Q4 2024 Eagle Materials Inc Earnings Call

Operator: Good day everyone, and welcome to Eagle Materials' fourth quarter and fiscal 2024 earnings conference call. This call is being recorded. At this time, I'd like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir.

Good day, everyone and welcome to Eagle Materials' fourth quarter and fiscal 'twenty 'twenty four earnings conference call.

Speaker Change: It's probably is being recorded at this time I'd like to turn the call over to Eagle's, President and Chief Executive Officer, Mr. Michael Haack, Mr. Haack. Please.

Speaker Change: Please go ahead Sir.

Speaker Change: Thank you Jamie.

Michael R. Haack: Good morning. Welcome to Eagle Materials' conference call for our fourth quarter of fiscal year 2024. This is Michael Haack.

Michael R. Haack: Good morning, welcome to Eagle materials conference call for our fourth quarter and fiscal year 2024.

Michael R. Haack: This is Michael hack joining me today are Craig Kesler, our Chief Financial Officer, and Al <unk> Senior Vice President of Investor Relations strategy and corporate development.

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

Michael R. Haack: There'll 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.

Michael R. Haack: While 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. Let me start out today by simply saying thank you.

Michael R. Haack: While you're accessing the slides. Please note that the first slide covers our cautionary disclosure regarding forward looking statements made during this call.

Michael R. Haack: These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call.

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

Michael R. Haack: Thank you to our employees who made fiscal year 2024 a safe, productive year working diligently to produce industry-leading quality products for our customers. Thank you to our customers who support our local operations daily and use the materials we produce to make America better. Thank you to our investors who believe in the value that Eagle Materials brings to society. Without each of you, I would not be able to report on yet another year of record financials, benchmark safety statistics, and excellent operational performance at Eagle Materials. First, let me take a minute to comment on our most valuable asset, our people.

Michael R. Haack: Let me start out today by simply saying thank you.

Michael R. Haack: More specifically.

Michael R. Haack: Thank you to our employees, who made fiscal year 'twenty 'twenty four a safe productive here working diligently to produce industry, leading quality products for our customers.

Michael R. Haack: Thank you to our customers and support our local operations daily and use the materials, we produce to make America better.

Michael R. Haack: Thank you to our investors that believe in the value of the Eagle Eagle materials brings to society.

Michael R. Haack: Without each of you I would not be able to report on yet another year of record financials benchmark safety statistics and excellent operational performance at Eagle materials.

Michael R. Haack: First let me take a minute to comment on the most our most valuable asset our people.

Michael R. Haack: Our results are dependent on our employees. At Eagle, we are dedicated to continuously developing our people and ensuring they understand their role with respect to health, safety, and the environment. In this regard, I'm happy to report that we were able to sustain our below industry total recordable and lost time incident rates across all four of our businesses. Our work on safety will not be complete until we achieve zero.

Michael R. Haack: Our results are dependent on our employees.

Michael R. Haack: At Eagle, we are dedicated to continuously developing our people and ensuring they understand their role with respect to health safety and the environment.

Michael R. Haack: In this regard I'm happy to report that we were able to sustain our below industry total recordable and lost time incident rates across all four of our businesses.

Michael R. Haack: Our work on safety will not be complete until we achieved zero.

Michael R. Haack: We will continue to focus on leading indicators, as highlighted by our 35% increase in near-miss hazard observations since 2021, to drive change and create an even safer workplace. With regard to environmental stewardship, we made meaningful headway this year, as demonstrated in our updated Corporate Sustainability Report, which we released earlier this quarter. I'd like to highlight a few items from this report. Our transition from traditional cement to portland limestone cement and other blended products has brought us close to achieving our 2030 aspiration for reduced carbon intensity early.

Michael R. Haack: We will continue to focus on leading indicators as highlighted by our 35% increase in near Miss Hazard observation since 2021 to drive change and create an even safer workplace.

Michael R. Haack: With regards to environmental stewardship, we made meaningful headway this year and demonstrated as demonstrated in our updated corporate sustainability report, which we released earlier this quarter.

I'd like to highlight a few items from this report.

Michael R. Haack: Our transition from traditional cement supporting limestone cement and other blended products brought us close to achieving our 2030 aspiration for reduced carbon intensity early we will continue to find ways to reduce this intensity level over the coming years to exceed our 2030 goal.

Michael R. Haack: We will continue to find ways to reduce this intensity level over the coming years to exceed our 2030 goal. We have reduced our water consumption by 23% company-wide and will continue to find ways to be more water efficient.

Michael R. Haack: We reduced our water consumption by 23% companywide and we will continue to find ways to be more water efficient.

Michael R. Haack: In terms of how we report our progress, we have incorporated new disclosures in our sustainability report, including data around our Scope 1 and Scope 2 emissions, and we have started to align with the SASB and TCFD reporting frameworks. Turning now to our financial results for the year and the quarter, we achieved a third consecutive year of record financial results despite some weaknesses in the heavy businesses in Q4 due to adverse weather and increased cement maintenance costs. Let me mention just some of the financial highlights for the fiscal year. During fiscal 2024, we reported record revenue of $2.3 billion and record diluted EPS of $13.61.

Michael R. Haack: In terms of how we report our progress we have incorporated new disclosures in our sustainability report, including data around our scope, one and scope two emissions and we started to align with SaaS B and T. C F D reporting frameworks.

Michael R. Haack: Turning now to our financial results for the year and the quarter, we achieved a third consecutive year of record financial results. Despite some weaknesses in the heavy businesses in Q4 due to adverse weather and increased maintenance costs.

Michael R. Haack: Let me mention just some of the financial highlights for the fiscal year.

Michael R. Haack: During fiscal 'twenty 'twenty four we reported record revenue of $2 3 billion and record diluted EPS of $13.61.

Michael R. Haack: We expanded gross margins by 50 basis points to 30.3%, and we generated operating cash flow of $564 million. As always, these results are a testament to the soundness of our strategy, the consistency of our execution, and the deep talent and commitment of our employees, each of whom contributes to this ongoing success of our company. Thank you, and congratulations to every one of you.

Michael R. Haack: We expanded gross margins by 50 basis points to 33% and.

Michael R. Haack: And we generated operating cash flow of $564 million.

Michael R. Haack: As always these results are a testament to our soundness of our strategy the consistency of our execution and the deep talent and commitment of our employees each of whom contributes to this ongoing success of our company.

Michael R. Haack: Thank you incorrect graduations to every one of you.

Michael R. Haack: I'd be remiss if I did not take a few minutes to discuss our fourth quarter results. The weather did affect the demand side picture and had a knock-on effect regarding costs due to several equipment failures and frozen feed systems. However, the larger part of the cost impact was driven from the fact that we chose to do some maintenance when we had an open window to do so, because customer demand was reduced, and we have run these plants very hard over the past several years. It was a great time to do some work that normally would have happened later in the year, during a heavy shipping window, and it was completed early.

Michael R. Haack: I'd be remiss, if I did not take a few minutes to discuss our fourth quarter results. The.

Michael R. Haack: The weather did affect the demand side picture and had a knock on effect regarding cost due to several equipment failures and frozen feed systems.

Michael R. Haack: However, the larger part of the cost impact was driven from the fact that we chose to do some maintenance when we had an open window to do so.

Michael R. Haack: Customer demand was reduced and we have run these plants very hard over the past several years. It was a great time to do some work that normally would have happened later in the year during a heavy shipping window and completed early.

Michael R. Haack: We always want our production systems in like-new condition, especially when we see the favorable demand picture in front of us for the coming years. Let me turn to the market environment that drove our financial performance this past year. Our markets mirror many of the dynamics in the broader economy, dynamics that will continue to follow the overall U.S. macro conditions and the path of U.S. monetary policy.

Michael R. Haack: We always want our production systems in like new condition, especially when we see the favorable demand picture in front of us for the coming years.

Michael R. Haack: Let me turn to the market environment that drove our financial performance this past year.

Michael R. Haack: Our markets mirror many of the dynamics in the broader economy.

<unk> that we'll continue to follow the overall U S macro conditions and the path of the U S monetary policy.

Michael R. Haack: This is most true for the light side of our business. Last fiscal year, the strength of the U.S. consumer and the continued limited supply of existing home inventory supported the single-family market while multifamily construction remained elevated. As we move into our new fiscal year, even with the recent uptick in mortgage rates, there are positive signs for the single-family residential market, while multifamily is likely to be a drag on the overall housing market. Because single-family units are two to three times more wallboard-intensive than multifamily units, the industry could see a net increase in consumption if this dynamic does indeed materialize.

Michael R. Haack: This is the most true for the light side of our business.

Michael R. Haack: Last fiscal year, the strength of the U S consumer and the continued limited supply of existing home inventory supported the single family market, while multifamily construction remain elevated.

Michael R. Haack: As we move into our new fiscal year, even with the recent uptick in mortgage rates. There are positive signs for the single family residential market, while multifamily is likely to be a drag on the overall housing market.

