Business Context and Reporting Period
Company: United States Lime & Minerals, Inc. (USLM)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Business Overview: The Company manufactures lime and limestone products for construction, industrial, environmental, metals, agriculture, and oil and gas sectors. Operations are conducted through wholly-owned subsidiaries across six U.S. states. The Company also holds non-operated working interests in natural gas wells in the Barnett Shale Formation.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenues | $87.8 million | $91.3 million |
| Gross Profit | $41.8 million (47.5% margin) | $46.2 million (50.6% margin) |
| Operating Profit | $35.8 million (40.7% margin) | $39.9 million (43.7% margin) |
| Net Income | $30.6 million | $34.1 million |
| Diluted EPS | $1.06 | $1.19 |
| Operating Cash Flow | $32.1 million | $39.4 million |
| Cash and Equivalents (End of Period) | $383.2 million | $300.6 million |
| Total Debt | $0 (No outstanding debt) | $0 |
| Capital Expenditures | $18.3 million | $14.9 million |
Material Changes vs. Prior Period
- Revenue Decline: Revenues decreased 3.7% year-over-year, driven by a 3.4% drop in sales volumes (lower demand from construction, oil/gas, and roof shingle customers) and a 0.2% decrease in average selling prices.
- Margin Compression: Gross profit margin declined from 50.6% to 47.5%. This was primarily due to lower revenues and increased fuel and transportation costs.
- Net Income Reduction: Net income fell 10.4% to $30.6 million, reflecting the revenue and margin pressures.
- Capital Spending Increase: Capital expenditures rose to $18.3 million, with $10.0 million allocated to the new vertical kiln project at the Texas Lime Company plant.
- Cash Position: Despite lower operating cash flow, the cash balance increased by $12.0 million quarter-over-quarter to $383.2 million.
Outlook, Commentary, and Risks
- Management Outlook: Management remains optimistic about the balance of 2026, particularly regarding demand from construction customers, despite the first revenue decrease since the 2020 pandemic onset. Weather-related shipping interruptions from January storms were resolved during the quarter.
- Major Project: Construction continues on a new vertical kiln in Texas with estimated total costs of $65 million. The project is expected to start up in the summer of 2026. As of March 31, 2026, $48.5 million has been incurred ($45.9 million paid).
- Liquidity: The Company maintains a $75 million revolving credit facility with no outstanding debt draws, aside from $4.6 million in letters of credit. Management believes cash on hand and operating cash flows are sufficient for operations, capital needs, and dividends.
- Dividends: A quarterly dividend of $0.06 per share was paid in March 2026. A subsequent dividend of $0.06 per share was declared on April 29, 2026, payable June 12, 2026.
- Risks: Key risks include volatile energy and transportation costs, supply chain disruptions, regulatory changes, and macroeconomic factors affecting construction and industrial demand.
Investor Verification Checklist
- Texas Kiln Project Status: Verify the timeline for the summer 2026 startup and monitor for any cost overruns beyond the $65 million estimate.
- Volume Recovery: Confirm if the decrease in construction and oil/gas demand is a temporary seasonal/weather effect or a structural shift.
- Cost Pass-Through: Assess the Company's ability to pass through rising fuel and transportation costs to customers to stabilize gross margins.
- Working Capital Trends: Monitor the $10.2 million increase in trade receivables to ensure it reflects timing rather than collection issues.
- Debt Covenants: Review the Cash Flow Leverage Ratio to ensure continued compliance for dividend payments and share repurchases (limit is 3.00 to 1.00 for repurchases).