Good day, and welcome to the Eagle Materials first quarter of fiscal 2027 earnings conference call. This 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 Hack. Mr. Hack, please go ahead, sir.

Thanks, Chuck. Good morning. Welcome to Eagle Materials conference call for our first quarter of fiscal year 2027. 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. For further information, please refer to this disclosure, which is also included at the end of our press release. Thank you all for joining us today. Against a backdrop of macroeconomic uncertainty, we are pleased to report steady results fiscal year. Our first quarter revenue was a record $651 million. We generated earnings per share of $3.29, and our gross margin was 24.8%. These results highlight how our low-cost producer position allows us to successfully navigate and execute in dynamic environments. We published our annual report, updated corporate sustainability report, highlighting our progress across Eagle for... These documents highlight how we strive to consistently make our operations safer and our assets more efficient to maintain our low-cost producer position is our belief that a safe efficient operation also yields better everything we do at Eagle starts with protecting our employees health and well-being candidly our safety results weren't where we want them to be we are not at zero we will continue to expand our use of technology training and the sharing of best practices to further improve our safety culture mentally across our asset footprint we have driven down our co2 intensity and overall emissions levels while increasing the usage of alternative fuels at our efficiency led us to explore alternative uses of previous waste streams across all of our businesses moving mine material multiple times is not efficient and is costly through testing and analysis we have found new uses for a lot of the material that was once considered waste most of this material will be converted to revenue streams while the remainder will help improve manufacturing processes to this extent and fifty thousand were reclaimed or in previous years during fiscal year 26 our safety and operational influence by changing backhoeconomic fluctuations our strategy is to execute through cycles the long-term problem with a multi-cycle approach focused on resilience peak to trough and compounding earnings potential peak to peak, especially valuable in the current demand environment when our end markets continue to be in different points of their respective on the heavy side, continue to be your spending, AA bill, and elevated state DOT budgets. Even as questions remain about what comes next from the potential new federal state DOT budgets, our customers report a robust pipeline of multi-year infrastructure projects. Similarly, data center construction is still quantifying the impact on our volumes of rapid data center growth. What we do know is our customers are seeing an increased number of projects, project announcement to also seeing this growth such as utility and community build-outs. The volume growth in the cement and pricing initiatives in these businesses is cement up about 1% year over year. The strength of our cement sales volumes was offset by an approximately $6 million earnings impact, resulting from unexpected equipment failure at the mountain cement facility, some of which we expect to reach our 1960s vintage, and they are showing their age and importance of the new modern work we've built is, as we were able to bring in cement from across our footprint to meet customer demand without any disruption. Here in late July, the equipment issues have been largely resolved. These additional movements and elevated freight rates broadly impacted our net cement over the medium term, further benefiting from energy costs that should normalize. Infrastructure make up about 80% of our heavyside end market exposure. In residential car businesses, about 80% of our wallboard end market exposure. It's been a near-term, we have seen relatively stable demand levels on a delivered basis, so the increased freight rates we saw last quarter were the primary driver for our June 1st price increase in wallboard, which would not be typical in this volume environment. We believe wallboard pricing additionally reflects the cost pressures that the rest of the industry, other than Eagle, are facing and that go beyond the elevated freight rate. We are effectively benign this quarter, especially given our unique raw materials position with decades of low-cost gypsum across our upward footprint. The dynamic macroeconomic environment and the freight cost disruptions we've seen clearly demonstrate the benefits of our strategy to reinforce our position at the low end of it and to invest in higher cycles or larger modernizations that meet our strategic and financial criteria. We are making excellent progress on two larger and unique high-return modernization projects currently underway. The project at our Laramie, Wyoming cement plant will reduce the facility's operating cost by 25 percent, and the Duke, Oklahoma wallboard plant modernization will reduce the operating cost of that facility by 20 percent. Construction for Laramie cement plant is still on track to be completed late this year and commissioning plan for the first part of next year, and the Duke wallboard plant should commission towards the later half of 2027. Through the investments we make, larger modernizations or routine smaller capital projects, we remain well positioned to end market dynamics like we're seeing in housing today. With our capital expenditures from these two projects reaching a peak this year, we are still able to pursue additional high return growth opportunities organically or through M&A and return capital to our shareholders. Comments, let me turn it over to you, Craig.

$51 million percent reduction by continued strength in public infrastructure spending as well as key areas of private capital expenditures totaled on cement plant and layerments operating efficiency or competitive position. We continue to expect fiscal 2020 to fund the Strategic Growth Initiatives 2027 later this year, and the Duke project anticipated to be completed in mid-fiscal 2028 for $84 million. We ended the quarter with a current repurchase authorization that gives us significant financial flexibility, which is especially 1%, and our net debt to EBITDA leverage ratio is 2.1 times, and nearly $1 billion, no significant near-term debt maturity, in the businesses, and maintaining a strong...