Michael R. Haack: Because single family units are two to three times more wallboard intensive than multifamily units the industry could see a net increase in consumption is this dynamic does indeed materialize.

Michael R. Haack: Additionally, recent data suggests that the repair and remodel market could bottom out as we exit this calendar year, possibly further increasing demand on our light side. The supply-demand picture for the heavy side of our business is more clearly defined and is less sensitive to the uncertainties around interest rates. While volume in our heavy business was down in the fourth quarter of fiscal 2024, the underlying fundamentals in the sector remain positive.

Michael R. Haack: Additionally, recent data suggests that the repair and remodel market could bottom out as we exit this calendar year, possibly further increasing demand in our light side.

The supply demand picture for the heavy side of our business is more clearly defined and is less sensitive to the uncertainties around interest rates.

Michael R. Haack: While volume in our heavy business was down in the fourth quarter of fiscal 2024, the underlying fundamentals in the sector remain positive.

Michael R. Haack: We expect federal infrastructure spending to increase this year and into 2025, adding to already healthy public spending at the state and local level. Non-residential construction, while moderating somewhat, should also continue to grow as the unprecedented manufacturing construction cycle offsets some of the weaker pockets of non-residential spending. As mentioned earlier, residential construction is also showing signs of recovery, although much of the picture there will likely not become clear until the back half of calendar 2024 or early 2025. In the face of our nation's demand needs, adding meaningful capacity to the overall cement and wallboard industries will remain difficult, and we believe the constrained supply picture will not change meaningfully over the medium term.

Michael R. Haack: We expect federal infrastructure spending to increase this year and into 2025, adding to already healthy public spending at the state and local levels.

Michael R. Haack: Nonresidential construction, while moderating somewhat should also continue to grow as the unprecedented manufacturing construction cycle offset some of the weaker pockets of nonresidential spending.

Michael R. Haack: As mentioned earlier residential construction is also showing signs of recovery.

Michael R. Haack: Although much of the picture there will likely not be kind of unclear until the back half of calendar 'twenty 'twenty four and early 2025.

Michael R. Haack: In the face of our nation's demand needs, adding many full capacity to the overall cement and wallboard industries will remain difficult and we believe the constrained supply picture will not change meaningfully over the medium term.

Michael R. Haack: As we look to the year ahead, we remain optimistic about the mid-term demand profile for all of our businesses, and we believe all of our businesses will benefit from structural, long-term demand trends as well. Now let me spend a little time on capital allocation. As a reminder, our capital allocation priorities revolve around three main pillars, first growth through acquisitions and organically. Second, keeping our facilities in like-new condition. And third, returning cash to shareholders, primarily through stock repurchases.

Michael R. Haack: As we look to the year ahead, we remain optimistic about the midterm demand profile for all of our businesses and we believe all of our businesses will benefit from structural long term demand trends as well.

Michael R. Haack: Now, let me spend a little time on capital allocation.

Michael R. Haack: As a reminder, our capital allocation priorities revolve around three main pillars.

Michael R. Haack: First growth through acquisitions organically.

Second keeping our facilities in like new condition, and third returning cash to shareholders primarily through stock repurchases.

Michael R. Haack: Let me start off with our first priority of growth organically or through acquisition, where the growth meets our strict financial return criteria. This past quarter, we made two exciting announcements in this regard. First, the startup of the new slag grinding facility through our Texas Lehigh cement JV. Once fully operational later this summer, the facility will have an annual manufacturing capacity of 500,000 tons of slag.

Michael R. Haack: Let me start off with our first priority of growth organically or through acquisition.

Michael R. Haack: Where the growth meets our strict financial return criteria.

Michael R. Haack: This past quarter, we made two exciting announcements announcements in this regard.

Michael R. Haack: This is incremental to the manufacturing capacity of Texas Lehigh's Buda, Texas cement plant and our import terminal, and he's Slag cement will be crucial to meeting the needs of a fast-growing market like Texas, especially given the decreasing availability of other cementitious alternatives like fly ash. The facility is another step in transitioning our cement portfolio to less carbon-intensive blended products. The second organic growth investment is a $430 million project to modernize and expand our mountain cement plant in Laramie, Wyoming, and it includes an additional distribution facility in northern Colorado.

Michael R. Haack: First the startup of the new slag grinding facility through our Texas Lehigh cement JV.

Michael R. Haack: Once fully operational later this summer.

Michael R. Haack: The facility will have an annual manufacturing capacity of 500000 tons of flag. This.

Michael R. Haack: This is incremental to the manufacturing capacity of Texas, Lehigh, Utah, Texas cement plant.

Michael R. Haack: And our import terminal in Houston.

Michael R. Haack: Slag cement will be crucial to meeting the needs of the fast growing market like Texas, especially given the decreasing availability of other segment tissue alternatives like fly ash.

Michael R. Haack: Facility is another step in transitioning our cement portfolios to less carbon intensive blended products.

Michael R. Haack: The second organic growth investment is a 430 million dollar project to modernize and expand our mountains cement plant in Laramie, Wyoming and includes an additional distribution facility in northern Colorado.

Michael R. Haack: Our investment in mountain cement checks all the boxes of Eagle's strategy. It increases capacity by approximately 50% in a high-growth market. It lowers manufacturing costs by approximately 25%, enhancing our low-cost position, and it reduces the carbon intensity of that business by 20%. These growth investments, the new slag facility in Texas, the Laramie-Wyoming cement plant expansion, combined with the Stockton, California, cement terminal acquisition completed at the beginning of the year, meaningfully advanced our strategy and should generate high returns.

Michael R. Haack: Our investment in mountain cement checks all the boxes of Eagle's strategy. It increases capacity by approximately 50% and are a high growth market.

Michael R. Haack: It lowers manufacturing costs by approximately 25 per se enhancing our low cost position and reduces the carbon intensity of that business by 20%.

Michael R. Haack: These growth investments the new slag facility in Texas, The Laramie, Wyoming Smith plant expansion combined with Stockton, California cement terminal acquisition completed at the beginning of the year meaningfully advanced our strategy and should generate high returns.

Michael R. Haack: Moving on to our second pillar of keeping our assets in like-new condition, we were able to become more efficient, optimize our network, and be prepared for any down-cycle economic conditions by integrating our Battletown, Kentucky aggregates business, which we took full ownership of this year. Battletown extends our aggregate network at a site complementary to our existing cement footprint. Our operating efficiency investments also include our decades-old decisions to ensure our raw materials are next to our plants in an abundant reserve, helping us control our own raw material supply and lower transportation costs. We are also dedicated to ongoing targeted maintenance to keep the plants in like-new condition.

Michael R. Haack: Moving on to our second pillar of keeping our assets in like new condition.

Michael R. Haack: We were able to become more efficient optimize our network and be prepared for any down cycle economic conditions by integrating our battles have Kentucky aggregates business, which.

Michael R. Haack: Which we took full ownership of this year.

Michael R. Haack: Battle town extends our aggregate network as a complementary to our existing cement footprint.

Michael R. Haack: Our operating efficiency investments also include our decades old decisions to ensure our raw materials are next to our plants and an abundant reserve.

Michael R. Haack: Helping us.

Michael R. Haack: Control, our own raw material supply and lower transportation costs.

Michael R. Haack: We are also dedicated to ongoing targeted maintenance to keep the plants in like new condition.

Michael R. Haack: This leads me to the third pillar of capital management, returning excess cash flow to shareholders. Our consistent operational performance and financial discipline produce strong enterprise cash flows, putting us in an enviable position to return excess capital to shareholders, even as we capitalize on growth initiatives and invest in the sustainability of our businesses. This past fiscal year, we returned $343 million to shareholders through share repurchases and dividends. Over the last five years, our share buyback program has reduced the overall stock flow by nearly 30%.

Michael R. Haack: This leads me to the third pillar of capital management, returning excess cash flow to shareholders.

Michael R. Haack: Our consistent operational performance and financial discipline produced strong enterprise cash flows putting us in an enviable position of returning excess capital to shareholders, even as we capitalize on growth initiatives and invest in the sustainability of our business.

Michael R. Haack: This past fiscal year, we returned $343 million to shareholders through share repurchases and dividends over.

Michael R. Haack: Over the last five years, our share buyback program has reduced the overall stock quote by nearly 30%.

Michael R. Haack: Our balance sheet is healthy, with our net leverage ratio staying at 1.3 times, giving us substantial financial flexibility to execute our disciplined capital allocation strategy in varying market conditions. With that, I'll turn it over to Craig for more comments.

Our balance sheet is healthy with our net leverage ratio staying at 1.3 times, giving us substantial financial flexibility to execute our disciplined capital allocation strategy in varying market conditions.

Craig Kesler: With that I'll turn it over to Craig for more comments.

Craig Kessler: Michael, fiscal year 2024 revenue was a record $2.3 billion, up 5% from the prior year. The increase primarily reflects higher cement sales prices and a contribution from the Stockton Import Terminal we acquired in our first fiscal quarter, partially offset by lower wall board sales volume. Excluding the contribution from the Stockton Import Terminal, revenue was up 3%.

