Facility includes a $40.0 million letter of credit facility and a swingline loan sub-facility of $25.0 million, and expires on February 4, 2030.
The Revolving Credit Facility contains customary covenants for an unsecured investment-grade facility, including covenants that restrict the Company’s and/or its subsidiaries’ ability to incur additional debt; encumber assets; merge with or transfer or sell assets to other persons; and enter into certain affiliate transactions. The Revolving Credit Facility also requires the Company to maintain at the end of each fiscal quarter a Leverage Ratio of 3.50:1.00 or less and an Interest Coverage Ratio (both ratios, as defined in the Revolving Credit Facility) equal to or greater than 2.50 to 1.00 (collectively, the Financial Covenants).
At the Company’s option, outstanding loans under the Revolving Credit Facility bear interest, at a variable rate equal to either (i) the adjusted term SOFR rate (secured overnight financing rate), plus 10 basis points, plus an agreed spread (ranging from 100 to 162.5 basis points, which is established based on the Company's credit rating); (ii) in respect of any Revolving Loans (until such time as the then-existing Benchmark (as defined in the Revolving Credit Facility) is replaced in accordance with the Revolving Credit Facility), the adjusted daily simple SOFR rate, plus 10 basis points, plus an agreed spread (ranging from 100 to 162.5 basis points, which is established based on the Company's credit rating) or (iii) an Alternate Base Rate (as defined in the Revolving Credit Facility), which is the highest of (a) the Prime Rate (as defined in the Revolving Credit Facility) in effect on any applicable day, (b) the NYFRB Rate (as defined in the Revolving Credit Facility) in effect on any applicable day, plus ½ of 1%, and (c) the Adjusted Term SOFR (as defined in the Revolving Credit Facility) for a one-month interest period on any applicable day, or if such day is not a business day, the immediately preceding business day, plus 1.0%, in each case plus an agreed upon spread (ranging from 0 to 62.5 basis points), which is established quarterly based on the Company's credit rating. The Company is also required to pay a facility fee on unused available borrowings under the Revolving Credit Facility ranging from 9 to 22.5 basis points, which is established based on the Company's then credit rating.
The Company pays each lender a participation fee with respect to such lender’s participations in letters of credit, which fee accrues at the same Applicable Rate (as defined in the Revolving Credit Facility) used to determine the interest rate applicable to Term Benchmark Revolving Loans (as defined in the Revolving Credit Facility), plus a fronting fee for each letter of credit issued by the issuing bank in an amount equal to 12.5 basis points per annum on the daily maximum amount then available to be drawn under such letter of credit. The Company also pays each issuing bank such bank’s standard fees with respect to issuance, amendment or extensions of letters of credit and other processing fees, and other standard costs and charges relating to such issuing bank’s letters of credit from time to time.
We had no outstanding borrowings under the Revolving Credit Facility. There was $9.9 million of letters of credit outstanding as of June 30, 2026, leaving us with $740.1 million of available borrowings under the Revolving Credit Facility, net of the letters of credit outstanding. We were in compliance with all Financial Covenants on June 30, 2026; therefore, the entire $740.1 million is available for future borrowings.
Term Loan
On February 4, 2025, we increased our Term Loan borrowings under the Revolving Credit Facility to $300.0 million, and used these proceeds to, among other things, pay down a portion of the Revolving Credit Facility. The Term Loan requires quarterly principal payments of approximately $3.8 million, with any unpaid amounts due upon maturity on February 4, 2030. At the Company’s option, principal amounts outstanding under the Term Loan bear interest as set forth in the Revolving Credit Facility (but not, for the avoidance of doubt, at a daily simple SOFR rate unless and until such time as the then-existing Benchmark (as defined in the Revolving Credit Facility) is replaced in accordance with the Revolving Credit Facility).
(M) SEGMENT INFORMATION
Operating segments are defined as components of an enterprise that engage in business activities that earn revenue, incur expenses, and prepare separate financial information that is evaluated regularly by our chief operating decision maker (CODM), who is our President and Chief Executive Officer, to assist in allocating resources and assessing performance. This assessment is primarily based on segment earnings from operations, as management believes this is the best metric for segment operating performance. The CODM uses operating earnings as part of his review of the monthly operating results on a segment basis. The actual monthly results are reviewed against budgeted amounts as well as the current-year reforecast and prior-year actual amounts. Interest and taxes are managed on a centralized basis and are not included in segment operating information.
Our business is organized into two sectors, within which there are four reportable business segments. The Heavy Materials sector includes the Cement and Concrete and Aggregates segments. The Light Materials sector includes the Gypsum Wallboard and Recycled Paperboard segments. The Company's operating segments are the same as the Company's reporting segments.
