Q3 2024 Eagle Materials Inc Earnings Call
Good day, everyone and welcome to Eagle materials third quarter of fiscal 2024 earnings Conference call.
Speaker Change: This call is being recorded.
Speaker Change: At this time I would like to turn the call over to Eagle's, President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack. Please go ahead Sir.
Michael Haack: Thank you.
Michael Haack: Good morning, welcome to Eagle materials conference call for our third quarter of fiscal year 2024. This is Michael hack joining me today are Craig Kesler, our Chief Financial Officer, and Alex Static Vice President of Investor Relations strategy and corporate development.
Alex Static: 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 webcast.
Alex Static: Ah 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 that could cause results to differ from those discussed during the call for further information. Please refer to this disclosure which is also included at the end of our press release.
Michael Haack: Let me start out by saying that I'm excited to report on another quarter of superior execution at Eagle materials.
Michael Haack: A few financial results that I wanted to highlight from our third quarter, our record revenue of $559 million up 9%.
Michael Haack: Gross profit margin increased 130 basis points to 32, 3%.
Michael Haack: Adjusted EPS was up 16% to $3.72 and we returned $106 million to shareholders through stock repurchases and the quarterly dividend.
Michael Haack: These results would not be attainable without the over 2600 fantastic employees at Eagle materials that make the company successful through their safe hard work and dedication to customer satisfaction.
Alex Static: Each of you who contributes to the results I'm proud to report on thank you.
Alex Static: Because of these impressive results Eagle materials continued to produce strong cash flows.
Alex Static: Over the years, we have been very clear as to how we'll use the free cash flow generated from our operations.
Alex Static: Our investment priorities have been consistent for years and will continue to remain so they consist of three main components.
Alex Static: First is to maintain or widen our low cost producer strategy by keeping our facilities in like new condition.
Alex Static: Second is to grow the company with emphasis on expanding the heavy materials segment through acquisitions or investments that increase existing capacity.
And third when investment opportunities do not meet our disciplined return on investment criteria, we prudently return excess cash to shareholders.
Alex Static: And the first nine months of fiscal year 2024, we have returned an impressive total of $276 million of cash to shareholders through share repurchases and dividends.
Alex Static: Our ability to execute our investment priorities relies on the long term sustainability of our businesses.
Alex Static: The business is not just the hard assets of the equipment, but consists of our most vital asset the people operating the plants their safety and ensuring we are good stewards of the environment.
Michael Haack: We have made and continue to make progress in these areas and I'd like to spend a little time, highlighting a few items here.
Michael Haack: In 2023, we're able to sustain our total recordable injury rate well below industry averages.
Michael Haack: Any incident is one too many and we will continue to strive for zero incidents, but I am proud of the work that was done to sustain our step change in tier IR from previous years.
Michael Haack: Environmentally we continue to make significant gains on our transition to blended some mess.
This quarter, our blended cement accounted for over 75% of our manufactured sales volume.
Michael Haack: These cement slower our C O two content per ton of material enable us to extend our clinker capacity.
Michael Haack: We also announced agreements with terrorists C O two granting us exclusive rights to use terrorists technology to produce low carbon supplementary cementitious material in three regions complementary to eagle's current footprint.
Michael Haack: This product has the potential to lower the carbon intensity of our cementitious materials and will enable us to fulfill the increased cement demand and today is virtually sold out market, especially as other scm's like fly ash continue to decrease and availability.
Michael Haack: We look forward to highlighting these achievements and much more in our updated sustainability report to be published later this quarter.
Alex Static: In the report you will see significant progress from Eagle both in what we are doing for our businesses, but also in how we are reporting that progress.
Alex Static: With that let me turn to the specifics on the quarter, starting with the heavy materials business.
Alex Static: Our heavy materials performance this quarter continued to benefit from favorable business conditions.
Alex Static: Public infrastructure spending is robust.
Alex Static: Bulk of the United States investment in roads bridges and highways. It comes from the state and local level and tax receipts continued to be strong while state budgets remain healthy.