Craig Kesler: Thank you Michael.

Craig Kesler: Fiscal year 2044 revenue was a record $2 3 billion.

Craig Kesler: Up 5% from the prior year.

Craig Kesler: The increase primarily reflects higher cement sales prices and contribution from the Stockton import terminal we acquired in our first fiscal quarter.

Craig Kesler: Partially offset by lower wallboard sales volume.

Craig Kesler: Excluding the contribution from the Stockton import terminal revenue was up 3%.

Craig Kessler: As Michael mentioned, underlying fundamentals remain strong across our businesses, which supported our price increases, drove margin expansion, and ultimately helped us achieve record annual EPS. Revenue for the fourth quarter was up 1% to $477 million, primarily reflecting increased cement sales prices. Diluted earnings per share for the full fiscal year increased 9% to $13.61. In addition to margin expansion, the increase reflects a reduced share count resulting from our share repurchase program. Fully diluted shares are down 5% from the prior year and are down nearly 30% in the last five.

Craig Kesler: As Michael mentioned underlying fundamentals remained strong across our businesses, which supported our price increases drove margin expansion and ultimately helps us achieve record annual EPS.

Craig Kesler: Revenue for the fourth quarter was up 1% to $477 million, primarily reflecting increased cement sales prices.

Craig Kesler: Diluted earnings per share for the full fiscal year increased 9% to $13.61.

Craig Kesler: In addition to margin expansion the increase reflects the reduced share count, resulting from our share repurchase program.

Craig Kesler: Fully diluted shares are down 5% from the prior year and are down nearly 30% in the last five.

Craig Kessler: Fourth quarter EPS was down 20%, largely because of heavy materials results in the quarter when the cement and concrete and aggregate businesses were affected by adverse weather conditions and increased maintenance costs in the cement business. Turning now to segment performance, we highlight the next slide.

Craig Kesler: Fourth quarter, EPS was down 20% largely because of heavy materials results in the quarter, when the cement and concrete and aggregates businesses were affected by adverse weather conditions and increased maintenance costs in the cement business.

Craig Kesler: Turning now to segment performance highlight over the next slide.

Craig Kessler: In our heavy materials sector, which includes our cement, concrete, and aggregate segments, annual revenue increased 12% to $1.5 billion. The increase reflects higher cement sales prices and the contribution from the Stockton Import Terminal. As Michael mentioned, we face adverse weather conditions during the fourth quarter across most of our markets, including the coldest January in 17 years in Austin with record rainfall, and an extreme cold snap in Kansas City during January that caused disruption not only to sales but also to operations.

Craig Kesler: In our heavy materials sector, which includes our cement and concrete and aggregates segment's annual revenue increased 12% to $1 5 billion.

Craig Kesler: The increase reflects higher cement sales prices and the contribution from the Stockton import terminal.

Craig Kesler: As Michael mentioned, we faced adverse weather conditions during the fourth quarter across most of our markets.

Craig Kesler: Including the coldest January in 17 years in Austin with record rainfall in.

Craig Kesler: In an extreme cold snap in Kansas City during January that caused disruption not only to sales, but also to operations.

Craig Kessler: We estimate the impact on earnings from lower sales volume due to weather delays was $3-4 million. The operational impact from equipment downtime was another three to four million dollars. And an increased maintenance cost was approximately $7 million.

Craig Kesler: We estimate the impact on earnings from lower sales volumes due to weather delays was $3 million to $4 million.

Craig Kesler: The operational impact from equipment downtime to be another $3 million to $4 million.

Craig Kesler: It increased maintenance cost was approximately $7 million.

Craig Kessler: One last comment on the weather is that the impact was also felt in our concrete businesses, which we largely operate in the same market as our cement plants. Annual operating earnings increased 18% to $351 million, again reflecting higher cement prices partially offset by our operating costs. Our fourth quarter cement price was up 5% as a result of price increases we implemented in January. Moving to our light materials sector on the next slide.

Craig Kesler: One last comment on the weather is the impact was also felt in our concrete businesses, which we largely operate in the same markets as our cement plants.

Craig Kesler: Annual operating earnings increased 18% to $351 million again, reflecting higher cement prices, partially offset by higher operating costs.

Craig Kesler: Our fourth quarter cement price was up 5% as a result of price increases we implemented in January.

Craig Kesler: Flipping to a light materials sector on the next slide.

Craig Kessler: Annual revenue in our light materials sector declined 4% to $941 million, reflecting lower Walmart sales volume. Annual operating earnings declined 3% to $366 million, also because of lower wallboard sales volume, partially offset by record paperboard shipments and lower recycled fiber costs. In the fourth quarter, industry wallboard shipments increased for the first time in five quarters. In response to the favorable outlook for residential construction, we implemented a price increase during the fourth quarter, the full effect of which is not completely reflected in our quarterly average wallboard price.

Craig Kesler: Annual revenue in our light materials sector declined 4% to $941 million, reflecting lower wallboard sales volume and you.

Craig Kesler: Operating earnings declined 3% to $366 million also because of lower wallboard sales volume, partially offset by record record paperboard shipments and lower recycled fiber costs.

Craig Kesler: In the fourth quarter industry wallboard shipments increased for the first time in five quarters in response to the favorable outlook for residential construction, we implemented a wallboard price or price increase during the fourth quarter. The full effect of which is not completely reflected on our quarterly average wallboard price.

Craig Kessler: Looking now at our cash flow, we continue to generate very strong cash flow and allocate capital in a disciplined way throughout fiscal 2024. Operating cash flow is up 4% year-over-year to $564 million, and capital spending increased to $120 million as we continue to invest in and improve our operations. During the year, we also acquired the Stockton Cement Import Terminal for approximately $55 million. We paid $35 million in dividends and repurchased approximately 1.9 million shares of our common stock, or 5% of the outstanding, for $343 million, returning a total of $378 million to shareholders over the course of the year.

Craig Kesler: Looking now at our cash flow.

Craig Kesler: We continue to generate very strong cash flow and allocate capital in a disciplined way throughout fiscal 2024.

Craig Kesler: Operating cash flow was up 4% year over year to $564 million cap.

Craig Kesler: Capital spending increased to $120 million as we continue to invest in and improve our operations.

Craig Kesler: During the year, we also acquired the Stockton cement import terminal for approximately $55 million.

Craig Kesler: We paid $35 million in dividends and repurchased approximately one 9 million shares of our common stock or 5% of the outstanding for $343 million.

Craig Kesler: Returning a total of $378 million to shareholders over the course of the year.

Craig Kesler: We have $5 9 million shares remaining under the current repurchase authorization.

Craig Kessler: We have 5.9 million shares remaining under the current repurchase authorization. As we announced last week and Michael discussed earlier, we are investing $430 million to modernize and expand our mountain cement plant, which serves the growing northern Colorado market. The plant will be upgraded from the existing two long dry kilns to a single modern pre-calciner kiln line, which will significantly improve energy efficiency and simplify maintenance programs.

Craig Kesler: As we announced last week and Michael discussed earlier, we are investing $430 million to modernize and expand our mountain cement plant with.

Craig Kesler: It serves the growing northern Colorado market.

Craig Kesler: The plant will be upgraded from the existing too long dry kilns to a single modern pre calciner kiln line, which will significantly improve energy efficiency and simplify maintenance programs.

Craig Kessler: The existing plant will continue to operate until construction is complete in the latter half of calendar 2026. Construction is expected to begin this summer, and as a result, we expect total company capital spending in fiscal 2025 to increase to a range of $310 to $340 million. Finally, a look at our capital structure. At March 31st, 2024, our net debt to equity ratio was 45%, and our net debt to EBITDA leverage ratio was 1.3 times.

The existing plant will continue to operate until construction is complete in the latter half of calendar 2026 <unk>.

Craig Kesler: Construction is expected to begin this summer and as a result, we expect total company capital spending in fiscal 2025 to increase to a range of $310 million to $340 million.

Craig Kesler: Finally, a look at our capital structure.

Craig Kesler: At March 31, 2024, our net debt to cap ratio was 45% and our net debt to EBITDA leverage ratio was one three times.

Craig Kessler: We ended the year with $35 million of cash on hand. The total liquidity at the end of the fiscal year was approximately $607 million. And we have no meaningful near-term debt maturity, giving us substantial financial flexibility.

Craig Kesler: We ended the year with $35 million of cash on hand, and total liquidity at the end of the fiscal year was approximately $607 million.

Craig Kesler: And we have no meaningful near term debt maturities, giving us substantial financial flexibility.

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

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

Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. To join the question queue, you may press star and then one using a touch-tone telephone. (Inaudible) Part and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Ladies and gentlemen at this time well begin that question and answer session to join the question queue. You May Press Star and then one using a touchtone telephone.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: And two if he.