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And our first question for today will come from Trey Grooms with Stevens. Please go ahead.

Hey, good morning, Craig, Michael. Great work in the quarter congrats on that uh wanted to touch on wallboard volume uh so you know it held in really well especially given the tough comps and uh you know you saw the strong industry numbers as well just curious to to maybe get your thoughts on you know what's going on there you know the starts data has has just kind of been bouncing around um you know still pretty subdued levels And wallboards seem to really outperform, you know, in this most recent data and in your results. So, anyway, just curious your take on the relative strength there.

Yeah, you know, Trey, we've talked a lot about where housing is today. You know, we're, again, with interest rates, but for many, many years now.

Yeah, okay. I didn't know if there was any, you know, anything unique going on in the quarter, but it doesn't sound like that's the case. um okay and then you know you mentioned on cement kind of you know better net pricing realization maybe over the the medium term which you know kind of brings up the question around maybe the the canadian tariffs on cement you know but i'd love to get your your take on any you know potential impacts that this could have in your markets um maybe you know any impact to supply or potential pricing in any of your maybe your more midwest markets yeah yeah when you look at uh that track

you know you gotta take a step back first and then kind of drill into where those impacts would happen and you know we are pretty balanced on on cement and you can see the volume move order to kind of reflect that with it uh you know any kind of pressure on that will have kind of a little bit of a water falling effect with it we don't participate as much in the northeast section where most of that cement comes in. However, you know, there probably would be a waterfall tightening of the supply chain. It's just it's already tight today with the supply-demand dynamics. So any tightening of that would be beneficial for pricing environment or for a supply-demand environment.

Okay, that makes sense. Thanks for that. Last one for me, and this one's looking out a bit, a little bit higher level. but you know you guys continue to put up nice cash generation you continue to buy back stock your your capital projects are going well and they're going to be winding down i guess in the next 12 months or so just rough roughly and you know presumably we would be in a better you know kind of demand environment at that point and you know with with the the lower cost operations that you're going to have within those plants, it seems like you'd be in a position of very strong free cash flow generation, you know, when we get, especially once we get past these capital projects. So my question on that is, is longer term thinking on, are there other, you know, internal projects that you see where there's opportunities? It seems like it's a continuous kind of effort from you guys that you've seen over the last several decades. But any additional, you know, internal projects worth noting, thoughts on, you know, how you would approach the stock buyback, M&A, et cetera, because you're going to have a lot of cash flow generation once these projects are behind you.

Yeah, you know, Trey, when we look at it, we look at all of our operations continuously. We do a set strategy for what the facility is, what the investments of that facility need to be, and kind of plan those out over multi-years with it. The main thing on the growth of Duke still, it is very difficult to get a permit just to even expand a facility, so that's where, like I said, we continue to look at everything that would make sense to a permitting process if we could even get that permit and then what those on the m a front you know we've always continuously looked at m a uh you know we are uh uh value buyers in a lot of ways so we will look at m a with our financial criteria that makes sense for us uh you know that determines you know the price really determines what we'll do on the m a front and where it's located and if it fits into our strategic footprint with it. We look at a lot of transactions every year. We will continue to look at a lot of transactions, and if they make sense from our financial perspectives, we will be definitely buyers. We have, you know, the financial balance sheet to do M&A transactions with it, but they have to meet those strict criteria we have. And then I'll turn it over to Craig on the share buyback side and some of the other uses of capital that we have on that side.

No, Trey, I think you pointed it out. We've positioned ourselves with a good balance sheet. We continue to balance. And we've been a serial acquirer not just the last five or ten years, but for 20 years. And we continue to see good value.

That's it for me. Thanks for all the colored guys. I'll pass it on.

The next question will come from Brian Brophy with Stiefel.

Please go ahead. yeah thanks good morning everybody appreciate you taking the question um it looks like cement volumes were a little bit stronger than some of the other peers that have reported just any color that you're seeing on what's driving this and um where the sources of strength have been thanks um you know look it's consistent with what the innings of some of the yeah that's helpful helpful and then just as a follow-up to that are there any notable differences in cement pricing that you're seeing across your footprint, and I'm particularly curious as to what you're seeing in Texas at the moment.

You know, cement's a very regional. The shipping radius is pretty... Different regions have different...

I'll pass it on.

The next question will come from Anthony Pettenori with Citi. Please go ahead.