Michael Haack: In addition increased infrastructure spending from the federal I I J, a funds should increase noticeably for the next several years.
Michael Haack: Private nonresidential spending also continues to provide demand tailwind for our business.
Michael Haack: While certain pockets of non residential construction such as warehousing may be a drag on the total spending the hour.
Michael Haack: Look from heavy industrial projects and manufacturing construction give us confidence in the visibility for our cement business.
Michael Haack: The passing of the chips Act and inflation reduction Act has led to meaningful increase in heavy industrial projects focused on computer electric and the onshoring of other manufacturing.
Michael Haack: Signs also suggest residential construction may have bottomed.
Michael Haack: Yeah.
Michael Haack: From these facts our demand outlook remains positive and we will continue to focus on executing to provide materials for our customers.
Michael Haack: Turning to the supply side dynamics for heavy we still see no meaningful supply additions for the cement industry on the horizon.
Michael Haack: Blended cement products, while important for making clinker go further well not add enough U S cement capacity to alter the supply demand fundamentals.
Michael Haack: Imports are increasingly required to meet U S demand as they have been in the past.
Michael Haack: Since we are well positioned low cost heartland producer Eagle remains generally insulated from imports as transportation is very expensive.
Michael Haack: Do you expect it to remain so.
Michael Haack: Against this supply demand backdrop half of our markets are implementing a January 1st price increase while the other half of our markets have announced in April 1st price increase.
Michael Haack: Now, let me turn to the right side of our business.
Michael Haack: This quarter, our light materials business held steady in an uncertain environment.
Michael Haack: Gypsum wallboard continues to benefit from a long tail construction backlog that has kept demand steadier than expected and construction across the south where much of our footprint is has held up particularly well.
The near term outlook remains dynamic.
Michael Haack: With the latter half of our fiscal third quarter seeing constructive market conditions for housing and wallboard demand given the drop in interest rates.
Michael Haack: In the medium term the direction of the U S monetary policy and its effect on mortgage rates remains uncertain and will dictate the big component of the demand picture.
Michael Haack: While we expect multifamily housing starts and construction to drop off single family housing starts are recovering nicely, especially in the south and homebuilders are reporting favorable outlooks.
Michael Haack: The longer term housing deficiency in the U S will need to be addressed through new home construction.
Michael Haack: The wallboard demand backdrop continues to be set against supply constraints, there are fundamentally changing our business.
As the availability of synthetic gypsum continues to diminish the approximately 50% of the wallboard industry designed to use synthetic gypsum basis raw material challenges.
Michael Haack: Challenges from which Eagle is generally insulated given the surety of raw material, we maintain at all of our wallboard plants.
Michael Haack: The result of the synthetic gypsum shortages is a steep at the industry cost curve and crimped industry capacity.
Michael Haack: We do not see any improvement in cost or capacity in the medium term.
Michael Haack: Against these market conditions, we recently announced a wallboard price increase for February 1st.
Michael Haack: Given the structural and operational dynamics, we believe our heavy and light materials businesses look increasingly similar.
Michael Haack: Structurally as I have discussed supply side dynamics mean capacity remains constrained for both cement and wallboard, although for different reasons.
Michael Haack: On the demand side each business is supported by long term demographic driven tailwind that should provide meaningful growth.
Michael Haack: Operationally, our two core businesses are well defined well established and well positioned.
Michael Haack: Each uses mined material minerals.
Michael Haack: They have many decades at Volund reserves.
Michael Haack: And each are in cyclical sectors. So cycle management skills are important and we have proven for decades that operating through the up and down of the cycle is where we excel.
Michael Haack: And all of the combined businesses produced meaningful free cash flow, keeping our balance sheet healthy and positioning us to capitalize on growth opportunities when they come.
Michael Haack: With that I'll turn it over to Craig to go through our financial results in more detail.
Craig: Thank you Michael.
Craig: Third quarter revenue was a record $559 million, an increase of 9% from the prior year.
