# Eagle Materials Inc: Form 10-Q for the period ended Jun 30, 2024

- Company: [Eagle Materials Inc](/companies/exp.md) (CIK 918646)
- Form: 10-Q
- Filed: 2024-07-30
- Accepted by EDGAR: Jul 30, 2024, 20:51 ET
- Period: 2024-06-30
- Accession: 0000950170-24-087945
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/918646/000095017024087945/exp-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/918646/000095017024087945/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $608.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $421.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $186.9m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $194.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $10.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $37.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $133.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $3.94 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $3.97 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 33,993,023 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-04-01 to 2024-06-30 | $132.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-04-01 to 2024-06-30 | $33.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-04-01 to 2024-06-30 | $8.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-04-01 to 2024-06-30 | $85.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $46.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $713.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $3.04bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $290.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $1.69bn | us-gaap:Liabilities |
| Long-term debt | at 2024-06-30 | $1.09bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-06-30 | $10.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-06-30 | $1.35bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,585 characters.

### EXECUTIVE SUMMARY

We are a leading manufacturer of heavy construction materials and light building materials in the United States. Our primary products, Portland Cement and Gypsum Wallboard, are commodities that are essential in commercial and residential construction; public construction projects; and projects to build, expand, and repair roads and highways. Demand for our products is generally cyclical and seasonal, depending on economic and geographic conditions. We distribute our products throughout most of the United States, except the Northeast, which provides us with regional economic diversification. However, general economic downturns or localized downturns in the regions where we have operations may have a material adverse effect on our business, financial condition, and results of operations.

Our business is organized into two sectors: Heavy Materials, which includes the Cement and Concrete and Aggregates segments; and Light Materials, which includes the Gypsum Wallboard and Recycled Paperboard segments. Financial results and other information for the three months ended June 30, 2024, and 2023, are presented on a consolidated basis and by these business segments – Cement, Concrete and Aggregates, Gypsum Wallboard, and Recycled Paperboard.

We conduct one of our cement operations through a joint venture, Texas Lehigh Cement Company LP, which is located in Buda, Texas (the Joint Venture). We own a 50% interest in the Joint Venture and account for our interest under the equity method of accounting. We proportionately consolidate our 50% share of the Joint Venture’s Revenue and Operating Earnings in the presentation of our Cement segment, which is the way management organizes the segments within the Company for making operating decisions and assessing performance.

All our business activities are conducted in the United States. These activities include the mining of limestone for the manufacture, production, distribution, and sale of portland cement, including portland limestone cement (a basic construction material that is the essential binding ingredient in concrete); the grinding and sale of slag; the mining of gypsum for the manufacture and sale of gypsum wallboard; the manufacture and sale of recycled paperboard to the gypsum wallboard industry and other paperboard converters; the sale of readymix concrete; and the mining and sale of aggregates (crushed stone, sand, and gravel).

### MARKET CONDITIONS AND OUTLOOK

Our end markets remained steady despite continued restrictive monetary policy from the U.S. Federal Reserve. Although Sales Volume for both Cement and Gypsum Wallboard declined in the first quarter of fiscal 2025, the decline was relatively low, and both pricing and demand remained relatively strong.

#### Demand Outlook

The macroeconomic environment continues to be constructive for our products. We expect demand for cement to remain steady given increased federal funding from the *Infrastructure Investment and Jobs Act* for public construction and repair projects; continued high allocations from state budgets for additional infrastructure projects; and growth in heavy industrial projects. The chronic housing shortage driven by more than a decade of underproduction supports solid levels of housing construction activity, and at this time, most consumers are employed and confident they will remain employed. These conditions support the housing market; however, persistent inflation and the impact of interest rates on affordability have moderated housing market strength. Nonetheless, we also believe our geographical footprint across the U.S. heartland and fast-growing Sun Belt region positions us to capitalize on these favorable market dynamics.

#### Cost Outlook

We believe we are well-positioned to manage our cost structure and meet our customers’ needs during this fiscal year. Our substantial raw material reserves for our Cement, Aggregates, and Gypsum Wallboard businesses, and their proximity to our respective manufacturing facilities, support our low-cost producer position across all our business segments.

Energy costs, primarily solid fuel, decreased slightly in all our businesses, but primarily Cement, during the first quarter of fiscal 2025 compared with fiscal 2024. We anticipate fuel costs will be lower in fiscal 2025 but will remain higher than they have been historically. We are expecting increases in freight and delivery costs in fiscal 2025 compared with fiscal 2024.

The primary raw material used to produce paperboard is OCC. Prices for OCC increased during the three months ended June 30, 2024 as compared to fiscal 2024. Fiber prices are subject to change upon short notice due to several factors, including supply of OCC and demand for OCC from both domestic and international companies. Our current customer contracts for gypsum liner include price adjustments that partially compensate for changes in raw material fiber prices. However, because these price adjustments are not realized until future quarters, material costs in our Gypsum Wallboard segment are likely to fluctuate until the effects of these price adjustments are realized.

Maintenance costs increased in fiscal 2024, and we expect continued inflation for maintenance in fiscal 2025 as equipment and contractor costs remain high.

