Eagle Materials Inc

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 Hack. Mr. Hack, please go ahead, sir.

Thank you, Jamie. Good morning. Welcome to Eagle Materials' conference call for our fourth quarter and fiscal year 2024. This is Michael Hack. 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 eaglematerials.com and click on the link to the webcast. 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. More specifically, 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 that 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. 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. 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 regards 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 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. We reduced our water consumption by 23% company-wide and will continue to find ways to be more water efficient. 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 started to align with 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. 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 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. Thank you and congratulations to every one of you. 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 cost 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. 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. We always want our production systems in like new conditions 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 US macro conditions and the path of the US monetary policy. This is the most true for the light side of our business. Last fiscal year, the strength of the US 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. 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. While volume in our heavy business was down in the fourth quarter of fiscal 2024, the underlying fundamentals in the sector remain positive. We expect federal infrastructure spending to increase this year and into 2025, adding to already healthy public spending at the state and local levels. 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 and 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. 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 organically. Second, keeping our facilities in like new condition. And third, returning cash to shareholders, primarily through stock repurchases. 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. This is incremental to the manufacturing capacity of Texas Lehigh's Buda, Texas cement plant and our import terminal in Houston. Black cement will be crucial to meeting the needs of the 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 includes an additional distribution facility in northern Colorado. Our investment in mountain cement checks all the boxes of EGLE'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 Stockton, California cement terminal acquisition completed at the beginning of the year, meaningfully advanced our strategy and should generate high returns. 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. 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 of returning 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 quote by nearly 30%. 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.

Thank you, 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 contribution from the Stockton import terminal we acquired in our first fiscal quarter, partially offset by lower wallboard sales volume. Excluding the contribution from the Stockton import terminal, revenue was up 3%. As Michael mentioned, underlying fundamentals remained 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 the 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. 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, highlighted on the next slide. In our heavy materials sector, which includes our cement and 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 faced 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. We estimate the impact on earnings from lower sales volume due to weather delays was $3 to $4 million. The operational impact from equipment downtime to be another $3 to $4 million. An increased maintenance cost was approximately $7 million. One last comment on the weather is 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. Flipping to our light materials sector on the next slide, annual revenue in our light materials sector declined 4% to $941 million, reflecting lower wallboard 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 wallboard price increase during the fourth quarter, the full effect of which is not completely reflected on our quarterly average wallboard price. 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 was up 4% year-over-year to $564 million. Capital spending increased to $120 million as we continued 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. 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. 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 cap ratio was 45%, and our net debt to EBITDA leverage ratio was 1.3 times. 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, and we have no meaningful near-term debt maturity, giving us substantial financial flexibility. 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.

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-turn telephone. So we draw a star 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. Once again, that is star and then one to join the question queue. Our first question today comes from Trade Rooms from Stevens. Please go ahead with your question.

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

Yeah, no, I think you're on the right path, Trey. You know, look, January, and I think it's been pretty well chronicled, especially in this industry, Difficult weather conditions we faced in January, even a little bit into early February, you know, 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 hadn't had the chance to for many years as these facilities have been running at full steam. Take the opportunity, as I mentioned, 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 The sales volume impact, there's actually an operational impact. You know, the $3 million to $4 million on the sales volume is similar to what we then had in terms of some operational downtime. 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, you know, 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 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.

Okay. Thanks for that. And then kind of sticking with the cement margin here, 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 I would guess 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 1Q, assuming weather doesn't just completely derail it.

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. The June quarter is always our lowest margin quarter for the year. But as you said, you look at 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.

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

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

Hey, good morning, Michael, Craig, and Alex. Thank you guys for the question. I guess if you could talk a little bit more about the Laramie expansion. Very, I think, interesting and interesting timing, too. Should we read into it, one, I guess that the M&A markets may be what we're a little too frothy compared to what you all were looking at? Or is it just more kind of confidence and opportunities that you saw in the Salt Lake and the Denver markets?

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 heads, that's important in that it reduces the energy consumption significantly, much more energy efficient, and simplifies the maintenance programs. You go to two kilns down to one, more modern technology. And it's in a growing market, right? So while the plant sits in Laramie, Wyoming, its primary market is is south to Denver. 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. And that market remains constrained, supply constrained, especially given its location in the middle of the country. 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 hurl rates, and that's what this project is about. 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, continuation doesn't. of 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.

Perfect. Thanks. That's great, Colin. 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 what we think the pricing would be?

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.

Perfect. That's it for me, guys. Thanks so much. Best of luck.

Our next question comes from Brent Thielman from DA Davidson. Please go ahead with your question.

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?

Yes, some of it certainly is that, but I'll tell you, and I think Michael said it well, these plants have been running in 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 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 today. 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 some point needed to be done, and we took the opportunity.

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 and maybe any sort of cadence we should expect that might create some downtime at that plant in particular through this year?

Yeah, we've mentioned we've got a couple of larger projects. 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 more additional downtime in the fall. We'll dimensionalize that for everyone. But I'm glad you mentioned the joint venture project. 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 there in the ship channel, and that's an incremental 500,000 tons of cementitious product that we'll be able to sell above and beyond Houston. 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 associated with 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.

