Eagle Materials Inc. (EXP) - Q1 2027 (Ended June 30, 2026) Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026 (Fiscal Q1 2027). Eagle Materials Inc. is a leading U.S. manufacturer of heavy construction products (cement, concrete, aggregates) and light building materials (gypsum wallboard, recycled paperboard). The company operates through two sectors: Heavy Materials and Light Materials, with facilities spanning 21 states. The company is a large accelerated filer.
Key Financial Metrics
| Metric | Q1 2027 (Jun 30, 2026) | Q1 2026 (Jun 30, 2025) |
|---|---|---|
| Revenue | $650.97 million | $634.69 million |
| Net Earnings | $102.13 million | $123.36 million |
| Diluted EPS | $3.29 | $3.76 |
| Gross Profit | $161.25 million | $185.60 million |
| Gross Margin | 24.8% | 29.2% |
| Operating Cash Flow | $154.38 million | $136.63 million |
| Capital Expenditures | $120.76 million | $76.10 million |
| Total Debt (Long-Term + Current) | $1.76 billion | $1.78 billion |
| Cash and Equivalents | $233.54 million | $59.74 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 3% year-over-year, driven by a 3% increase in sales volume, partially offset by a 2% decrease in average net sales prices.
- Profitability Decline: Net earnings decreased 17% to $102.1 million. Gross profit declined 13% due to higher operating costs ($25.7 million increase) and lower sales prices ($3.5 million decrease).
- Segment Performance:
- Cement: Revenue up 8% on volume growth; Operating Earnings down 9% due to higher maintenance costs and unexpected downtime at the Mountain Cement facility.
- Gypsum Wallboard: Revenue down 8% and Operating Earnings down 21% due to lower sales volume (residential construction slowdown) and higher freight costs.
- Recycled Paperboard: Revenue up 15% and Operating Earnings up 38% due to higher sales prices and volume.
- Concrete & Aggregates: Operating Earnings down 35% due to higher operating costs.
- Interest Expense: Net interest expense increased 11% to $12.9 million, primarily due to the issuance of 5.000% Senior Unsecured Notes in November 2025.
- Capital Spending: Capital expenditures increased significantly to $120.8 million, driven by expansion and modernization projects at the Mountain Cement facility and the Duke, Oklahoma gypsum wallboard plant.
Guidance, Outlook, and Risks
- Market Outlook: Management expects cement demand to remain steady, supported by federal infrastructure spending (IIJA) and data center construction. Residential construction remains challenging due to high mortgage rates, impacting wallboard demand.
- Cost Outlook: Energy costs are expected to remain stable. Freight costs are expected to increase in fiscal 2027. Maintenance costs are expected to see low single-digit inflation outside of specific project-driven increases.
- Capital Expenditure Guidance: Full-year fiscal 2027 capital expenditures are expected to range from $490.0 million to $525.0 million.
- Liquidity: The company maintains a $750 million revolving credit facility with $740.1 million available. Debt-to-capitalization ratio is 54.5%.
- Risks: Key risks include cyclical demand, raw material and energy price volatility, labor shortages (specifically truck drivers), and potential delays in capital projects. The company is also undergoing a multi-year ERP implementation.
Investor Verification Checklist
- Verify the impact of the Mountain Cement facility downtime on future maintenance costs and production capacity.
- Monitor residential construction trends and mortgage rates to assess the recovery timeline for the Gypsum Wallboard segment.
- Review the progress of capital projects (Mountain Cement and Duke, OK) to ensure they align with the $490M-$525M full-year guidance.
- Assess the sustainability of Recycled Paperboard margins given the reliance on long-term supply agreements and OCC price volatility.
- Confirm the company's ability to maintain financial covenants (Leverage Ratio ≤ 3.50:1.00) amidst increased interest expenses from the new 5.000% notes.