You are using a speakerphone please pick up the handset prior to pressing the keys to ensure the best sound quality.

Trey Grooms: Once again, that is the star and then one to join the question. Our first question today comes from Trey Grooms from Stevens. Please go ahead with your question.

Speaker Change: Once again that is star one to join the question queue.

Speaker Change: Our first question today comes from shrinking rooms from Stephens. Please go ahead with your question.

Craig Kessler: Hey, good morning, everyone. Craig, you mentioned several things on the concrete side, some maintenance, and a few other things you called out there. And, you know, I'm sure the lower organic volume didn't help. Clearly, it's a seasonally slower quarter as well. So you know, that can amplify things. But it sounds like a lot of these things are transitory. You know, and if I did my math right, I think the margin would have been closer to 22.4, which would have been up about 300 basis points.

Speaker Change: Hey, good morning, everyone.

Speaker Change: Craig you mentioned.

Speaker Change: Several things on the cement side some maintenance on a few other things you called out there.

Speaker Change: I'm sure the the lower organic volume didn't help.

Speaker Change: Clearly, it's a seasonally slower quarter as well so you know that can amplify things, but it.

Speaker Change: It sounds like a lot of these things are transitory.

Speaker Change: You know and if I did my math right I think.

Speaker Change: The margin would've been closer to 22.4 kind of range, which would have been up about 300 basis points or is that am I on the neighborhood with that and I guess also is as you kind of look at those things you called out or any of those going to be kind of a trickling into the the <unk> or anything like that.

Craig Kessler: Am I in the neighborhood with that? And I guess also, as you kind of look at those things you called out, are any of those going to be kind of trickling into the 1Q or anything like that?

Craig Kessler: Yeah, no, I think you're on the right path, Trey. You know, look, January, I think it's been pretty well chronicled, especially in this industry, the difficult weather conditions we faced in January, even a little bit into early February, really impacted, you know, demand from a timing perspective. The nice thing about weather is the projects are still there, they just get delayed, and that's what we saw during the quarter. And as Michael mentioned, when you're dealing with that type of weather and already what's a slower seasonal period, we took the opportunity to go out and perform some maintenance that we haven't had the chance to do for many years as these facilities have been running at full steam. So, you know, take the opportunity, as I mentioned.

Speaker Change: Yes.

Speaker Change: Yeah, No I think you're on the right path Trey.

Craig Kessler: And then you even had some of the weather that, frankly, impacted the facilities and their ability to operate. We had some frozen fuel bins. We had some frozen raw material bins that caused downtime at the plant. So it's not just the sales volume impact; there's actually an operational impact as well. You know, the $3 million to $4 million in sales volume is similar to what we then had in terms of some operational downtime.

Speaker Change: January I think it's been pretty well chronicled, especially in this industry the.

Craig Kessler: And then, you know, we highlighted specifically the $7 million in maintenance costs. You know, look, the maintenance costs are kind of focused on the quarter and contained in the quarter. You know, I will point out that we still have seen some rain here in April and May across most parts of the country. Again, it just pushes out the projects, but I still feel really good about where the demand picture is for the heavy side. As we look forward, customers continue to tell us they expect to be very, very busy this year and into the next several years.

Speaker Change: Difficult weather conditions, we faced in January even a little bit into early February.

Speaker Change: You know really impacted.

Speaker Change: Demand from a timing perspective, the nice thing about weather as the projects are still there. They just get delayed and that's what we saw during the quarter and as Michael mentioned, when youre dealing with that type of weather and already with a slower seasonal period, we took the opportunity to go out and perform.

So maintenance so we haven't had the chance to for many years as these facilities have been running at full steam.

Speaker Change: So you take the opportunity as I mentioned.

Speaker Change: And then you even had some of the weather that frankly impacted the facilities and their ability to operate we had some frozen fuel bins, we had some frozen raw material bins that caused downtime at the plants. So it's not just the sales volume impact there there was actually an operational impact of those $3 million to $4 million on the sales.

Speaker Change: <unk> is similar to what we then had in terms of some operational downtime.

Speaker Change: Then we highlighted specifically the $7 million in maintenance costs.

Speaker Change: The maintenance costs are kind of the.

Speaker Change: Focused on the quarter and contained in the quarter.

Speaker Change: I will point out we still are seeing some rain here in April and may across most parts of the country again, it just pushes out the projects, but still feel really good about where the demand picture is for for the heavy side as we as we look forward.

Speaker Change: Customers continue to tell us they expect to be very very busy this year and then into the next several years.

Trey Grooms: Okay. Thanks for that.

Speaker Change: Okay.

Speaker Change: Thanks for that and then kind of sticking with the cement margin here Bill.

Craig Kessler: And then kind of sticking with the cement margin here. Yeah, I believe you guys are expecting some energy costs to kind of ease some in the cement business here for fiscal 25. Is that still the case? And, you know, I would guess that with any, you know, additional price realization in April, we should probably be looking for a rebound in the cement margins to some degree in fiscal 1Q, assuming weather doesn't just completely derail it. Yeah,

Speaker Change: Believe you guys are expecting.

Speaker Change: Some energy cost to kind of ease some.

In the cement business here for fiscal 'twenty five is that still the case and I would've guessed that with any additional price realization in April we should be probably looking for a rebound in the cement margins to some degree in fiscal <unk>, assuming weather does.

Speaker Change: It was completely derail it.

Craig Kessler: Yeah, you know, look, as I always say, you've got to look at the cement business on a trailing 12-month basis, and I know you know this. The June quarter is when we perform the majority of our kiln maintenance, so the June quarter is always our lowest-margin quarter for the year. But as you said, looking out over the broader year for fiscal 25, we've got some benefits on the energy side, more specifically in the solid fuels, that should help margins, and as we remain at full utilization in these price increases, we would expect to see margin improvement as we move forward.

Speaker Change: Yeah look.

Speaker Change: As always say you got to look at the cement business on a trailing 12 month basis and I know you know this the June quarters, when we perform the majority of our kiln maintenance so the.

Speaker Change: The June quarter is always our lowest margin quarter for the year, but as you as you said you look out over the broader year for fiscal 'twenty five we've got some benefits on the energy side more specifically in the solid fuels that should help margins.

Speaker Change: And as a as we remain at full utilization in these price increases.

We would expect to see margin improvement as we move forward.

Trey Grooms: Okay, thanks for that, Craig. I'll pass it on, and best of luck.

Speaker Change: Okay. Thanks for that Greg I'll I'll pass it on and best of luck.

Speaker Change: Okay.

Stanley Stoker Elliott: Our next question comes from Stanley Elliott from Spiegel. Please go ahead with your question.

Speaker Change: Our next question comes from Stanley Elliott from Stifel. Please go ahead with your question.

Stanley Stoker Elliott: Hey, good morning Michael, Craig, and Alex. Thank you guys for the question.

Speaker Change: Hey, Good morning, Michael Craig and Alex. Thank you guys for the question.

Craig Kessler: I guess you could talk a little bit more about the Laramie expansion. Very interesting, I think, and interesting timing, too. Should we read into it? One, I guess that the M&A markets may be what we're...

Stanley Stoker Elliott: What I guess, if you could talk a little bit more about the Laramie expansion very I think interesting an interesting time in Q U should we read into it one I guess at the M&A markets, maybe what we're.

Stanley Stoker Elliott: A little too frothy compared to what you all were looking at or is it just more kind of confidence and an opportunity set you saw in the salt Lake in the Denver market.

Craig Kessler: Yeah, Stanley, great question, and really, there's two parts to that. One is the project itself. Look, it's an older facility. I mentioned it operates two long dry kilns, which are a little older technology. We'll be modernizing that to a pre-calciner single kiln line for the cement head, and that's important in that it reduces the energy consumption significantly, making it much more energy efficient, and simplifies the maintenance programs. You go two kilns down to one, more modern technology, so, you know, and it's in a growing market, right?

Speaker Change: Yeah great.

Speaker Change: Great question, and really Theres two parts to that one is the projects itself if.

Speaker Change: If you look at it's an older facility I mentioned it operates two long dry kilns, which are little older technology.

Speaker Change: We'll be modernizing that to a pre calciner single kiln line.

Speaker Change: For the <unk>, that's important and that is it reduces the energy consumption significantly.

Speaker Change: Much more energy efficient.

Speaker Change: And simplifies the maintenance programs you go to <unk> down to one more monitor technology, so and instead of growing market right. So while the plant sits in Laramie, Wyoming its primary markets as is south to Denver.

Craig Kessler: So while the plant sits in Laramie, Wyoming, its primary market is south of Denver, and we've got some advantages in that market in terms of terminals that exist and terminals that we will be building, which are all included in that capital cost. And that market remains constrained, supply constrained, especially given its location in the middle of the country.

Speaker Change: And we've got some advantages into that market in terms of terminals that exist and terminals that we will be building, which are all included in that capital cost.