Our primary products, portland cement and gypsum wallboard, are essential for building, expanding, and repairing roads, highways, and residential, commercial and industrial structures across America. We manufacture and sell our products through a network of more than 70 facilities spanning 21 states. Demand for our products is generally cyclical and seasonal, depending on economic and geographic conditions. Our operations are conducted in the United States and include the mining of limestone for the manufacture, production, distribution, and sale of portland cement (a basic construction material that is the essential binding ingredient in concrete); the grinding and sale of slag; the mining of gypsum for the manufacture and sale of gypsum wallboard; the manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; and the mining and sale of aggregates (crushed stone, sand, and gravel).
We operate eight modern cement plants, two slag grinding facilities, and over 30 cement distribution terminals. One cement plant, one slag plant, and 5 cement terminals are operated through our joint venture located in Buda, Texas (the Joint Venture). Our cement companies focus on the U.S. heartland and operate as an integrated network selling product primarily in California, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Tennessee, and Texas. We operate over 25 readymix concrete batch plants and seven aggregates processing plants, with annual production capacity of 9 million tons, in markets that are complementary to our cement network.
We operate five gypsum wallboard plants and a recycled paperboard mill. We distribute gypsum wallboard and recycled paperboard throughout the continental United States, with the exception of the Northeast.
We account for intersegment sales at market prices. For segment reporting purposes only, we proportionately consolidate our 50% share of the Joint Venture Revenue and Operating Earnings, consistent with the way management reports the segments within the Company for making operating decisions and assessing performance.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE SUMMARY
We are a leading U.S. manufacturer of heavy construction products and light building materials. Our primary products, portland cement and gypsum wallboard, are essential for building, expanding, and repairing roads, highways, and residential, commercial, and industrial structures across America. Headquartered in Dallas, Texas, Eagle manufactures and sells its products through a network of more than 70 facilities spanning 21 states. Demand for our products is generally cyclical and seasonal, depending on economic and geographic conditions. General economic downturns or localized downturns in the regions where we have operations may have a material adverse effect on our business, financial condition, and results of operations.
Our business is organized into two sectors: Heavy Materials, which includes the Cement and Concrete and Aggregates segments, and Light Materials, which includes the Gypsum Wallboard and Recycled Paperboard segments. Financial results and other information for the three months ended June 30, 2026, and 2025, are presented on a consolidated basis and by business segment.
We conduct one of our cement operations through a joint venture, Texas Lehigh Cement Company LP, which is located in Buda, Texas (the Joint Venture). We own a 50% interest in the Joint Venture and account for our interest under the equity method of accounting. We proportionately consolidate our 50% share of the Joint Venture’s Revenue and Operating Earnings in the presentation of our Cement segment, which is the way management organizes financial information with respect to the segments within the Company for making operating decisions and assessing performance.
All our business activities are conducted in the United States. These activities include the mining of limestone for the manufacture, production, distribution, and sale of portland cement, including portland limestone cement (a basic construction material that is the essential binding ingredient in concrete); the grinding and sale of slag; the mining of gypsum for the manufacture and sale of gypsum wallboard; the manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; and the mining and sale of aggregates (crushed stone, sand, and gravel).
MARKET CONDITIONS AND OUTLOOK
Our fiscal 2027 first quarter results were generally strong, with record Revenue of $651.0 million, Net Earnings of $102.1 million, and Diluted Earnings per Share of $3.29 per share. Our end markets remained resilient despite geopolitical, fiscal, and trade-policy disruptions and widespread uncertainty around future U.S. economic conditions. Year-over-year sales volume increased in our Heavy Materials Sector and declined in our Light Materials Sector.
We expect demand for cement to remain steady in the near term supported by bipartisan federal, state, and local support for public infrastructure projects and continued spending on certain elements of private-nonresidential construction, including data centers. A significant amount of federal funding from the trillion-dollar Infrastructure Investment and Jobs Act (IIJA) remains to be spent, and state Department of Transportation (DOT) budgets remain supportive.
The backdrop for residential construction activity remained challenging in the first quarter of fiscal 2027, primarily because of housing affordability concerns driven by persistently elevated mortgage interest rates, as well as other macroeconomic uncertainties. At the same time, the national supply of homes remains constrained by years of underbuilding. Recently, new home construction has slowed as builders have pulled back on production because of mixed demand signals and higher levels of new home inventory in certain markets. This recent pullback affected our wallboard sales volume, which was down approximately 2% in the first quarter of fiscal 2027. The path ahead for mortgage rates, and the corresponding effect on residential construction activity, is unclear, and
thus the timing of a recovery in new-home construction remains uncertain. Nonetheless, we believe our geographic footprint across the U.S. heartland and fast-growing Sun Belt region positions us to capitalize on these market dynamics in the near and longer term.
Cost Outlook
We believe we are well-positioned to manage our cost structure and meet our customers’ needs. Our major costs include raw materials, energy, freight, labor, and maintenance.
