Good day, everyone, and welcome to the Eagle Materials second quarter of Fiscal 2026 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir.

Thank you, Chris. Good morning. Welcome to Eagle Materials Conference Call for our second quarter of Fiscal Year 2026. This is Michael Haack. Joining me today are Craig Kessler, our Chief Financial Officer, and Alex Haddock, Senior Vice President of Investor Relations, Strategy, and Corporate Development. There will be a slide presentation made in connection. Please go to eaglematerials.com. 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. Back to this disclosure, I'm looking forward to discussing the details of the Eagle team team, having achieved financial, operational, and safety performance we did this quarter. Even as we felt the headwind financially, we were able to achieve record revenue of $639 million and deliver an EPS of $4.23. Strategically, we made significant progress in expansion and commenced construction of our Duke, Oklahoma wallboard strategic capital investments more in a few minutes as they tie directly to our capital allocation principles and value generation turning to safety performance. The halfway point of our fiscal year is also a time when we reflect on our safety performance and prepare for our upcoming annual Health Safety and Environment, or HSE, conference. Eagle Materials has a fantastic safety track record, consistently performing below the industry average for total recordable incident rates across all of our businesses. Of this safety history, our goal is zero incidents. At this year's HSE conference, we will focus on how we can capitalize on our momentum by being proactive and continuing our emphasis on leading indicators to drive further improvement. I'm excited to welcome our employees to our HSE conference later this quarter. Thank you to each and every one of you for everything you do to keep our people safe. for the remainder of our fiscal year and beyond, starting with the heavy side of the business. We entered this calendar and fiscal year cautiously optimistic in cement and aggregates. In line with our expectations, our cement and aggregates volume increased for the second consecutive quarter and were up for the first half of the year. The crop for cement and aggregates volumes remains favorable for the remainder of our fiscal year for several factors. About 60% of the investment in the Infrastructure and Jobs Act, or IIJA funds, have yet to be And all signs point to those IIJA also continue to believe private non-residential construction dynamics should support cement consumption. Against the improving volume outlook for cement and aggregates, we have announced price increases across most of our markets effective January 1, 2026. Our views regarding residential construction activity, the primary driver for wallboard consumption remains more reserved in the near term, by reduced demand due to high interest rates and affordability challenges. As the builders pulled back over the summer, our wallboard volumes, ability in wallboard pricing, however, is the clearest evidence to date of the structural changes benefiting our business. The capacity reduction and steepening of synthetic gypsum availability has kept capacity utilization rates reasonable, even in the challenging home-building environment as persisted in the United States. The decades of under-building of homes should lead to mid- and long-term growth and wallboard demand. It is the obvious question that farmers invest in their long-term growth. Even in this more challenging market, we continue to generate meaningful excess-free cash flow, and thus we do obsess over how we best invest the cash. I'm excited about two organic growth investment projects we have underway, both of which currently are on budget, and both projects are unique and compelling, albeit for different reasons, by the end of calendar 2026, with several unique advantages. Environmental regulations make it increasingly difficult to permit greenfield or brownfield cement capacity additions, and we have not seen any loosening of restrictions. These are the oldest in our network. Modern cement kiln technology is much more efficient than the 1960s vintage kilns currently used at our Laramie facility. This allows us to reduce our manufacturing costs by 25%. New preheater, pre-calciner, tower, and single kiln system, two kiln system. This will result in lower energy usage in the form of fuel and a significantly higher proportion of alternative fuels and natural gas, while having meaningful savings on annual plan maintenance. We are undertaking a similar modernization project at our Southern Oklahoma wallboard facility. Again, much of the return is driven by the fact that our Duke, Oklahoma wallboard plant is one of the oldest, highest-cost wallboard plants in our network. Upon completion, we will lower the per-unit cost of the wallboard production by about 20% by reducing electricity consumption, automating the production process, and lowering our annual maintenance needs. Importantly, when volume does recover, Laramie and Duke will be well-positioned to capitalize on long-term growth drivers. In tandem with these projects, we continue to look for others. This includes M&A opportunities that meet our return criteria. We also continue to return capital prudently in the form of share repurchases while maintaining flexibility on our balance sheet.

EPS reflects up 11%, primarily because of the 8% increase in cement sales. Order revenue, our light material sector decreased 13% to $213 million in a disciplined way. Modernization, full company capital spending in fiscal 26, the two growth projects, approximately 396,000 shares for $89 million, in addition to paying our quarterly dividends. returning a total of $97 million to share 3.9 million shares remaining under our current repurchase authorization. A look at our capital structure, which continues to give us significant financial flexibility. It was 45%, and our net debt to EBITDA leverage ratio was 1% with $35 million of cash on hand. Total committed liquidity at the end of the quarter was approximately $520 million dollars, and we have no meaningful near-term debt maturities, giving us substantial flexibility. Thank you for attending today's call.

Thank you. We will now begin the question and answer session. As a reminder, to ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

If your question has been addressed and you would like to withdraw it, please press star, then two at this time we will pause momentarily to assemble our roster and today's first question comes from Trey Grooms with Stephens please proceed hey good morning everyone uh I guess first off on uh wallboard volume you know down almost 14 percent in the quarter after you know seeing some some outperformance over the last few quarters and I understand you know you You guys are facing tougher comps now, and you had some easier comps, you know, earlier this year. But if you could maybe talk about, you know, the wallboard performance in a little more color within the quarter, you know, and then kind of what drives the big swings that we've seen from one quarter to the next in any color, you know, on maybe directionally how we should be thinking about the demand drivers here.

Yeah, thanks, Trey. You know, look, I think a lot of attention, but as we think a little broader than that, you know, we like our position, we're improving that position, and we are woefully under-consuming wallboard and under-built homes here in the U.S.