Okay, just one more quick one. Appreciate all the color on the investment at the facility in Wyoming. Is it fair to say that you're evaluating sort of similar capacity improvement or opportunities across the broader portfolio? Is this one somewhat unique? Does it stand out relative to what you might be looking at relative to the other facilities? Just curious kind of how you're thinking about the broader portfolio here.

No, 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, 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. So this is the one that we've chosen to do, and there may be others if they meet our financial return criteria.

Excellent. Thank you.

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

Good morning. 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.

Yeah, Anthony. So for the mountain cement project, The $430 million now 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 is what we've budgeted. A little more than that in fiscal 26, and then the remainder in fiscal 27. So you'll be, by that point, below $100 million for that project. So what you start to do the math that puts kind of the kind of sustaining capital back closer to that 150 160 million dollar 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 alternative alternative fuel projects at three of our facilities and 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.

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%, you know, XM&A on the weather. How should we think about cement volumes for the fiscal year or this current fiscal year? Is it maybe flat year over year, not including the slag facility, or are there some other sort of puts and takes that we should be thinking about as we kind of model out the full year?

Yeah, you know, as I mentioned, Anthony, certainly April and May for most parts of the country 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. I do think that will be in the second half of the year than the first half, just given how the first month or so has started. But 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, 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. So when you look at the south, you look at the Midwest where our facilities, both wallboard and cement, are generally located, we saw really good growth in single-family housing starts in those markets. The Northeast 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.

Okay, that's very helpful. I'll turn it over.

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

Yes, hi. Good morning, everyone. You know, in cement, even with the impact that you folks spoke to in the March quarter, you know, for the full year, profit per ton was up over 20%. You know, the prior year was up 12%. 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 a lower energy input cost based on contract timing. I'm wondering if you just weigh on the puts and takes of potential for another double-digit profit per ton growth year in cement.

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. 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 the 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.

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

Yeah, it's interesting, Jerry. On a margin basis, the separation isn't as dramatic as you might think. The difference is where those higher-cost plants sit are normally a little higher-priced markets 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 we think we can continue to improve their margins or that plant's margins by lowering the costs of the operations. And, you know, that's what the biggest opportunity is for that project.

Okay. And lastly, you know, it's been a really strong track record for you folks in cement property growth over the past, 10 years, 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 the pre-financial crisis? How much of that is rising transportation costs versus other factors? How do you think about the sustainability of this level of unit profitability growth that's meant?

Yeah, you know, look, we've acquired 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, 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 being maximized. And that's through maintenance programs, being very diligent, With our maintenance, you know, 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 finish mills running at higher rates, which not only improves your overall operating costs, it also allows us to meet our customers' needs. And so where the opportunity and the growth has come from is making sure those kilns are running. 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 a cost 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 and throughout the cycle. 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 cycles.

I appreciate the discussion.

Thank you.

Our next question comes from Adam Valheimer from Thompson Data. Please go ahead with your question.

Hey, good morning, guys. Hey, Craig, can you just comment on cement pricing a little bit? Was the weather an impact to cement pricing as well?

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

Okay. Any for April?

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 has 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.

Makes sense. And then how should we, this slag plant, Does that open up at capacity, or how do you see that ramping up over time?

Yeah, no, it's like most facilities. There will be a start-up time. So as that plan begins here late in the summer, you know, it will have start-up capacity. associated with that 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.

Fiscal 26, perfect. And then what are you seeing from others, just kind of a bigger picture question on tightness in the cement market, and what are you seeing from others in terms of capacity additions or expansions?

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

Yep. Okay. Thanks. Our next question comes from Phil Ong from Jefferies. Please go ahead with your question.

Hey, Craig. Appreciate some of the color you just gave on cement. Can you provide a little more color where, like, your ASP was for cement as you exited quarter 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 increases in cement as well?

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 in the markets that we went forward in. And so I would say the average was pretty consistent throughout the quarter. We're in the process of implementing some price increases kind of post the quarter, and we'll certainly give you an update on that as we get into the next call. A little early to speculate on additional price increases for the remainder of calendar 24. And certainly, as we've said before, you know, 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 timings.

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, those markets, how much you have, and does it all go in April? Does half of that go in June? Just give us a little more colors so we're mindful how to model how the summit increases. Sure.

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

Okay. And then I guess pivoting to perhaps your wallboard business, Michael, you tied a 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 seen, obviously, rates tick back up, and the starts data more lately have been a little more choppy. 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 kind of progressing?

Phil, I'll take that first. As I mentioned earlier, you can look at the choppiness in 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 outperforming the national average. The data from last week, you've bifurcated, and 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 markets, which are our core markets, they continue to see very nice appreciation and growth. And as Michael mentioned, the 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 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, it's clearly the smallest component of the entire demand picture for wallboard. And, again, that also has varying adjustments geographically. Again, we don't – operate much in the northeast or in the northwest, which are a little 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.

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 commercial. 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 take?

Yeah, that's right in terms of the margin. And we've been very happy with our order intake here as the construction season has begun. Very nice growth there.

Okay. Thank you. Appreciate the color, guys.

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.

Thank you, Jamie. As we reflect on the third year of record performance across the board for EGLE, we are grateful for the dedication and hard work of our employees and 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.

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.