Our substantial raw material reserves for our Cement, Aggregates, and Gypsum Wallboard businesses, and their proximity to our respective manufacturing facilities support our low-cost producer position across all our business segments.
Recycled fiber and finished paper are significant cost components in our Recycled Paperboard and Gypsum Wallboard businesses, respectively. The primary raw material used to produce paperboard is old corrugated containers (OCC). Recycled fiber prices are subject to change on short notice due to several factors, including supply of OCC and demand for OCC from both domestic and international companies. OCC prices have increased recently. Our current customer contracts for gypsum liner include price adjustments that partially compensate for changes in the cost of raw materials, such as OCC and energy, including natural gas and electricity. However, because these price adjustments are not realized until future quarters, adjustments to material costs in our Gypsum Wallboard segment could be delayed until the effects of these price adjustments are realized.
Our energy costs were nearly flat during the first quarter of fiscal 2027 compared with the first quarter of fiscal 2026 and are expected to remain relatively stable over the near future. Freight costs for our Gypsum Wallboard segment, which delivers mostly by trucks, increased in the first quarter of fiscal 2027, and with current fuel prices increasing, they could continue to increase in fiscal 2027. Freight costs for our Cement segment, which relies mostly on rail delivery, also increased in the first quarter of fiscal 2027, and are expected to increase in fiscal 2027. Additionally, labor shortages, primarily of truck drivers, can adversely affect our Concrete business. Any worsening of labor constraints could cause delays and inefficiencies in this business.
While cement maintenance costs were up 10% in the first quarter of fiscal 2027, this was largely driven by specific projects at some of our Cement plants. Other than these discreet projects, we expect low single digit inflation for maintenance costs as equipment and contractor costs are expected to increase.
RESULTS OF OPERATIONS
THREE MONTHS ENDED June 30, 2026, Compared WITH THREE MONTHS ENDED June 30, 2025
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For the Three Months Ended June 30, |
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2026 |
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2025 |
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Percentage
Change |
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(in thousands, except per share) |
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Revenue |
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$ |
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650,966 |
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$ |
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634,690 |
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3 |
% |
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Cost of Goods Sold |
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(489,721 |
) |
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(449,091 |
) |
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9 |
% |
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Gross Profit |
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161,245 |
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185,599 |
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(13 |
)% |
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Equity in Earnings of Unconsolidated Joint Venture |
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2,843 |
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3,804 |
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(25 |
)% |
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Corporate General and Administrative Expense |
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(20,202 |
) |
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(20,783 |
) |
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(3 |
)% |
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Other Non-Operating Income |
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746 |
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954 |
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(22 |
)% |
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Interest Expense, net |
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(12,947 |
) |
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(11,716 |
) |
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11 |
% |
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Earnings Before Income Taxes |
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131,685 |
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157,858 |
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(17 |
)% |
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Income Tax Expense |
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(29,558 |
) |
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(34,496 |
) |
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(14 |
)% |
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Net Earnings |
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$ |
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102,127 |
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$ |
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123,362 |
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(17 |
)% |
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Diluted Earnings per Share |
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$ |
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3.29 |
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$ |
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3.76 |
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(13 |
)% |
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REVENUE
Revenue increased by $16.3 million, or 3%, to $651.0 million for the three months ended June 30, 2026. Higher Sales Volume positively affected Revenue by $19.8 million, and was partially offset by lower gross sales prices, which adversely affected Revenue by approximately $3.5 million.
COST OF GOODS SOLD
Cost of Goods Sold increased by $40.6 million, or 9%, to $489.7 million for the three months ended June 30, 2026. The increase was due to higher operating costs and Sales Volume of $25.7 million and $14.9 million, respectively. The $25.7 million of higher operating costs were primarily attributable to $16.8 million of higher costs in our Cement segment, $4.5 million of higher costs in Gypsum Wallboard, and $5.5 million of higher Concrete and Aggregates costs, all of which were partially offset by $1.1 million of lower operating costs in our Paperboard business.
The $17.6 million of higher Sales Volume was primarily related to $15.9 million of higher Sales Volume in our Cement business and $1.9 million higher Paperboard Sales Volume. These costs were partially offset by lower Sales Volume of $2.0 million in our Gypsum Wallboard business and $0.9 million in our Concrete and Aggregates business. These costs are discussed further in the segment analysis.
GROSS PROFIT
Gross Profit decreased 13% to $161.2 million during the three months ended June 30, 2026. The decrease was primarily related to higher operating costs of $25.7 million and lower gross sales prices of $3.5 million, partially offset by higher Sales Volume of $4.8 million. The gross margin declined to 25%, with higher operating costs being partially offset by higher Sales Volume.
EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURE
Equity in Earnings of our Unconsolidated Joint Venture decreased by $1.0 million, or 25%, for the three months ended June 30, 2026. The decrease was due to lower average gross sales prices of $0.5 million and increased operating costs of $1.1 million, partially offset by higher Sales Volume of $0.7 million. Increased operating costs were primarily related to higher maintenance and freight costs of $1.6 million and $0.8 million, respectively, which was partially offset by lower purchased cement costs of $1.4 million.
CORPORATE GENERAL AND ADMINISTRATIVE
Corporate General and Administrative expenses decreased by approximately $0.6 million, or 3%, for the three months ended June 30, 2026. The decrease was due primarily to lower salary and incentive compensation of $2.8 million, which was partially offset by higher information technology costs and insurance costs of $1.8 million and $0.5 million, respectively.
OTHER NON-OPERATING INCOME
Other Non-Operating Income consists of a variety of items that are unrelated to segment operations and include non-inventoried Aggregates income, asset sales, and other miscellaneous income and cost items.
INTEREST EXPENSE, NET
Interest Expense, net increased by approximately $1.2 million, or 11%, during the three months ended June 30, 2026. This increase was due to increased interest expense of approximately $5.2 million and increased other expenses of $0.4 million, which was partially offset by higher Interest Capitalized of approximately $2.5 million and higher interest income of $1.9 million. The increase in interest expense was primarily a result of our 5.000% Senior Unsecured Notes due March 2036, which were issued on November 13, 2025. The increase in Interest Capitalized was due primarily to capital spending for the expansion and modernization of our cement plant in Laramie, Wyoming and our gypsum wallboard plant in Duke, Oklahoma.
EARNINGS BEFORE INCOME TAXES
Earnings Before Income Taxes decreased to $131.7 million during the three months ended June 30, 2026, primarily as a result of lower Gross Profit and Equity in Earnings of Unconsolidated Joint Venture, and higher Interest Expense, net.
INCOME TAX EXPENSE
Income Tax Expense was $29.6 million for the three months ended June 30, 2026, compared with $34.5 million for the three months ended June 30, 2025. The effective tax rate remained consistent at 22% with the prior-year period.
NET EARNINGS
Net Earnings decreased 17% to $102.1 million for the three months ended June 30, 2026.
Three MONTHS ENDED June 30, 2026, COMPARED WITH three MONTHS ENDED June 30, 2025, BY SEGMENT
The following presents results within our two business sectors for the three months ended June 30, 2026, and 2025. Revenue and operating results are organized by sector and discussed by individual business segments.
Heavy Materials
CEMENT (1)
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For the Three Months Ended June 30, |
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2026 |
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2025 |
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Percentage
Change |
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(in thousands, except per ton information) |
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Revenue, including Intersegment and Joint Venture |
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$ |
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377,899 |
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$ |
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347,622 |
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9 |
% |
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Less Intersegment Revenue |
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$ |
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(9,996 |
) |
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$ |
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(10,013 |
) |
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— |
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Less Joint Venture Revenue |
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$ |
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(31,410 |
) |
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$ |
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(27,283 |
) |
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15 |
% |
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Revenue |
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$ |
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336,493 |
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$ |
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310,326 |
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8 |
% |
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Sales Volume (M Tons) |
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2,145 |
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1,993 |
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8 |
% |
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Freight and Delivery Costs Billed to Customers |
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$ |
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(25,392 |
) |
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$ |
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(20,132 |
) |
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26 |
% |
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Average Net Sales Price, per ton (2) |
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$ |
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154.09 |
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$ |
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156.72 |
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(2 |
)% |
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Operating Margin, per ton |
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$ |
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34.31 |
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$ |
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40.68 |
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(16 |
)% |
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Operating Earnings |
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$ |
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73,605 |
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$ |
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81,084 |
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(9 |
)% |
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(1) Total of wholly owned subsidiaries and proportionately consolidated 50% interest in the Joint Venture’s results.
(2) Net of freight per ton, including Joint Venture.
Cement Revenue was $377.9 million, a 9% increase, for the three months ended June 30, 2026. This increase was due to higher Sales Volume and gross sales prices, which increased Cement Revenue by $25.8 million and $4.5 million, respectively.
Cement Operating Earnings decreased by $7.5 million to $73.6 million for the three months ended June 30, 2026. The decrease was due to higher operating costs of $17.9 million, which were partially offset by higher Sales Volume and higher gross sales prices of $5.9 million and $4.5 million, respectively. The increase in operating costs was due to higher maintenance, purchased raw materials, and inefficiencies associated with unexpected downtime at our Mountain Cement facility of approximately $7.4 million, $4.2 million, and $6.0 million, respectively. The Operating Margin decreased to 19% from 23% because of higher operating costs, partially offset by the increase in Sales Volume.