And, yeah, and that all makes a lot of sense. And, you know, kind of looking at the longer-term picture definitely looks bright. Right. As we think about, you know, more kind of medium term, there's, you know, it can continue to be choppy possibly. And in that environment so far, you guys have put up very, very stable wallboard pricing, even in the face of, you know, some pretty challenging operating environments with as far as demand goes. And this quarter being an example of the resilience there, is that kind of still the same or your, you know, expectation still the same for wallboard pricing being, you know, relatively stable as we look through this kind of near-term choppiness with what's going on with the demand environment?

Yeah, look, it's always a balance.

And if I can sneak one more in there, just with the cement volume, I mean, clearly very, very strong. You know, if you could maybe talk about some of the drivers there. And you mentioned it remains favorable for the rest of the year. And is that kind of to say that you expect positive demand here to continue maybe through your fiscal year as we look at the cement and aggregates business?

Thank you, guys. yeah you know but nice to see and and volumes have continued to trend this league you know optimistic going forward that we would expect to see something similar i mean obviously we're going to hit the winter months uh here shortly but this construction season good it's not better than very good thanks for taking my question guys and the next question comes from brian brophy with stiefel please proceed hey guys this is andron for brian thank you for taking my question.

I just had one on the organic aggregates volume up 35% in the quarter. Are there any particular drivers or sort of one-time projects to call out there? And then also, is that a good run rate for how you're thinking about the next couple quarters?

Yeah. So, you know, when we look at our aggregate volumes, you know, we've been, you know, consistent aggregates has always been something that's been an interest to us. You know, during this last year, we've looked at both how we increased the capacity out of where we did the acquisitions. A lot of that growth was from the acquisitions we made. However, 35% of our existing operations was also in there from some of the capital improvements we made. You know, we'll continue to focus on that segment of the business. It's one that's interested in growing over time if the right acquisitions come available. And if not, we will continue to look internally as we're doing in our cement and wallboard facilities with our upgrade projects to maximize what we could do out of our existing reserves we have.

And then sort of along the same lines, but very strong profitability in that in concrete and aggregates in the quarter as well. I'm wondering how you're thinking about margins there over the next couple quarters.

Andrew, you know, I think if you recall, we completed in January in western Pennsylvania. Very happy, you know, one near Pittsburgh.

And our next question is from Brent Thielman with DA Davidson. Please proceed.

Hey, thanks. Good morning, guys. Hey, I had a question on just cement and the reported ASP and any sort of factors to consider there. I've heard some from some others about, you know, competitive pressures here and there. Also, I was just curious if there was any impact from oil well on the reported ASP. Obviously, that's been a softer market. Just hoping you can bridge that out.

Brent, today, given the footprint of Eagle's cement business, oil well cement has become a much smaller percentage of our business as we've diversified. And I think, as we've pointed out, it's out 26, a little early to speculate on the organization of those.

And then maybe just on the demand side of the equation, you mentioned the strength and infrastructure, clear factor here. What are your backlogs at your facilities and or sort of customer discussions tell you about, you know, call it the next six months if you're able to see out that far? I'm just trying to get a feel beyond kind of this next quarter where the climate sits.

The company would necessarily, but certainly the conversations with customers gives you a good insight as best that you can about the look forward. And as we said, coming into this year, you know, bidding act, you know, look, they're continuing to see private non-res. You never know when winter, you know, all have seen.

Thank you. And the next question is from Anthony Pecanari with Citigroup. Please proceed.

Good morning. Mike, with Duke and Laramie, I was just wondering if there were updated thoughts on CapEx in fiscal 26 and understanding you don't give multi-year guidance, if there's any way to think about kind of step up in 27 and maybe what it could look like in 28 and also just on one big, beautiful bill, if you can remind us sort of how that impacts EGLE as a cash tax care with the two big projects yeah great questions anthony um 26 you know which okay that

that's very helpful that's um and then anthony sorry yeah the last part of your yeah the last part of your question so what's really meaningful about the new tax bill is that you get to accelerate meaning you take and as a reminder if you do have a question please press star then one

on your touchdown phone. And the next question comes from Phil Ng with Jeffries. Please proceed.

Hey, good morning, guys. It's Jesse on for Phil. Just on cement, I wonder if you guys have like a view on what actual underlying demand is there. It's obviously probably not up nine, but it's probably not down mid-singles last year with a lot of cross currents with weather. I'm just curious if you kind of had a view on what underlying demand actually looks like.

Interesting, Jesse. I mean, to your point, we've seen that can be influenced, cement demand grow. You know, but similar, we see upside on.

And then just a quick follow-up on kind of cement mostly, but also in wall board. Any kind of big maintenance projects to call out over the next kind of next 12 months? I know you pulled forward quite a bit in cement last year, but just anything else to call out that we should be aware of. I'll turn it over.

The next question comes from Jonathan Bettenhausen with Truist. Please proceed. hey guys I'm on for Keith just one quick housekeeping item for me the price increases is that wallboard as well or is that just cement just in cement okay got it thank you and again if you do have a question please press star then one and at this time there are no further questioners in the queue I'd like to turn the call back over to Michael Huck for any closing remarks our Our performance in the second quarter of fiscal 2026 was a result of consistent financial, operational, and safety discipline.

We entered the second half of our fiscal year in a position of strength focused on operational excellence and committed to continuing to invest in our assets, in our network, and most importantly, in our people. Thanks for joining the call today. We look forward to discussing results and progress on our modernization projects again next quarter.

Thank you. The conference is now concluded. You may now disconnect your lines and have a pleasant day.