Craig: Kris reflects higher cement sales volume and prices.
Craig: Contribution from the recently acquired import terminal in Stockton, California.
Partially offset by lower wallboard sales volume and prices.
Craig: Excluding the Stockton acquisition revenue was up 7%.
Craig: Again, this past quarter, we generated record EPS.
Michael Haack: Third quarter earnings per share was $3.72, that's a 16% increase from the prior year and represents the 10th consecutive quarter of year over year improvement.
Michael Haack: This quarter's increase was driven by higher earnings and a 5% reduction in fully diluted shares due to our buyback program.
Michael Haack: Turning now to segment performance highlight on the next slide.
Michael Haack: And our heavy materials sector, which includes our cement and concrete and aggregates segment's revenue was up 18% to $366 million.
Michael Haack: This revenue growth was driven primarily by an increase in cement sales prices that were implemented earlier this year.
Higher cement sales volume and the contribution from the recently acquired cement import terminal in Northern California.
Michael Haack: Operating earnings were up 43%, primarily because of increased cement prices and sales volume.
Cement prices increased 13% in sales volume was up 7%.
Michael Haack: Given the strong market conditions that Michael discussed we've announced another round of price increases for the first half of calendar 2024.
Michael Haack: Moving to the light materials sector on the next slide.
Michael Haack: Revenue in our light materials sector decreased 4%, reflecting lower wallboard sales volume and prices, partially offset by record recycled paperboard sales volume, which was up 9% in the quarter.
Michael Haack: One comment on our wallboard sales price this quarter.
Alex Static: With wallboard sales volume coming in stronger than we had anticipated we had a catch up in our customer rebate program. This quarter that impacted our quarterly average wallboard sales price.
Michael Haack: Excluding the catch up our wallboard sales price decline would have been about half sequentially.
Michael Haack: Operating earnings in the sector declined 13% to $83 million, reflecting lower wallboard sales volume and prices.
Michael Haack: Looking now at our cash flow.
Michael Haack: As Michael discussed, we continued to generate strong cash flow and allocate capital in a disciplined way.
Michael Haack: During the first nine months of our fiscal year operating cash flow was up 4% to $501 million capital spending increased to $88 million.
Michael Haack: And we acquired the cement import terminal in Stockton, California for $55 million.
Alex Static: We repurchased approximately one and a half million shares or 4% of our outstanding for $249 million. In addition to paying our quarterly dividends returning a total of $276 million to shareholders. During the first nine months of the fiscal year.
Michael Haack: We have approximately $6 3 million shares remaining under our current repurchase authorization.
Michael Haack: Finally, we also used our strong cash flow to strengthen our balance sheet.
Michael Haack: Let's look at our capital structure.
Michael Haack: At December 31, 2023, our net debt to cap ratio was 43% and our net debt to EBITDA leverage ratio was 1.2 times.
Michael Haack: We ended the quarter with $49 million of cash on hand.
Total committed liquidity at the end of the quarter was approximately $684 million and we have no meaningful near term debt maturities, giving us substantial financial flexibility.
Thank you for attending today's call Rocco will now move to the question and answer session.
Michael Haack: Thank you.
Michael Haack: That's a question you May press Star then one on the telephone keypad.
Michael Haack: If youre using a speakerphone please pick up your handset before pressing the keys.
Michael Haack: So it's only a question. Please press Star then two.
Michael Haack: At this time, we will pause momentarily to assemble our roster.
Michael Haack: And today's first question comes from Trey Grooms with Stephens. Please go ahead.
Trey Grooms: Hey, good morning, everyone. Thanks for taking my question Wallboard volume.
Trey Grooms: You know clearly came in a little bit better looks to maybe even seen a little bit of an inflection here in the quarter.
Trey Grooms: Firstly is that primarily the impact of single family starts are beginning to show up.
Trey Grooms: And as we kind of look.
Now into the next few quarters would you expect to see volume continue to get better here.
Troy: Yeah. Thanks Troy.