CONCRETE AND AGGREGATES
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2026 |
|
|
|
|
|
2025 |
|
|
|
Percentage
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except net sales prices) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, including Intersegment |
|
$ |
|
80,748 |
|
|
|
$ |
|
77,568 |
|
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Intersegment Revenue |
|
|
|
(4,516 |
) |
|
|
|
|
(3,852 |
) |
|
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
76,232 |
|
|
|
$ |
|
73,716 |
|
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M Cubic Yards of Concrete |
|
|
|
316 |
|
|
|
|
|
322 |
|
|
|
|
(2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M Tons of Aggregate |
|
|
|
1,741 |
|
|
|
|
|
1,731 |
|
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Net Sales Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concrete, per cubic yard |
|
$ |
|
156.79 |
|
|
|
$ |
|
150.43 |
|
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates, per ton |
|
$ |
|
14.47 |
|
|
|
$ |
|
14.24 |
|
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings |
|
$ |
|
4,003 |
|
|
|
$ |
|
6,175 |
|
|
|
|
(35 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concrete and Aggregates Revenue increased 4% to $80.7 million for the three months ended June 30, 2026. The increase was due to higher gross sales prices of $3.3 million and higher Aggregates Sales Volume of $0.1 million, which was partially offset by lower Concrete Sales Volume, which reduced Revenue by $0.9 million.
Operating Earnings were approximately $4.0 million, a 35% decrease. The decrease was due to higher operating costs of $5.5 million and were partially offset by higher gross sales prices of $3.3 million and higher net Sales Volume of $0.1 million. The increase in operating costs was primarily due to higher freight, maintenance, energy, and labor and other fixed costs of approximately $1.4 million, $1.6 million, $0.9 million, and $ 0.9 million, respectively.
Light Materials
GYPSUM WALLBOARD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2026 |
|
|
|
|
|
2025 |
|
|
|
Percentage
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per MMSF information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
204,747 |
|
|
|
$ |
|
221,516 |
|
|
|
|
(8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMSF) |
|
|
|
772 |
|
|
|
|
|
784 |
|
|
|
|
(2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight and Delivery Costs Billed to Customers |
|
$ |
|
(42,823 |
) |
|
|
$ |
|
(39,372 |
) |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Net Sales Price, per MSF (1) |
|
$ |
|
209.65 |
|
|
|
$ |
|
232.40 |
|
|
|
|
(10 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight, per MSF |
|
$ |
|
55.47 |
|
|
|
$ |
|
50.22 |
|
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, per MSF |
|
$ |
|
95.02 |
|
|
|
$ |
|
118.16 |
|
|
|
|
(20 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings |
|
$ |
|
73,353 |
|
|
|
$ |
|
92,641 |
|
|
|
|
(21 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of freight per MSF.
Gypsum Wallboard Revenue was $204.7 million, an 8% decrease for the three months ended June 30, 2026. Lower gross sales prices and lower Sales Volume decreased Revenue by approximately $13.4 million and $3.4 million, respectively. Our market share remained relatively consistent during the three months ended June 30, 2026, based on the Gypsum Association's data.
Operating Earnings decreased 21% to $73.4 million, primarily because of lower gross sales prices of $13.4 million, lower Sales Volume of $1.4 million, and higher operating costs of $4.5 million. The higher operating costs were primarily related to higher freight costs of $4.1 million. Operating Margin decreased to 36% for the three months ended June 30, 2026, primarily because of lower gross sales prices and higher operating costs. Fixed costs are not a significant portion of the overall cost of wallboard; therefore, changes in utilization have a relatively minor impact on our operating cost per unit.
RECYCLED PAPERBOARD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2026 |
|
|
|
|
|
2025 |
|
|
|
Percentage
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per ton information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, including Intersegment |
|
$ |
|
55,411 |
|
|
|
$ |
|
51,104 |
|
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Intersegment Revenue |
|
|
|
(21,917 |
) |
|
|
|
|
(21,972 |
) |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
33,494 |
|
|
|
$ |
|
29,132 |
|
|
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (M Tons) |
|
|
|
92 |
|
|
|
|
|
90 |
|
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Net Sales Price, per ton (1) |
|
$ |
|
600.44 |
|
|
|
$ |
|
566.33 |
|
|
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, per ton |
|
$ |
|
142.68 |
|
|
|
$ |
|
105.59 |
|
|
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings |
|
$ |
|
13,127 |
|
|
|
$ |
|
9,503 |
|
|
|
|
38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of freight per ton.
Recycled Paperboard Revenue increased 8% to $55.4 million during the three months ended June 30, 2026. Higher gross sales prices and Sales Volume increased Revenue by $3.1 million and $1.2 million, respectively. Higher gross sales prices were related to the pricing provisions in our long-term sales agreements.