Speaker Change: And that market remains constrained supply constrained, especially given its location in the middle of the country. So that project ended up itself. It reminds me very much of a project we completed years ago at our Illinois cement facility when we modernize that facility, it's very low cost today.

Craig Kessler: So that project, in and of itself, it reminds me very much of a project we completed years ago at our Illinois Cement Facility when we modernized that facility. It's very low cost today, very similar margin profile with these two facilities. And that Illinois Cement modernization had a high, high return, more than met our internal hurling rates. And that's what this project is about.

Speaker Change: Very similar margin profile with these two facilities in Illinois cement modernization had a high high return more than met our internal hurdle rates.

Speaker Change: And that's what this project is about.

Stanley Stoker Elliott: Your other question, more broadly about capital allocation, we're very fortunate that we've positioned the balance sheet at below one and a half times. We have good free cash flow. And so we've really positioned ourselves that while this is an important project, the mountain cement expansion, and relatively large dollars, that does not preclude us from continuing to invest in inorganic or M&A opportunities that may come around. And frankly, if that doesn't happen, continuing our share repurchase program. So I just think this is just one more opportunity to invest, and we still have the ability to invest in other ways as well.

Speaker Change: Your other question more broadly about capital allocation, we're very fortunate that we've positioned the balance sheet.

Speaker Change: At below one five times, we have good free cash flow and.

Speaker Change: And so we've really positioned ourselves that while this is an important project are the mountain cement expansion in relatively large dollars that does not preclude us from continuing to invest in inorganic or M&A opportunities that may come around and.

Speaker Change: And frankly, if that doesn't happen continuation of our share repurchase program. So I. Just think this is just one more opportunity to invest in and we still have the ability to invest in other ways as well.

Stanley Stoker Elliott: Perfect, thanks. That's a great color.

Speaker Change: Perfect. Thanks, that's great color I guess, just one on the on the Wallboard you mentioned some of the pricing kind of not fully realized could you help us maybe what the exit rate on the wallboard pricing or where do we think that the pricing would be.

Craig Kessler: I guess just one on the wall board. You mentioned some of the pricing kind of not fully realized. Could you help us maybe with the exit rate on that wall board pricing or where we think the price would be?

Speaker Change: Yeah, our price was up about $5 sequentially in the quarter.

Speaker Change: As you saw from December to March and there was about another $5 that wasn't in the quarterly average.

Craig Kessler: Yeah, our price was up about $5 sequentially in the quarter, as you saw from December to March. And there's about another $5 that wasn't in the quarterly average that still has yet to flow through.

Speaker Change: That still has yet to flow through.

Stanley Stoker Elliott: Perfect, that's it for me guys, thanks so much, and best of luck to you

Speaker Change: Perfect. That's it for me guys. Thanks, so much best of luck.

Brent Edward Thielman: Our next question comes from Brent Thielman from D.A. Davidson. Please go ahead with your question.

Speaker Change: Our next question comes from Brent Thielman from D. A Davidson. Please go ahead with your question.

Brent Edward Thielman: Hey, thanks. Hey, Craig, just as a follow-up to a previous question, it wasn't quite clear to me, did you essentially pull forward most or all of that cement maintenance from June to the March quarter?

Speaker Change: Hey, Thanks, Hey, Craig.

Brent Edward Thielman: As a follow up to previous question. It wasn't quite clear to me did you essentially pulled forward most or all of that maintenance from June through the March quarter.

Craig Kessler: Yes, some of it certainly is that, but I'll tell you, and I think Michael said it well, these plants have been running at full utilization for several years now, as we've discussed. And so some of this is maintenance that you just haven't had the time to perform over the last couple of years, and you finally had the opportunity to do this quarter. So I don't know that I would necessarily say it's pulling forward as much as it was the opportunity presented itself.

Speaker Change: Yes, some of it certainly is that but I'll tell you and I think Michael said it well.

Speaker Change: These plants have been running at full utilization for several years now.

Speaker Change: As we've discussed and so some of this is maintenance that you just haven't had the time to perform over the last couple of years.

Speaker Change: You finally have the opportunity to this quarter. So I don't know that I would necessarily say, it's pulling forward as much as it was the opportunity presented itself.

Craig Kessler: And it pulled it forward in the sense that you were going to have to do it eventually, whether that was in fiscal 25 or fiscal 26. It was, at some point, needed to be done, and we took the opportunity.

Speaker Change: And it it pulled it forward in the sense that you were going to have to do it eventually whether that was in fiscal 'twenty five or a physical 26. It was some point needed to be done and we took the opportunity.

Craig Kessler: Okay, and Craig, at Texas Lehigh, I think you have some ongoing repairs and plans around that facility. Could you just update us on that? Maybe any sort of cadence we should expect that might create some downtime at that plant in particular this year?

Speaker Change: Okay, and Craig at Texas, Lehigh I think you had some ongoing repairs and plans around that facility could you just update us on that.

Speaker Change: Maybe any sort of cadence we should expect.

Speaker Change: Might create some downtime at that plant in particular through this year.

Craig Kessler: Yeah, yeah. We've mentioned we've got a couple of larger projects. You know, they're largely slated for this fall. They'll go through their normal maintenance program here in the June quarter, and then they'll have some additional downtime in the fall. We'll dimensionalize that for everyone.

Speaker Change: Yeah, Yeah, we've mentioned, we've got a couple of larger projects.

Speaker Change: They are largely slated for this fall.

Speaker Change: They'll go through their normal maintenance program here in the June quarter, and then they'll they'll have some more additional downtime in the fall we will dimensionalize that for everyone.

Craig Kessler: But I'm glad you mentioned the joint venture. You know, Michael mentioned that the other organic investment that we announced during the quarter was a slag cement facility down in Houston. It will be right on the ship channel.

Speaker Change: But I'm glad you mentioned the joint venture.

Speaker Change: Michael mentioned that the other organic investments that we announced during the quarter was a slag cement facility down in Houston It.

Speaker Change: It will be right there in the ship channel and Thats, an incremental 500000 tons of semi tissue product that that will be able to sell above and beyond the cement manufacturing footprint that is in the joint venture. So we pick up half of that opportunity, but good investment we are carrying some costs.

Craig Kessler: And that's an incremental 500,000 tons of cementitious product that we'll be able to sell above and beyond the cement manufacturing footprint. That is in the joint venture, so we pick up half of that opportunity. But a good investment. We are carrying some costs associated with the startup of that facility. Call it, you know, $700,000 to $800,000 in the quarter of incremental costs for that facility and as we're staffing that facility up. But that's an exciting opportunity for us later this summer.

Speaker Change: Associated with startup of that facility.

Speaker Change: Seven to $800000 in the quarter of incremental costs for for that facility and as we are staffing that facility up but that's an exciting opportunity for US later this summer.

Brent Edward Thielman: Okay, just one more quick one. I appreciate all the color on the investment at the facility in Wyoming. Is it fair to say that you're evaluating sorts of similar capacity improvement or opportunities across the broader portfolio? Or was this one somewhat unique? Does it stand out relative to what you might be looking at relative to the other facilities? Just a curious kind of how you're thinking about the broader portfolio. No, it's a great question, and I appreciate the question because

Speaker Change: Okay, just one more quick one I appreciate all the color on the investment.

Speaker Change: Facility in Wyoming is it is it fair to say that you're evaluating sort of a similar.

Speaker Change: It has to be improvement or opportunities across the broader portfolio was there as well.

Speaker Change: One somewhat unique as it stand out.

Speaker Change: You can do what you might be looking at relative to the other facilities.

Speaker Change: Just curious kind of how you're thinking about the broader portfolio here.

Craig Kessler: It's a great question, and I appreciate the question because when we look at our network of cement plants across the nation, we look at every single facility and what value those facilities bring, and the age of those facilities, and the maintenance cost of those facilities. While we chose Mountain to upgrade on this one, we do a strategic analysis on every single one of the facilities and what value that brings to the company. This is the one that we've chosen to do, and there may be others if they meet our financial return criteria.

It's a great question and I appreciate the question because you know when we look at our our network of cement plants across the nation. We look at every single every single facility and what value those facilities bring in the age of those facilities.

Speaker Change: Maintenance costs those facilities.

Speaker Change: So you know.

Speaker Change: While we chose a mountain to upgrade on this one we do a strategic analysis on every single one of the facilities.

Speaker Change: And what value that brings to the company.

So this this is the.

Speaker Change: One that we've chosen to do and there may be others, if they meet our financial return criteria.

Speaker Change: Excellent. Thank you.

Anthony James Pettinari: Our next question comes from Anthony Pettinari from Citi. Please go ahead with your question.

Speaker Change: Our next question comes from Anthony Pettinari from Citi. Please go ahead with your question.

Hi, good morning.

Anthony James Pettinari: Hey, I think you said that CapEx for the year would be $310 to $340, and if Laramie costs $430, I'm just wondering if you could help us understand kind of the phasing in of CapEx through 25 and maybe 26 and kind of breaking out sort of maintenance CapEx versus Laramie versus maybe sort of other growth projects.