Good morning. Your net cement sales price was down 2%, and if I look at last year at Fiscal 1Q, you know, they were also, I guess, flat year over year. So we're kind of on two years of maybe flat to down prices. I'm just wondering from the big picture, if you could give, you know, any context in terms of what you think is sort of driving the sort of, you know, flattish pricing in the, you know, face of, you know, rising costs. Is it really just come down to the housing market? Are there changes to import dynamics? Are there really strong regional changes? I'm just wondering, stepping back, how you'd characterize the last year and a half in terms of pricing and what's driving that?

Yeah, Anthony, if you go back to a year ago with pricing being flat, which is this year's issue, but with elevated freight coming off set, we did see some gross price on a net basis.

Okay, that's very helpful. And then that spread, that $3 a ton gross up 1% net down to Any kind of view on how that would be trending in July or thinking about fiscal 2Q, understanding it's just a very volatile situation on fuel and freight?

Yeah, look, I think geopolitical issues across the globe right now that is really driving a lot of that, certainly oil, which in some ways is a good thing.

Understood. I'll turn it over. The next question will come from Timna Tanners with Wells Fargo. Please go ahead.

Hey, good morning. I wanted to approach the question a little differently perhaps if I could for some color on any market color from your wallboard price hike you mentioned. And you mentioned it was abnormal, so how is that being received to the extent you can talk about that?

And similarly, what's the latest on cement price increases as well? yeah thanks tim yeah we did have a price increase that went through like you know given the elevating meaningfully in this demand environment in the april time frame as i mentioned

earlier we did see our markets okay i appreciate it and then i know there is a question about canadian tariffs but i guess it's also uh appropriate to ask about any thoughts on 301 tariffs and and the chatter around those industry is structurally on cement plant in the Okay, fair enough. And if I could sneak in a last one, kind of also asking for your thoughts on maybe things that are tough to speculate on. But on the state budget side, some preliminary numbers have come in. Any thoughts about those? They seem to be trending down in some regions. So any thoughts about your experience with state budgets or the outlook for 2027?

Yeah, look, I don't know, with Oklahoma, more than double the miles. So we've seen in our markets continue very healthy.

Okay, thanks again.

The next question will come from Adam Dalheimer with Thompson Davis. Please go ahead.

Hey, good morning, guys. Craig, I don't know if you mentioned this, but where was wallboard pricing at the end of the June quarter?

Yeah, we pretty much exited at the same level.

Okay. And are there, do you have any cement price increases announced for fiscal Q2? And then lastly, on data centers, how many of your cement plants do you feel like are well positioned for that? Can you just unpack the mechanics there a little bit? Like I would figure it would be your ready mix customers who are bidding on that and then coming, they come back to you or how does that work?

Depending upon the...

We work with soil stabilization groups. If you have tilt-up, then you have tilt-up. The foundation side, you work with ReadyMix. So it's a broad mix of who we work with. The consumption trends for the soil stabilization in some of these is very beneficial for us and very high demand. So we're seeing it from multiple aspects of end users.

Wow. Okay. All right. I'll turn it over. Thanks, guys.

The next question will come from Garrett Greenblatt with J.P. Morgan. Please go ahead.

Hey, thanks for taking my question. Just a quick follow-up on the Wallboard pricing as you saw in 2Q. I think you got price increases as of June 1st. So how did pricing trend as we moved through the quarter month by month? And then on the cost side of Wallboard, let's say there's much more pressure in 2Q or 1Q as opposed to 4Q. In terms of those cost pressures on a go-forward basis, how should we think about those impacts? And then last one on the recent announcement from the administration on the coal industry investments in that increase in production of coal. How do we think about the long-term impact of those investments on the cost dynamics between synthetic versus natural gypsum?

You mentioned earlier that we exited the quarter at the end of June on the net basis was driven by freight. Freight was up, you know, C when we filed. You know, that had a net pricing in the wallboard this quarter, at least on a sequential basis. Significant change in synthetic gypsum. We no doubt have seen plants. I don't see them. You know, then I think you were asking about cement first quarter costs. You know, this is our quarter, our cement footprint. So the June quarter always has an elevated operating cost because of those annual outages that happened in April and May. and then, you know, that abates.

And this will conclude our question and answer session. I would like to turn the conference back over to Mr. Michael Hack for any closing remarks. Please go ahead, sir.

Thanks, Chuck. In closing, I want to acknowledge the efforts and focus of the whole Eagle team during this extended period of changing macroeconomic conditions. It's their focus and commitment that enables us to execute our strategy and deliver results for our shareholders through cycles and over the long term. Thanks for joining our call today, and I look forward to updating you next quarter.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.