Operating Earnings increased 38% to $13.1 million, primarily due to higher gross sales prices, increased Sales Volume, and lower operating costs, which increased Operating Earnings by $3.1 million, $0.2 million and $0.3 million, respectively. As a result, Operating Margin increased to 24% from 19% in the quarter ended June 30, 2025. Although the Company has certain pricing provisions in its long-term sales agreements, prices are adjusted only at certain times throughout the year, so price adjustments are not always reflected in the same period as the change in costs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts disclosed in the financial statements. In many cases, alternative policies or estimation techniques could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare our financial statements. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information.
Information regarding our Critical Accounting Policies can be found in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (the Annual Report). The two Critical Accounting Policies that we believe are material to our financial statements, and either require the most judgment, or the selection or application of alternative accounting policies, are those related to goodwill and business combinations. Management has discussed the development and selection of these Critical Accounting Policies and estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm. In addition, Note (A) in the Notes to Consolidated Financial Statements in our Annual Report contains a summary of our significant accounting policies.
Recent Accounting Pronouncements
Refer to Note (A) in the Notes to Unaudited Consolidated Financial Statements of this Quarterly Report on Form 10-Q for information regarding recently issued accounting pronouncements that may affect our financial statements.
LIQUIDITY AND CAPITAL RESOURCES
We believe we have access at the present time to sufficient financial resources from our liquidity sources to fund our business and operations, including contractual obligations, capital expenditures, and debt service obligations, for at least the next 12 months. In the long term, we intend to rely on our existing financial resources, together with borrowings under existing and future credit facilities and potential offerings of our securities in private or public markets. We regularly monitor any potential disruptions to the economy, and to our operations, particularly changing fiscal policy or economic conditions affecting our industries. Please see the Debt Financing Activities section below for a discussion of our revolving credit facility and the amount of borrowings available to us in the next 12-month period.
Cash Flow
The following table provides a summary of our cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2026 |
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
|
154,378 |
|
|
|
$ |
|
136,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to Property, Plant, and Equipment |
|
|
|
(120,755 |
) |
|
|
|
|
(76,097 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
|
|
(120,755 |
) |
|
|
|
|
(76,097 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings Under Revolving Credit Facility |
|
|
|
— |
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of Borrowings Under Revolving Credit Facility |
|
|
|
— |
|
|
|
|
|
(25,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of Term Loan |
|
|
|
(3,750 |
) |
|
|
|
|
(3,750 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid to Stockholders |
|
|
|
(7,964 |
) |
|
|
|
|
(8,254 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and Retirement of Common Stock |
|
|
|
(83,833 |
) |
|
|
|
|
(78,616 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Stock Option Exercises |
|
|
|
67 |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Redeemed to Settle Employee Taxes on Stock Compensation |
|
|
|
(2,524 |
) |
|
|
|
|
(5,579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities |
|
|
|
(98,004 |
) |
|
|
|
|
(21,199 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
$ |
|
(64,381 |
) |
|
|
$ |
|
39,338 |
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities increased by $17.7 million to $154.4 million during the three months ended June 30, 2026. This increase was primarily attributable to higher cash flows from changes in Working Capital and noncash activity of $13.3 million and $25.6 million, respectively, partially offset by lower Operating Earnings of $21.2 million.
Working Capital decreased by $49.0 million to $641.8 million at June 30, 2026, compared with March 31, 2026. The decrease was primarily due to lower Cash, Inventories, and Income Tax Receivable of $64.4 million, $28.8 million, and $1.2 million, respectively, and higher Accounts Payable, Accrued Liabilities, and Income Taxes Payable of $18.0 million, $6.1 million, and $2.8 million, respectively. This was partially offset by higher Accounts Receivable, net of $65.2 million and higher Prepaid and Other Assets of $7.7 million.
The increase in Accounts Receivable at June 30, 2026, was primarily related to higher Revenue during the three months ended June 30, 2026, particularly in the month of June, compared with the three months ended March 31, 2026. As a percentage of quarterly sales generated for the respective quarters, Accounts Receivable was approximately 45% and 48% at June 30, 2026, and March 31, 2026, respectively. Management measures the change in Accounts Receivable by monitoring the days sales outstanding on a monthly basis to determine if any deterioration has occurred in the collectability of the Accounts Receivable. No significant deterioration in the collectability of our Accounts Receivable was identified at June 30, 2026.
Our Inventory balance at June 30, 2026, decreased by approximately $28.8 million from our balance at March 31, 2026. Within Inventory, Raw Materials and Materials-in-Progress, Finished Cement, Aggregates, Recycled Paperboard, Repair Parts and Supplies, and Fuel and Coal declined $24.4 million, $0.8 million, $0.3 million, $2.1 million, $2.1 million, and $1.0 million, respectively. This was partially offset by an increase in Gypsum Wallboard inventory of $1.9 million. The decline in Raw Materials and Materials-in-Progress is consistent with our business cycle; we generally build up clinker inventory over the winter months to meet the demand for cement in the spring and summer. The decrease in Repair Parts inventory was primarily due to the completion of most of our scheduled outages during the quarter. The largest individual balance in our Inventory is Repair Parts. These parts are necessary given the size and complexity of our manufacturing plants, and the age of certain plants, which creates the need to stock a high level of Repair Parts inventory. We believe all these repair parts are necessary, and we perform semi-annual analyses to identify obsolete parts. We have less than one year’s sales of all product inventories, and our inventories have a low risk of obsolescence because our products are basic construction materials.