Anthony James Pettinari: Hey, I think you said that the capex for the year would be $3 10 to $3 40 and.

Anthony James Pettinari: Laramie cost 430, I'm just wondering if you could help us understand kind of the phasing in of Capex.

Anthony James Pettinari: Through 'twenty, five and maybe 26 and kind of breaking out sort of maintenance capex versus laramie versus maybe sort of other growth projects.

Craig Kessler: Yeah, Anthony, so for the Mountain Cement Project, the $430 million phases in over Fiscal 25, 26, and into Fiscal 27, as we expect the project to complete late in 2026. So you're talking about about $150 million for that project in Fiscal 25, which is what we budgeted. A little more than that in Fiscal 26 and then the remainder, you know, in fiscal 27, so you'll be, by that point, below $100 million for that project. So when you start to do the math, that puts kind of the sustaining capital back closer to that $150, $160 million range, which is about typical.

Speaker Change: Entity, so for the mountain cement project, the $430 million of phases in over fiscal 'twenty five 'twenty six and are in the fifth.

Speaker Change: 27, as we expect the project to complete late in 2026, so you're talking about about $150 million for that project in fiscal 'twenty five is what we budgeted.

More than that in fiscal 'twenty, six and then the remainder.

Speaker Change: In fiscal 2007, so youll be by that point below $100 million for that project.

Speaker Change: So what you start to do the math that puts kind of kind of sustaining capital back closer to that 150 $160 million range, which which is about typical it's a little higher because we've got some projects we've announced a couple of times now sort of alternative fuel projects at three of our facilities.

Craig Kessler: It's a little higher because we've got some projects we've announced a couple of times now, alternative fuel projects at three of our facilities. Those are underway. We're upgrading finished mill capacity at one of our facilities to facilitate full production of PLC. So there are a couple of those projects, some other energy and cost-saving projects, one large one at our paper mill. So we've got some good projects underway in addition to the mountain cement expansion.

Speaker Change: Those are underway, we're upgrading finished mill capacity at one of our facilities to facilitate full production of plc.

Speaker Change: So there are a couple of those projects some other energy and cost saving projects.

Speaker Change: One large one at our paper mill.

Speaker Change: So we've got some good good projects underway. In addition to the mountains led expansion.

Anthony James Pettinari: Got it, got it. And then, you know, thinking about fiscal 25 and cement volumes, I guess volumes in the fourth quarter were down 3%, XM&A on the weather. How should we think about cement volumes for the fiscal year, or the upcoming, or this current fiscal year? Is it maybe flat year over year, not including the slag facility, or there's some other sort of puts and takes that we should be thinking about as we kind of model out the full year?

Speaker Change: Got it got it and then you know thinking about fiscal 'twenty, five and cement volumes I guess volumes in the fourth quarter were down 3%.

Speaker Change: Ex M&A on the weather, how should we think about cement volumes for the for the fiscal year is or the upcoming for this current fiscal year or is it maybe flat year over year, not including the slag facility or theres. Some other or some other sort of puts and takes that we should be thinking about.

As we kind of model off the full year.

Craig Kessler: Yeah, you know, as I mentioned, Anthony, certainly April and May have seen some, again, some wet weather that's impacted the start of the construction season. So I do think you can see volume growth. But I do think that will be in the second half of the year rather than the first half, just given how the first month or so has started.

Speaker Change: Yeah, as I mentioned Anthony.

Speaker Change: Certainly April and May for most parts of the country is seeing some again some wet weather that's impacted the start of the construction season. So I do think you can see volume growth I do think that will be in the second more in the second half of the year than the first half.

Speaker Change: Just given how the first month or so has started but.

Craig Kessler: Again, feel good about Fiscal 25 volumes, and as you head into Fiscal 26 and 27, I know the PCA came out with their forecasted estimates here recently, and they've continued to see growth in the out years. You know, Anthony, the one last comment I would make on this, you know, lots of data points. When you look at, let's say, for example, housing starts that came out last week, if you take one step down into those numbers, you'll see really good growth in our primary markets.

Speaker Change: Again feel good about fiscal 'twenty five volumes and as you head into fiscal 'twenty six 'twenty seven although the PCA came out with their forecasted estimates here recently.

Speaker Change: They've continued to see growth in the out years.

The one last comment I would make on this.

Speaker Change: Lots of data points. When you look at let's say for example housing starts that came out last week. If you take one step down into those numbers Youll see really good growth in our primary markets.

Craig Kessler: You know, so when you look at the South and the Midwest, where, you know, our facilities, both Wal-Mart and Cement are generally located, we saw really good growth in housing, single-family housing starts in those markets. The Northeast, you know, was down significantly, and that's just not a market that we really participate in. So it is also geographically, we've said many times, we think we're well-positioned, and that continues to play out in the data.

Speaker Change: So when you look at the South do you look at the Midwest, where our facilities both wallboard and cement are generally located we saw really good growth in housing single family housing starts in those markets the northeast.

Speaker Change: Down down significantly and that's just not a market that we really participate in so it is also geographically we've said many times, we think we're well positioned and that continues to play out in the data.

Anthony James Pettinari: Okay, that's very helpful. I'll turn it over.

Speaker Change: Okay. That's very helpful I'll turn it over.

Jerry David Revich: Our next question comes from Jerry Rebich from Goldman Sachs. Please go ahead with your question.

Speaker Change: Our next question comes from Jerry Revich Goldman Sachs. Please go ahead with your question.

Jerry David Revich: Yes, hi. Good morning, everyone.

Jerry Revich: Yes, hi, good morning, everyone.

Jerry David Revich: In cement, even with the impact that you folks spoke about in the March quarter, profit per ton was up over 20 percent for the full year, compared to 12 percent for the prior year. I'm wondering, how are you thinking about the potential for double-digit profit per ton growth this fiscal year? You've got, I think, tailwinds from lower energy input costs based on contract timing. I'm wondering if you could just weigh in on the potential for another double-digit profit per ton growth year in cement.

Speaker Change: Sure.

Speaker Change: Yeah, Hi.

Speaker Change: And so even with.

Speaker Change: No impact.

Speaker Change: Luke spoke to in the March quarter, you know for the full year profit per ton was up over 20%. Prior year was up 12% I'm wondering how are you thinking about the potential for double digit yeah.

Speaker Change: Profit per ton growth. This fiscal year, you you've got I think tailwind from lower energy input cost based on contract timing I'm wondering if you just weigh on that.

Speaker Change: It takes a potential for another.

Speaker Change: Double digits.

Speaker Change: Profit per ton growth year in cement.

Craig Kessler: Yeah, Jerry, you point out the right way to look at the business. As I mentioned, you've really got to look at a business that has seasonal impacts on a trailing 12-month basis, and it's easy to do for the annual period.

Speaker Change: Yeah, Jerry you pointed out the right way to look at the business as I mentioned, you've really got to look at a business that is seasonal impacts on a on a trailing 12 month basis and it's easy to do for the annual period, but are very happy with the margin expansion that we've seen over the last several years in the face of some pretty significant.

Craig Kessler: But I'm very happy with the margin expansion that we've seen over the last several years in the face of some pretty significant inflation headwinds around energy. And as we've talked, those headwinds have turned around, especially on solid fuels. And that should be a benefit to the margins, and we've continued to see some price appreciation here. So all in all, we expect margins to continue to expand in the cement business. And I think it's very well positioned.

Speaker Change: <unk> headwinds around energy.

Speaker Change: As we've talked those headwinds of turnaround, especially on the solid fuels.

Speaker Change: And.

Speaker Change: That should be a benefit to the margins and then we've continued to see some price appreciation here. So all in all we expect margins to continue to expand in the cement business.

Speaker Change: And I think it's very well positioned.

Craig Kessler: And then in terms of the alternative fuel upgrade projects and the expansion projects, you know, as you look at your footprint today, you know, how big is the dispersion in margins between your most efficient plants and your least efficient plants after these projects? How much does that gap narrow as you look at your portfolio?

Speaker Change: Right.

Speaker Change: And then in terms of the alter.

Speaker Change: Alternative fuel upgrade projects.

Speaker Change: Expansion projects.

Speaker Change: Look at.

Your footprint today, how big is the dispersion in margins between your most efficient plants in Europe.

Speaker Change: Least efficient plants post these projects.

Speaker Change: How much does that gap.

Speaker Change: Narrow as you look at your portfolio.

Craig Kessler: Yeah, you know, it's interesting, Jerry. On a margin basis, the separation isn't as dramatic as you might think. The difference is that where those higher-cost plants sit is normally a little higher price market given where they're located. And so, in this case, we're taking the Mount Cement facility, which is an older technology, and modernizing it. And so that's where a lot, you know, we think we can continue to improve their margins or that plant's margins by lowering the costs of that, of the operation. And, you know, that's what the biggest opportunity is for that project.

Speaker Change: Yes, it's interesting Jerry.