Troy: So I would say yeah look as I said in my comments I think wallboard volumes came in stronger throughout the entire year not just this quarter.
Troy: I think the for the calendar year 2023 volume was 27 billion square feet not that far off of the pace for calendar 'twenty. Two so overall I would say things are sales volume for wallboard was was stronger than anticipated and as you say you've looked at the housing numbers coming.
Troy: The orders coming out of the homebuilders for the last three quarters or more and they have certainly seen a pick up in their order books, which would translate eventually into wallboard volume, there's a little bit of a lag between the starts are really in order to start and then ultimately the wallboard consumption.
Trey Grooms: You know are our best guess is that's more of a calendar 'twenty four of them.
Trey Grooms: So I don't know that we've actually seen that turn yet in the actual volume.
Michael Haack: But but would anticipate that given the increase in orders and as Michael mentioned, our that's why we put out a February price increase in wallboard as we start we think we're gonna be pretty busy into calendar 'twenty four.
Michael Haack: Alright, thanks for that Craig and I wanted to touch on that as well so.
Craig: Thank you for bringing up the price increase here the wallboard margins were down.
Craig: And I understand you know volume and price were both slightly down in the quarter, but.
Craig: Maybe if you could talk about a little bit more into the drivers there on the margin declines and clearly the February price increase comes at a good time given that some of the headwinds you're seeing on the margin you know any color on magnitude or geographically, if it's widespread or just any.
Craig: The other color you could give us around that increase.
Michael Haack: Yeah. The the February increase is slated for across the country, a little too early for us to speculate on the exact dollar amounts in a region by region, but again given.
Michael Haack: Given the volume strength and utilization rates are still pretty high we're gonna be moving forward with it you did point out some cost pressures OCC prices, while they had been lower during most of calendar 'twenty three we have seen a recent uptick in.
Michael Haack: In recycled fiber prices and so that will that will start to impact are in the next quarter or two.
And then in terms of the price for this past quarter as I mentioned in my comments. The we had because volumes were better weird our rebate programs needed to get caught up in AR and the last part of the calendar year and so really if you were to exclude that catch up the price cadence has been.
Michael Haack: Very similar for the last several months.
Michael Haack: Okay. That's helpful. I appreciate it Craig I'll turn it over thank you.
Michael Haack: Thank you and our next question today comes from Anthony Pettinari with Citi. Please go ahead.
Michael Haack: Good morning.
Michael Haack: When you talked about he you'd talked about cement hikes I think half of your regions in January 1st and half in April 1st if I got that right is there any way to kind of think about the differentiation between.
Anthony Pettinari: But the two the two hikes or or maybe where the impact are or why they were staggered or any any color you can give there.
Anthony Pettinari: Yeah.
Anthony Pettinari: You know really when you look at the staggering of the AR.
Anthony Pettinari: The increases are if you remember last year, we had a several price increases and some of them were at different times on the second price increase.
Anthony Pettinari: So really this is more on the cadence of where these price increases are falling.
Anthony Pettinari: Or.
Anthony Pettinari: For our customers and everything if they got one in the later half of the year there.
Anthony Pettinari: Not in the January timeframe there in the.
Anthony Pettinari: April timeframe with it.
Anthony Pettinari: As for consistency, it's very similar to what Craig was saying on the wallboard side, you know a nationally.
Anthony Pettinari: As everybody knows we've been in a sold out condition across the nation with it so.
It's gonna be increases pretty much across the nation.
Anthony Pettinari: For our cement businesses with it and we also.
Anthony Pettinari: Also with the wallboard as you know, it's it's too early for us to speculate on what those numbers are working with our customers right now and then you'll see those results as we report the next quarter.
Okay. Okay. That's helpful. And then I guess, maybe switching gears can you talk a little bit more about the Tara agreement and I guess in the announcement.
Anthony Pettinari: It says that you have sort of the the right to build the ICM plants.
Anthony Pettinari: And that those could produce each 240000 tons per year in terms of you know timeline implementation capital investment I'm. Just wondering if you can give us any more.