Net Cash Used in Investing Activities during the three months ended June 30, 2026, was approximately $120.8 million, compared with $76.1 million during the same period in 2025. The $44.7 million increase was primarily related to the modernization and expansion of our Mountain Cement facility.
Net Cash Used in Financing Activities was $98.0 million during the three months ended June 30, 2026 compared with $21.2 million during the same period in 2025. The $76.8 million increase was mainly related to lower borrowings, net of repayments of $75.0 million and higher Purchase and Retirement of Common Stock of $5.2 million. This was partially offset by lower Shares Redeemed to Settle Employee Taxes on Stock Compensation of $3.1 million.
Our debt-to-capitalization ratio and net-debt-to-capitalization ratio were 54.5% and 50.9%, respectively, at June 30, 2026, compared with 54.7% and 50.1%, respectively, at March 31, 2026.
Debt Financing Activities
Below is a summary of the Company’s outstanding debt facilities at June 30, 2026.
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Maturity |
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Revolving Credit Facility |
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February 2030 |
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Term Loan |
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February 2030 |
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2.500% Senior Unsecured Notes |
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July 2031 |
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5.000% Senior Unsecured Notes |
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March 2036 |
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|
See Note (L) in the Notes to Unaudited Consolidated Financial Statements for further details on the Company’s debt facilities, including interest rate, and financial and other covenants and restrictions.
The revolving borrowing capacity of our Revolving Credit Facility is $750.0 million (any revolving loans borrowed under the Revolving Credit Facility, as applicable, the Revolving Loans). The Revolving Credit Facility also includes a swingline loan sublimit of $25.0 million, and a $40.0 million letter of credit facility. At June 30, 2026, we had no outstanding Revolving Loans under the Revolving Credit Facility and $9.9 million of outstanding letters of credit, leaving us with $740.1 million of available borrowings under the Revolving Credit Facility, net of outstanding letters of credit. We are contingently liable for performance under $52.2 million in performance bonds relating primarily to our mining operations. We do not have any off-balance sheet debt or any outstanding debt guarantees as of June 30, 2026.
Other than the Revolving Credit Facility, we have no additional source of committed external financing in place. Should the Revolving Credit Facility be terminated, no assurance can be given as to our ability to secure a new source of financing. Consequently, if any balance were outstanding on the Revolving Credit Facility at the time of termination, and an alternative source of financing could not be secured, it would have a material adverse impact on our business.
We believe our cash flow from operations and available borrowings under our Revolving Credit Facility, as well as cash on hand, should be sufficient to meet our currently anticipated operating needs, capital expenditures, and dividend and debt service requirements for at least the next 12 months. However, our future liquidity and capital requirements may vary depending on several factors, including market conditions in the construction industry, our ability to maintain compliance with covenants in our Revolving Credit Facility, the level of competition, and general and economic factors beyond our control, such as supply chain constraints and inflation. These and other developments could reduce our cash flow or require that we seek additional sources of funding. We cannot predict what effect these factors will have on our future liquidity. See the Market Conditions and Outlook section above for further discussion of the possible effects on our business.
As market conditions warrant, the Company may from time to time seek to purchase or repay its outstanding debt securities or loans, including the 2.500% Senior Unsecured Notes, 5.000% Senior Unsecured Notes, the Term Loan, and any Revolving Credit Loans, in each case, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases we make may be funded by using cash on our balance sheet or issuing new debt. The amounts involved in any such purchase transactions, individually or in aggregate, may be material.
We had approximately $38.4 million of lease liabilities at June 30, 2026, with an average remaining life of approximately 11.1 years.
Dividends
Dividends paid were $8.0 million and $8.3 million for the three months ended June 30, 2026, and 2025, respectively. Each quarterly dividend payment is subject to review and approval by our Board of Directors, who will continue to evaluate our dividend payment amount on a quarterly basis.
Share Repurchases
During the three months ended June 30, 2026, our share repurchases were as follows.
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Period |
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Total Number of
Shares Purchased |
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Average Price Paid
Per Share |
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|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs |
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|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs |
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April 1 through April 30, 2026 |
|
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182,500 |
|
|
$ |
198.66 |
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|
|
— |
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May 1 through May 31, 2026 |
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125,000 |
|
|
|
205.70 |
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— |
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June 1 through June 30, 2026 |
|
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99,000 |
|
|
|
220.85 |
|
|
|
— |
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Quarter 1 Totals |
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|
406,500 |
|
|
$ |
206.23 |
|
|
|
— |
|
|
|
2,523,372 |
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On May 17, 2022, the Board of Directors authorized us to repurchase an additional 7.5 million shares. This authorization brought the cumulative total of common stock our Board has approved for repurchase in the open market to 55.9 million shares since we became a publicly held company in April 1994. Through June 30, 2026, we have repurchased approximately 53.0 million shares.