Speaker Change: On a margin basis, the separation isn't as dramatic as you might say the differences where those higher cost plants that are normally a little higher margin or higher priced markets given where they are located.

And so in this case, we're taking in the mountain cement facility, which is an older technology and modernizing it and.

Speaker Change: So that's where we think we can continue to improve their margins or that plant's margins by.

Speaker Change: By lowering the costs of that.

Speaker Change: All of the operations.

Speaker Change: That's that's what the biggest opportunity is for that project.

Jerry David Revich: And lastly, you know, it's been a really strong track record for you folks in cement profit over the past 10 years. You know, even before COVID, you folks were getting really good unit profitability growth. I'm wondering, looking at the market, what aspects of it would you say have driven the really strong performance that's really been a big uptick versus, you know, the pre-financial crisis? How much of that is rising transportation costs versus other factors? What do you think about the sustainability of this level of unit profitability growth in cement?

Speaker Change: Great.

And lastly, you know it's been.

Speaker Change: A really strong track record for you folks in cement profitable growth over the past 10 years, you know even before Covid you folks were getting really good.

Speaker Change: Unit profitability growth I'm wondering looking at the market what aspects of it.

Speaker Change: Would you say you have driven the really strong performance, that's really been a big uptick versus.

Speaker Change: The pre financial crisis, how much of that is.

Speaker Change: Why is your transportation costs versus other factors.

Speaker Change: How do you think about the sustainability of this level of unit profitability growth in cement.

Craig Kessler: Yeah, you know, look, we've acquired a significant amount of capacity, so four or five plants if you include the slag facility we acquired back in 2015, but we've acquired a couple of cement plants here recently. And you've heard us say many times, and I'd love to tell you it's one or two things.

Speaker Change: Yeah.

Speaker Change: Look.

Speaker Change: We've acquired a significant amount of capacity so four or five plants. If you include the slag facility, we acquired back in 2015.

Speaker Change: But we've acquired a couple of cement plants here recently.

Speaker Change: And you've heard US say, many times and I'd love to tell you, it's one or two things.

Craig Kessler: It is an intense focus on operational improvement and recognizing that there are some key metrics around utilization rates and throughput. And that is an area that we spend an inordinate amount of time making sure the plants are up and running. And when they are running, the amount of throughput is maximized.

Speaker Change: It is an intense focus on operational improvement.

Speaker Change: And recognizing.

Speaker Change: That there are some key metrics around utilization rates and throughput.

Speaker Change: And that is an area that we spend an inordinate amount of time, making sure the plants are up and running and when they are running.

Speaker Change: The amount of throughput is being maximized and that's through maintenance programs being very diligent with our maintenance I know, we spent a decent amount of money here in the fourth quarter, but it pays off in the future as you keep your kilns running you keep the Finnish mills running at higher rates, which not only improves your.

Craig Kessler: And that's through maintenance programs, being very diligent with our maintenance. I know we spend a decent amount of money here in the fourth quarter, but it pays off in the future as you keep your kilns running, you keep the finished mills running at higher rates, which not only improves your overall operating costs, but it also allows us to meet our customers' needs. And so the opportunity and the growth have come from making sure those kilns are running.

Speaker Change: Overall operating costs. It also allows us to meet our customers' needs.

Speaker Change: And so where the opportunity and the growth has come from is making sure those killings are running.

Craig Kessler: And some of these facilities that were running prior to our ownership, prior to the financial crisis in the mid to low 80s, we've now got running well over 90%. And that is a meaningful change when you start thinking about costs on a per unit basis, and they're ultimately on a margin basis. So it's a lot of the operational folks that have done a fantastic job of keeping those plants running throughout the cycle.

Speaker Change: Some of these facilities that were running prior to our ownership prior to the financial crisis in the mid to low Eighty's, we've now got running well over 90% and that is a meaningful change when you start thinking about costs on a per unit basis.

Speaker Change: And there are ultimately on a margin basis. So it's it's a lot of the the operational folks that have done a fantastic job of keeping those plants running.

Speaker Change: And and throughout the cycle and in terms of the sustainability of that we've actually improve the overall network of Eagle. When you think about I go back many years. When you think about the plants that we ran before the financial crisis and the plants. We run today, the overall average as a as an.

Craig Kessler: And in terms of the sustainability of that, we've actually improved the overall network of EGLE. When you think about, I go back many years, when you think about the plants that we ran before the financial crisis and the plants we run today, the overall average is an improvement. And then you add in some of these projects like the mountain cement modernization, we're actually reinforcing that and keeping those margins sustainable through the cycle.

Speaker Change: <unk> and then you add in some of these projects like the mountain cement monetization.

Speaker Change: We're actually reinforcing that and keeping those margins sustainable through cycles.

Jerry David Revich: I appreciate the discussion. Thank you.

Speaker Change: I appreciate the discussion thank you.

Adam Robert Thalhimer: Our next question comes from Adam Thalhimer from Thompson Data. Please go ahead with your question.

Speaker Change: Our next question comes from Adam Thalheimer Thomson data you have with your question.

Adam Robert Thalhimer: Hey, good morning, guys. Hey, Craig, can you just comment on cement pricing a little bit? Has the weather been an impact on cement pricing as well?

Speaker Change: Hey, good morning, guys.

Speaker Change: Hey, Greg can you just comment on cement pricing a little bit was it was the weather impact of cement pricing as well.

Craig Kessler: You know, it doesn't necessarily impact the price, but it certainly impacts volumes, but we had price increases in about half our markets in January, and they went through as they were planned.

Speaker Change: It doesn't necessarily impact the price.

Speaker Change: Does certainly impact volumes.

Greg: We had price increases about half of our markets in January and they went through.

Greg: As they were as they were planned.

Craig Kessler: OK. Any for April?

Speaker Change: Okay any for April.

Craig Kessler: Yes, and we had some that were, you know, some of our markets have some in April and scattered throughout the early summertime, depending on the markets. And some of that is, you know, exact timing. As I mentioned, the construction season's gotten off to a little slower start given all the rain that we've seen. But for those markets, they'll be later here in the year.

Speaker Change: Yes, then we had some that were some of our markets have some in April and scattered throughout the early summertime depending on the markets.

Speaker Change: Some of that as you know exact timing as I mentioned, the construction season has gotten off to a little slower start given all the rain that we've seen.

Speaker Change: But for those markets they'll there'll be later in the year.

Craig Kessler: And then, this lag plant, does that open up at capacity, or how do you see that ramping up over time?

Speaker Change: It makes sense and then how should we in this slag plant does that open up at capacity or how do you see that ramping up over time.

Craig Kessler: Yeah, no, it's like most facilities; there'll be a startup time. So if that plan begins here late in the summer, you know, it'll have startup associated with it, and through the through the winter as you get into 4Q, you'll start to see that become a more meaningful contributor to our overall profile, but really, the benefit will be seen in fiscal 26 from that facility.

Speaker Change: No. It's like most facilities it'll there'll be a startup time. So is that plan begins here late in the summer.

Speaker Change: It will have startup.

Speaker Change: Associated with that.

Speaker Change: Through the through the winter as you get into for Q Youll start to see that become a more meaningful contributor to our overall profile, but really the benefit will be seen in fiscal 'twenty six from that facility.

Speaker Change: That's cool twenty-six perfect and then what are you seeing from others I'm just kind of a bigger.

Adam Robert Thalhimer: And then what are you seeing from others, just kind of a bigger... Answers your question on tightness in the cement market, and what are you seeing from others in terms of capacity additions or expansions?

Speaker Change: Picture question on tightness in the cement market and then what are you seeing from others in terms of.

Speaker Change: Capacity additions or expansions.

Craig Kessler: You know, I would say, look, I think we've well documented the significant constraints on adding any significant new capacity across the country. There are a few modernizations, one that was completed a year or so ago, and I'm aware of one other, but by and large, you know, again, it's just difficult to add capacity, U.S. cement capacity. Okay.

Speaker Change: Yeah.

Speaker Change: I would say look I think as we've well documented that significant constraints on adding any significant new capacity across the country.

Adam Robert Thalhimer: Okay, thanks.

Speaker Change: Theres a few modernizations, one that completed a year or so ago.

Speaker Change: I'm aware of one other but.

Speaker Change: By and large you know again, it's just difficult to add capacity U S cement capacity yet.

Speaker Change: Okay. Thanks.

Philip H. Ng: Our next question comes from Philip Ng from Jeffries. Please go ahead with your question.

Speaker Change: Our next question comes from so long from Jefferies. Please go ahead with your question.

Philip H. Ng: Hey Craig, I appreciate some of the color you just gave on cement. Can you provide a little more color on where, like, your ASP was for cement as you exited the corridor and what you've kind of realized thus far? in May, and a few of your competitors have talked about potentially announcing mid-year price increases in cement. Have you announced any, and do you plan on announcing any mid-year price increases in cement as well

Speaker Change: Hey, Greg appreciate some of the color just came on to me.