Anthony Pettinari: Kind of details on how this agreement is expected to play out yeah.
Trey Grooms: Yeah, No I'm happy to talk about the Terra business.
Trey Grooms: With me today.
Trey Grooms: We as a company look at a lot of different technologies out there that help us.
Trey Grooms: Provide product to our customers and also reduce.
Trey Grooms: Our C O two footprint through some blended products as you know we've been talking a lot about blended products here over the last year simply increased that quite a bit.
Trey Grooms: Terra was a great partner that we wanted to work with.
Trey Grooms: US as Eagle don't necessarily have a research and development.
Trey Grooms: Arm with it and we rely sometimes on some outside.
Trey Grooms:
Trey Grooms: Experts in that field to help us there and we've been very happy with the what Tara has brought to the table. They have done a bunch of research on a product that we feel is very beneficial for us.
Trey Grooms: I do want to.
Trey Grooms: Caution in a way is that they are working on their first commercial scale facility right. Now so we're still a little ways away from having that commercial production, but we're working with them really daily between our engineering teams and their engineering teams on how we bring that to the market.
Trey Grooms: Do have a one a.
Trey Grooms: They are building that theyre doing.
Trey Grooms: With another partner that they have and that is in process of being constructed on a commercial grade.
Trey Grooms: We are kind of watching that closely so we know when we can pool, the and feel confident on Poland.
Trey Grooms: Trigger on building our own facilities with Terra with it so in the meantime, we're going to work with them still work on the the making this a commercial viable.
Trey Grooms: Product, which they feel confident in doing and so we're still several quarters out from having.
And potentially several years out from having a commercially available plant running to deliver that 240000 tons that we put in the press release, but all indications are very favorable in their product and their performance in the testing we've done in this manufacturing.
Michael Haack: Anthony I might just add one thing to that in terms of the capital investments as Michael mentioned I would not anticipate that being in our fiscal 'twenty five.
Anthony Pettinari: And and then in terms of a profitability look I would just say it.
Anthony Pettinari: We believe this will more than meet our investment hurdle rates and return criteria. So very excited about it but it is still a ways off for us.
Anthony Pettinari: Okay. That's very helpful I'll turn it over.
Anthony Pettinari: Yeah.
Anthony Pettinari: And our next question today comes from Jerry Revich with Goldman Sachs. Please go ahead.
Speaker Change: Hi, Good morning, everyone. This is it's up and coming on behalf of Chad eat how much could you. Please talk about the potential for new margin highs for cement Ahmed rising replacement costs on slowing input costs in the coming quarters.
Speaker Change: It.
Jerry Revich: Could you repeat the first part of that question.
Jerry Revich: Yeah, Sean could you. Please talk about the potential for new much in high school segment, how might draw you, having some cost, Pennsylvania, because yes, no look it it's it's very consistent with what we've talked about for several years now we we've improved the cement network at Eagle through large M&A.
Over the last decade or so.
Jerry Revich: The assets that we've acquired have been high quality assets.
Jerry Revich: And so and then you then against the backdrop of very limited supply response to improving demand you have diminishing alternative materials like fly ash.
Michael Haack: And so that's led to an environment, where we've been able to achieve good pricing.
Michael Haack: And so yeah, we've seen margins improve very nicely in this quarter is in line with that.
As we look forward into physical 25, we've talked many times over the last several quarters about our we would expect to see some lower energy prices, especially around fuel.
So we would expect over over the rest of the cycle, we should continue to be able to expand margins across our cement network.
Michael Haack: Thanks, very much want to pass it on.
Michael Haack: Thank you and our next question today comes from Kevin gave you with Thompson Davis. Please go ahead.
Kevin Hocevar: Hey, guys its Kevin on for Adam.
Kevin Hocevar: I actually maybe I wanted to talk a little bit about the California import terminal.
Kevin Hocevar: Seems to be performing well.
Kevin: Have those assets been absorbed into the network easily and how are they performing versus kind of when you guys bought them.
Kevin: Yeah.