Share repurchases may be made from time to time in the open market or in privately negotiated transactions. The timing and amount of any share repurchases are determined by management, based on its evaluation of market and economic conditions and other factors. In some cases, repurchases may be made pursuant to plans, programs, or directions established from time to time by the Company’s management, including plans intended to comply with the safe-harbor provided by Rule 10b5-1.
During the three months ended June 30, 2026, the Company withheld from employees 29,228 shares of stock upon the vesting of Restricted Shares that were granted under the 2023 Plan. We withheld these shares to satisfy the employees’ statutory tax withholding requirements, which is necessary once the Restricted Shares or Restricted Share Units are vested.
Capital Expenditures
The following table details capital expenditures by category.
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For the Three Months Ended June 30, |
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2026 |
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2025 |
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(dollars in thousands) |
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Land and Quarries |
|
$ |
340 |
|
|
$ |
1,455 |
|
|
|
|
|
|
|
|
|
|
|
|
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Plants |
|
|
77,174 |
|
|
|
56,023 |
|
|
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|
Buildings, Machinery and Equipment |
|
|
43,241 |
|
|
|
18,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Expenditures |
|
$ |
120,755 |
|
|
$ |
76,097 |
|
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|
Capital expenditures for fiscal 2027 are expected to range from $490.0 million to $525.0 million and will be allocated across both Heavy Materials and Light Materials sectors. These estimated capital expenditures will be for the expansions and modernizations of our Mountain Cement facility in Wyoming and our gypsum wallboard plant in Duke, Oklahoma, as well as for ongoing maintenance and improvements, and other safety and regulatory projects.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations as to future events. These statements are not historical facts or guarantees of future performance but instead represent only the Company’s belief at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside the Company’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company’s actual performance include the following: the cyclical and seasonal nature of the Company’s businesses; fluctuations in public infrastructure expenditures; the effects of adverse weather conditions on infrastructure and other construction projects as well as our facilities and operations; the fact that our products are commodities and that prices for our products are subject to material fluctuation due to market conditions and other factors beyond our control; the availability of and fluctuations in the cost of raw materials; changes in the costs of energy, including, without limitation, natural gas, coal and oil (including diesel), and the nature of our obligations to counterparties under energy supply contracts, such as those related to market conditions (for example, spot market prices), governmental orders and other matters; changes in the cost and availability of transportation; unexpected operational difficulties, including unexpected maintenance costs, equipment downtime and interruption of production; material nonpayment or non-performance by any of our key customers; consolidation of our customers; interruptions in our supply chain; inability to timely execute or realize capacity expansions or efficiency gains from capital improvement projects; difficulties and delays in the development of new business lines; governmental regulation and changes in governmental and public policy (including, without limitation, climate change and other environmental regulation); changes in trade policy, including tariffs and the effects of any increases in tariffs on our business, including increases in inputs used in our facility expansion and modernization projects; possible losses or other adverse outcomes from pending or future litigation or arbitration proceedings; changes in economic conditions or the nature or level of activity in any one or more of the markets or industries in which the Company or its customers are engaged; competition; cyber-attacks or data security breaches, together with the costs of protecting our systems against such incidents and the possible effects thereof on our operations; increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction or construction projects undertaken by state or local governments; the availability of acquisitions or other growth opportunities that meet our financial return standards and fit our strategic focus; risks related to pursuit of acquisitions, joint ventures and other transactions or the execution or implementation of such transactions, including the integration of operations acquired by the Company; general economic conditions, including inflation and recessionary conditions; and changes in interest rates and the resulting effects on the Company and demand for our products. For example, increases in interest rates, decreases in demand for construction materials or increases in the cost of energy (including, without limitation, natural gas, coal and oil) or the cost of our raw materials can be expected to adversely affect the revenue and operating earnings of our operations. In addition, changes in national or regional economic conditions and levels of infrastructure and construction spending could also adversely affect the Company’s results of operations. Finally, any forward-looking statements made by the Company are subject to the risks and impacts associated with natural disasters, the outbreak, escalation or resurgence of health emergencies, pandemics or other unforeseen events, as well as their impact on our operations and on economic conditions, capital and financial markets. These and other factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026, on file with the Securities and Exchange Commission. All forward-looking statements made herein are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein will increase with the passage of time. The Company undertakes no duty to update any forward-looking statement to reflect future events or changes in the Company’s expectations.