Speaker Change: Matt can you provide a little more color where like your ASP was for cement as you exited the quarter and what you kind of realized thus far.

Speaker Change: And may and a few of your competitors have talked about potentially announcing mid year price increases in cement.

Speaker Change: Have you announced any and do you plan on announcing any mid year increases in cement as well.

Craig Kessler: Yeah, Phil, in terms of the price for the quarter, cement is pretty much what you put it in in January, and that's the price for the quarter in the markets that we went forward into. And so I would say the average was pretty consistent throughout the quarter.

Phil: Yeah, Phil in terms of the price for the quarter cement is pretty much you put it in in January and that's the price for the quarter.

Phil: In the markets that are that we went forward and and so I would say the the average the average was pretty consistent throughout the quarter.

Craig Kessler: You know, we're in the process of implementing some price increases kind of post-quarter, and we'll certainly give you an update on that as we get into the next call. It's a little early to speculate on additional price increases for the remainder of calendar 24. And certainly, as we've said before, customers will be the first to know about that. But, you know, what we're interested in, when the sun shines here in April and May, business is good. But we have seen quite a bit of rain here in the first part of the year. And so, you know, we'll see about additional timing.

Phil: We're in the process of implementing some price increases kind of post the quarter and we will certainly give you an update on that as we get into a into the next call.

Phil: It's a little early to speculate on additional price increases for the remainder of calendar 'twenty four.

Phil: And certainly as we've said before you know customers will be the first to know about that but.

Phil: What we're interested when the sunshine's here in April and made business is good.

Phil: But we have seen quite a bit of rain here in the first part of the year and so we'll see about additional timing.

Philip H. Ng: So, Craig, I guess the remaining 50% that was not part of January, it sounds like the cadence is a little... throughout the quarter, maybe even late summer. Can you kind of give us a little more, can you kind of help us quantify, I guess, the market, how much you have, and does it all go in April? Do half of that going in June? Just give us a little more color so we're mindful of how to model the segment increases.

Speaker Change: So Greg I guess, the the remaining 50% that was not part of January it sounds like the cadence is a little.

Speaker Change: Throughout the quarter, maybe even late summer can you kind of give us a little more can you help kind of help us quantify I guess are those market. How much you have and does it all go in April does have a bad going in June just give us a little more color. So we're mindful of how to model germs and increases.

Craig Kessler: Yeah, you know, there's a couple of markets that did go up in April, and then some of them have been pushed into May or June, and And that's that kind of a cycle. So you'll see a little bit, you know, not as the full quarter average won't reflect the full price for for what we've gone up.

Speaker Change: Yes, there is a couple of markets that did go in April and then some of them have been pushed into may or June.

Speaker Change: And and that's that's kind of the cadence so youll see a little bit.

Speaker Change: Not at the full quarter average won't reflect the full price.

Speaker Change: Four for what we've gone up in.

Philip H. Ng: Okay. And then I guess pivoting to perhaps your wallboard business, Michael, you're kind of pretty upbeat on single-family new construction, but certainly the outlook's a little more mixed on multifamily and commercial. So I guess my question is, have you seen that inflection come through already in single-family and have bidding and orders progressed nicely because we've obviously seen rates tick back up and the starts data more lately have been a little more choppy?

Speaker Change: Okay, and then I guess pivoting to perhaps your wallboard business, Michael you sounded pretty upbeat on single family, New construction, but certainly the outlook a little more mix on multifamily and commercial so I guess my question is how do you see that inflection come through already in single family and have bidding and orders progressed.

Speaker Change: Nicely because we've seen obviously rates pick back up in the starts data more lately been a little more choppy and you expect volumes to be up this year.

Philip H. Ng: And do you expect volumes to be up this year, given what your view is on single-family and the mixed nuances that we need to be mindful from a margin standpoint as well, just given how these different end markets are progressing?

Speaker Change: Given what your view is on single family any mixing you want to do that we need to be mindful of from a margin standpoint, as well just given how these different end markets are kind of progressing.

Craig Kessler: Yeah, Phil, I'll take that first. And, as I mentioned earlier, you can look at the choppiness and some of the housing data. We do look at the next layer down, and when you start looking at it on a geographic basis, our markets are well outperformed by the national average. So, the data from last week, you bifurcated in the northeast, saw a pretty negative number for housing starts, whereas, which is a market we really don't operate in or compete in, whereas in the south and the midwest, which are our core markets, you know, they continue to see very nice appreciation and growth.

Phil: Yes, Phil I'll take that first and then as I mentioned earlier.

Speaker Change: You can look at the Choppiness in some of the housing data.

Speaker Change: We do look at the next layer down and when you start looking at on a geographic basis, our markets are well outperform the national average so the.

The data from last week, if you bifurcated in the northeast saw a pretty negative number four for housing starts, whereas which is a market, we really don't operate in or compete in.

Speaker Change: Whereas in the south and the Midwest markets, which are our core markets.

Speaker Change: They they continue to see.

Speaker Change: Very nice appreciation in growth.

Craig Kessler: And as Michael mentioned, single family construction activity is important, significantly more important than multifamily. Just given the size and the scale, single family construction will consume two to three times more wall board than a multifamily unit. So, that's why we spend most of our time talking about single family construction. And then, in terms of private non-res and its impact on wall board demand, it's clearly the smallest component of the entire demand picture for wall board.

Speaker Change #100: And as Michael mentioned, the single family construction activity is important.

Michael: Significantly more important than multifamily just given the size and the scale single family construction will consume two to three times more wallboard than a multifamily unit. So that's why we spend most of our time talking about single family construction activity and then in terms of private non res and its impact on wallboard demand.

Speaker Change #100: And it's clearly the smallest.

Speaker Change #100: A component of the entire demand picture for wallboard and again that also has varying.

Craig Kessler: And again, that also has varying adjustments geographically. You know, we don't operate much in the northeast or in the northwest, which are more challenged markets. In the areas that we do operate in, the southern half of the U.S., private non-res continues to be pretty strong.

Speaker Change #100: Adjustments geographically.

Speaker Change #100: Again, we don't.

Speaker Change #100: Operate much in the northeast or in the northwest, which are a little more challenged markets in the.

Speaker Change #100: Areas that we do operate in the southern half of the U S. Private non res continues to be pretty strong.

Philip H. Ng: And Craig, just so I understand, there's no real mixed margin nuances that we need to be mindful of multifamily versus single family, or commercially, it sounds like it's a good guy, the man is how we should think about it. And then, given your end markets, you haven't seen a slowdown in bidding and order activity. It sounds like you're seeing momentum build. Is that the right thing?

Greg I: Hey, Greg just so I understand there is no real mix margin.

Speaker Change #103: You watch is that we'd be need to be mindful of multifamily versus single family or commercially.

Speaker Change #104: Sounds like it's a good God. The man is how we should think about it and then given your end markets you haven't seen a slowdown in bidding and order activity. It sounds like you're seeing momentum build is that the right thing.

Craig Kessler: Yeah, that's right in terms of the margin, and we've been very happy with our order intake here in the, as the construction season has begun. Very nice growth there. Okay, thank you.

Speaker Change #105: Yes, that's right in terms of the margin and we've been very happy with our order intake here in the as the construction season has begun.

Speaker Change #106: Very nice growth there.

Philip H. Ng: Okay, thank you. I appreciate the color, guys.

Speaker Change #107: Thank you I appreciate the color guys.

Speaker Change #107: Okay.

Operator: And ladies and gentlemen, with that, in showing no additional questions, I'd like to turn the floor back over to management for any closing remarks.

Speaker Change #108: And ladies and gentlemen, with that in showing no additional questions I'd like to turn the floor back over to management for any closing remarks.

Speaker Change #109: Thank you Jamie as.

Michael R. Haack: As we reflect on the third year of record performance across the board for Eagle, we are grateful for the dedication and hard work of our employees in the support of you, our shareholders, through multiple business cycles. We're proud of our team's superior execution at every point in the cycle, and we're committed to continuing to execute our strategy with rigorous discipline, the highest safety standards, and respect for our communities, our environment, our employees, our shareholders, and all of our stakeholders. Thanks for joining us today. We're looking forward to a good year ahead.

Jamie: As we reflect on the third year of record performance across the board for Eagle, We are grateful for the dedication and hard work of our employees and the support of you our shareholders through multiple business cycles.

Speaker Change #110: Our out of our teams superior execution at every point in the cycle and we're committed to continuing to execute our strategy with rigorous discipline, the highest safety standards and respect for our communities our environment, our employees, our shareholders and our all of our stakeholders.

Speaker Change #110: Thanks for joining us today, we're looking forward to a good year ahead.

Operator: Ladies and gentlemen, with that, we'll be concluding today's conference call and presentation. We thank you for joining us. You may now disconnect your lines.

Speaker Change #111: Ladies and gentlemen, with that we'll be concluding today's conference call and presentation. We thank you for joining you may now disconnect your lines.

Speaker Change #111: Yeah.