Michael Haack: That that asset was a fantastic fit into our operation as we discussed previously with it you know where where are they were absorbed very quickly into the operation and its to support that western market and to support our plant on that side and satisfy our customers demand.
Michael Haack: We will continue to integrate that however, it's it's a it's actually came up very fast and very efficiently and is supporting our markets very well.
Michael Haack: Here and then maybe if you guys wanted to.
Michael Haack: Go just on cement margins a little more.
Michael Haack: Do you what gives you guys the confidence in sustaining that.
Michael Haack: I'm looking forward.
Michael Haack: Yeah, and just to be clear, we look at our margin profile, whether you want to call. It a trailing 12 months are on an annual period, you certainly have quarters, where you'll have our major maintenance outages like like we will have in the June quarter and.
Michael Haack: So we're really talking about annual margins and they look at it. It comes from a foundation of high quality assets low cost position in very good markets.
Michael Haack: Nicole has alluded to many times, we're relatively insulated from imports. So we're more in the heartland part of the country.
Michael Haack: And so given the market conditions, where demand is outpacing supply that generally provides a pricing power to the manufacturers in and you've seen that the last couple of years and we've got incremental price increases announced for the first half of this year and then you know on the cost side its in.
Michael Haack: Energy intensive business and in energy prices.
Michael Haack: Certainly of of stop being as inflationary as they were a couple of years ago. So that's what gives us the confidence as we look at this business.
Michael Haack: On an annual basis, why we think we can continue to improve margins.
Michael Haack: Sounds good I appreciate the time guys.
Michael Haack: And our next question today comes from so long with Jefferies. Please go ahead.
Michael Haack: Hey, guys I'm appreciating you're pretty insulated from imports Craig as you mentioned, but there is the conflict in the Red Sea you seeing any impact out there from you know imports, whether it's supply and pricing with that and what that ultimately means for the markets you're in.
Michael Haack: You know Phil no direct impact for us.
Phil: In terms of supply or anything coming across the ocean, but I think it does highlight the risks that imports have a that they are subject to global issues, whether it's very specific events as you mentioned or others that could impact timing of ships the trips that they have to take.
Phil: Trips that are more expensive.
Phil: So that is the that the issue with why imports you'll have a a restricted ability to impact the U S market.
Are you seeing any upward pressure on import prices just given that dynamic in recent weeks.
Phil: Ocean freight rates have kind of gone up and down over the last call. It six to nine months.
Phil: Those are are those are impacted by many things.
Phil: Again, we're not as large of an importer as others are so I can't say that we've seen any direct impact at this point.
Phil: But I think your point is well made that are there.
Phil: There are some upward pressures on ocean freight rates.
Phil: On the on the wallboard side the quarter was obviously quite strong from a volume standpoint.
Phil: Is any of that like a tide to like pre buy I know there was a fall price increase or any of your customers trying to hit these rebates. So my question is.
Trey Grooms: Could there be a hangover effect on the demand side for your March quarter, and then I guess bigger picture this year with rates actually coming back, let's say, we get back to like five 5%. How quickly do you see that kind of rippling through I appreciate theres, a lag, but like how quickly do you kind of see that inflection if you do see one on wallboard demand.
Trey Grooms: Yeah, we didn't see any sort of pre buy activity those type of things I think that is a fundamental wallboard consumption. We look at our orders are post the quarter, but had been very happy with the environment and the order activity. So I don't I don't think it was pretty clean volume.
Trey Grooms: Yeah in terms of the inflection point for interest rates and therefore, the benefit to housing.
Trey Grooms: Affordability and demand.
Trey Grooms: You know as I mentioned earlier, there is a lag between the start to wallboard consumption.
Trey Grooms: That was elongated post COVID-19 because of some of the supply chain issues. The homebuilders, we're dealing with I think those issues have been have eased over the last 18 months, let's call. It. So you would expect to see going back to more of a normal timing in terms of call. It three to four months from a.
Trey Grooms: Start to wallboard consumption is typically what are historically, what we've seen.
