eye on freight and natural gas.

But but but no other major changes there.

And then some.

Net are there any markets that are on allocation.

So what are the implications of that if there are.

We've been able to work with our customers.

Far and provide with our customers as we come into this is the peak shipping time with it and.

We are we are.

Close to allocation and some markets.

<unk>, but we've been able to satisfy our customers' demands and partner with those customers.

Great. Okay. Thanks, guys.

Thanks Sam.

Thank you. Our next question comes from England.

And as you May proceed with your question.

Good morning, and now this is actually calling on for Phil.

And I guess just go take on the cement market.

It seems very tight so I was just curious as to what you need to see to announce a second price increase and have you seen any of your competitors and as the summer increase outside of Texas.

Yes.

We continuously monitor the market.

C.

Supply and demand fundamentals to determine when we.

When we will announce that we're continuously monitoring that today as we talked about last time, we're implementing 1 and Texas currently.

Some.

Some of the other markets.

We will monitor those over the coming coming months and decide.

As for our customers our competition announcing price increases.

I don't really comment on those too much and we really look at it from what our supply demand fundamentals are.

And what our manufacturing capacity is.

Okay. Thank you and the color and then just touching on wallboard demand and we've heard from public builders have they been raining raining in their orders.

Somewhat so have you guys seen any choppiness and your business.

Large driver and wallboard demand or have you guys just being able to carry.

Carrying through.

We continue to see a very strong business environment for our wallboard business.

Okay. That's all I had thank you.

Thank you and our next question comes from Josh Wilson with Raymond James You May proceed with your question.

Yeah.

Yes, good morning, and Mike and Craig Thanks for taking the questions.

Wanted to start with just making sure we have the.

Maintenance costs down on cement I think last year, you said the benefit was $6 million. So did you pull some extra costs and and as everything this year now.

Is it will be oil.

And some things shift next fiscal year, a little bit to get truly back to normal.

Yes look at on the.

Last part of that I don't know that we have.

100% schedule and every maintenance event for for next year and want to be nimble and on our toes don't anticipate any changes but.

Look it was last.

Versus this year was not just a matter of timing but magnitude.

Made some decisions last year again as Covid was on folding to minimize what we were doing to minimize the downtime at the plants and so.

It was.

As we get back to a more normal maintenance.

Schedule and extent, that's why those costs were a little bit higher this year versus last year.

Got it and can you give us your current capex expectations for the year.

Yes, frankly, not all that different and what we guided to back and may it's going to be and that $90 million to $100 million level.

Last year full year.

And while for some of the projects that had been pushed off to get Spooled back up but I would expect to see that start to pick up again and the second half of the year.

And then last 1 from me other income is.

Still been a little bit.

A volatile piece of EBITDA and EPS can you give us a sense of.

And what drove the higher than normal levels, there and this quarter and what that should look like going forward.

Yes, those are little extraneous things that happen from time to time, whether it's a <unk>.

Small parcel of land that gets sold and 1 market or.

On some other.

Opportunity, where we have an opportunity to sell something.

On a piece of equipment or inventory something like that so.

It's hard to forecast that quarter to quarter, and and so I wouldn't put much in there.

Relatively small.

Got it for next quarter.

Thanks, John.

And.

Yeah.

Yes.

Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Michael <unk> for any further remarks.

Thank you very much for joining us today, and we look forward to talking to you at the next quarter earnings call.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

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