Trey Grooms: For for how fast that flows back into the business.
Trey Grooms: Super helpful really appreciate it.
Trey Grooms: And our next question today comes from Keith Hughes with Truest. Please go ahead.
Trey Grooms: Thank you our questions on the volume in the J D.
Keith Brian Hughes: Down in the quarter or something really easy comp in the prior year I'm sure weather played some role in here, but can you just talk about the pace of business that the volume in the JV in the quarter.
Keith Brian Hughes: Yeah.
Keith Brian Hughes:
Keith Brian Hughes: I'll take that question Keith Thank you.
Keith Brian Hughes: You know when we look at the JV, we had discussed earlier in the year that we had some.
Keith Brian Hughes: Our older equipment.
Keith Brian Hughes: At that JV that we if you remember about a couple of quarters ago, We had a a mill that we were struggling with a little bit and we get a repair to that mill that we thought would carry us through the lead time to get the parts that we need for that now.
Keith Brian Hughes: No actually had some additional issues that it was still running fine, but from a safety perspective and standpoint, we wanted to make sure. We took it down and address the issues that were happening. So we didn't have a catastrophic failure.
Keith Brian Hughes: So we did take a little bit more of an outage.
Keith Brian Hughes: It's called last quarter to address that we have the parts for that mill on order. It is just the lead time on these heavy industrial parts and it's a part that typically doesn't wear out as much that we're gonna have to replace so it had a 18 to 24 month lead time with it we're going to change that.
Keith Brian Hughes: There was no components out later on this year. The other thing I also wanted to highlight with Texas, Lehigh as I've talked about in previous quarters as well we have the.
Keith Brian Hughes: The secondary thing that caused us some issues throughout the year with a clinker cooler we have which we are going to also address during this next year. So this.
Keith Brian Hughes: This next fiscal year, we will have a little bit more extended downtime to address those two issues were very confident that the plant infrastructure. Other than these two components is is very very good.
Keith Brian Hughes: We just started getting to the end of life of these components and they take a little bit of time to replace and to get the parts into is satisfying. So we had a little bit more downtime in the quarter.
Keith Brian Hughes: It sounds like this is going to continue through really the next fiscal year.
Keith Brian Hughes: I'm sorry.
Keith Brian Hughes: Yeah, we're going to have an extended outage, we haven't defined when that outage is going to be yet because we want to ensure all of the components are in but it will happen sometime in this next fiscal year, where we will have.
Keith Brian Hughes: An extended outage.
Keith Brian Hughes: Uh huh.
Keith Brian Hughes: Probably a couple of weeks longer than a typical outage to address these two issues.
Keith Brian Hughes: And any can you give us any.
Keith Brian Hughes: Kind of a feel of how much capacity it absolutely has looked like.
Keith Brian Hughes: Bob.
Keith Brian Hughes: Problems are discussing.
Keith Brian Hughes: Yeah.
Keith Brian Hughes: Yeah, Keith I don't know that I would say, it's it's impacting our capacity. It's just the ability to to ramp up to full production as Michael said post the installation of these of the new equipment, we should be back to our ordinary level.
Keith Brian Hughes: Okay alright, thank you.
Keith Brian Hughes: Thank you and ladies and gentlemen. This concludes our question and answer session I would like to turn the conference back over to Michael Haack for any closing remarks.
Michael Haack: Thank you Rocco.
Michael Haack: We entered the new calendar year committed to continuing to operate safely and responsibly and deliver excellent results for our customers and you our shareholders.
Outlook for Eagle is bright and we look forward to capitalizing on opportunities ahead.
Michael Haack: Also excited to publish an updated and upgraded sustainability report and discuss highlights when we meet again in may on the report.
Michael Haack: And our full fiscal year 2024 results and progress on our strategic priorities. Thank you for joining us today.
Michael Haack: Thank you Sir This concludes today's conference call.
Michael Haack: You all for attending today's presentation you.
You may now disconnect your lines and have a wonderful day.
Michael Haack: [music].