### RESULTS OF OPERATIONS

### THREE MONTHS ENDED June 30, 2024, Compared WITH THREE MONTHS ENDED June 30, 2023

*(dollars in thousands, except per share)*

|  | For the Three Months Ended June 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Revenue | $608,689 | $601,521 | 1% |
| Cost of Goods Sold | (421,821) | (425,526) | (1)% |
| Gross Profit | 186,868 | 175,995 | 6% |
| Equity in Earnings of Unconsolidated Joint Venture | 7,716 | 3,159 | 144% |
| Corporate General and Administrative | (15,649) | (11,679) | 34% |
| Other Non-Operating Income | 2,683 | 213 | 1160% |
| Interest Expense, net | (10,684) | (12,239) | (13)% |
| Earnings Before Income Taxes | 170,934 | 155,449 | 10% |
| Income Tax Expense | (37,092) | (34,600) | 7% |
| **Net Earnings** | **$133,842** | **$120,849** | **11%** |
| **Diluted Earnings per Share** | **$3.94** | **$3.40** | **16%** |

### REVENUE

Revenue increased by $7.2 million, or 1%, to $608.7 million for the three months ended June 30, 2024. Higher gross sales prices positively affected Revenue by $26.8 million, and were partially offset by lower Sales Volume, which adversely affected Revenue by approximately $19.6 million.

### COST OF GOODS SOLD

Cost of Goods Sold decreased by $3.7 million, or 1%, to $421.8 million for the three months ended June 30, 2024. The decrease was due to lower Sales Volume of 15.4 million, partially offset by higher operating costs of $11.7 million. Higher operating costs were primarily related to our Concrete and Aggregates and Recycled Paperboard businesses and are discussed further in the segment analysis.

### GROSS PROFIT

Gross Profit increased 6% to $186.7 million during the three months ended June 30, 2024. The increase was primarily related to higher gross sales prices, partially offset by lower Sales Volume and increased operating costs. The gross margin expanded to 31%, with higher gross sales prices being partially offset by a rise in operating costs.

### EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURE

Equity in Earnings of our Unconsolidated Joint Venture increased by $4.5 million, or 144%, for the three months ended June 30, 2024. The increase was primarily due to higher Sales Volume and lower operating costs, which positively affected earnings by approximately $0.3 million and $4.5 million, respectively. This was partially offset by lower gross sales prices of $0.3 million. Decreased operating costs were primarily related to lower maintenance and energy costs, which increased operating earnings by $3.5 million and $0.5 million respectively. Lower maintenance costs in the current fiscal quarter were partly due to maintenance costs in the prior year being approximately $2.8 million higher than normal given an extended outage that required additional maintenance spending as well as reduced production.

### CORPORATE GENERAL AND ADMINISTRATIVE

Corporate General and Administrative expenses increased by approximately $3.9 million, or 34%, for the three months ended June 30, 2024. The increase was due primarily to higher salary and incentive compensation, insurance, and information technology costs of $1.2 million, $1.0 million, and $1.6 million, respectively.

### OTHER NON-OPERATING INCOME

Other Non-Operating Income consists of a variety of items that are unrelated to segment operations and include non-inventoried Aggregates income, asset sales, and other miscellaneous income and cost items.

### INTEREST EXPENSE, NET

Interest Expense, net decreased by approximately $1.5 million, or 13%, during the three months ended June 30, 2024. This decrease was primarily due to lower interest on our revolving credit facility, which was related to lower average outstanding borrowings in the first quarter of fiscal 2025 compared with the prior-year period.

### EARNINGS BEFORE INCOME TAXES

Earnings Before Income Taxes increased to $170.9 million during the three months ended June 30, 2024, primarily as a result of higher Gross Profit and Equity in Earnings of Unconsolidated Joint Venture, and lower Interest expense, which was partially offset by higher Corporate General and Administrative expense.

### INCOME TAX EXPENSE

Income Tax Expense was $37.1 million for the three months ended June 30, 2024, compared with $34.6 million for the three months ended June 30, 2023. The effective tax rate remained consistent at 22% with the prior-year period.

### NET EARNINGS

Net Earnings increased 11% to $133.8 million for the three months ended June 30, 2024, as discussed above.

### Three MONTHS ENDED June 30, 2024 vs. three MONTHS ENDED June 30, 2023 BY SEGMENT

The following presents results within our two business sectors for the three months ended June 30, 2024, and 2023. Revenue and operating results are organized by sector and discussed by individual business segments.

### Heavy Materials

### CEMENT (1)

*(in thousands, except per ton information)*

|  | For the Three Months Ended June 30, 2024 | 2023 | Percentage Change |
| --- | ---: | ---: | ---: |
| Revenue, including Intersegment and Joint Venture | $339,162 | $329,032 | 3% |
| Less Intersegment Revenue | (10,280) | (10,137) | 1% |
| Less Joint Venture Revenue | (29,310) | (27,123) | 8% |
| Revenue | $299,572 | $291,772 | 3% |
| Sales Volume (M Tons) | 1,947 | 2,013 | (3)% |
| Freight and Delivery Costs billed to Customers | $(20,372) | $(17,528) | 16% |
| Average Net Sales Price, per ton (2) | $156.10 | $147.27 | 6% |
| Operating Margin, per ton | $45.78 | $36.79 | 24% |
| Operating Earnings | $89,125 | $74,061 | 20% |

(1) Total of wholly owned subsidiaries and proportionately consolidated 50% interest of the Joint Venture’s results.

(2) Net of freight per ton, including Joint Venture.

Cement Revenue was $339.2 million, a 3% increase, for the three months ended June 30, 2024. Higher gross sales prices increased Cement Revenue by approximately $20.3 million, and were partially offset by lower Sales Volume of $10.2 million.

Cement Operating Earnings increased by $15.0 million to $89.1 million for the three months ended June 30, 2024. The increase was due to higher gross sales prices of $20.3 million which were partially offset by lower Sales Volume and higher operating costs of $2.9 million and $2.4 million, respectively. The increase in operating costs was primarily due to higher freight, labor, depreciation, and purchased raw materials costs of approximately $3.4 million, $1.1 million, $1.2 million, and $2.6 million, respectively. These were partially offset by lower maintenance and fuel costs of $1.8 million and $0.9 million, and the impact of recording acquired inventories at fair value in the first quarter of fiscal 2024 of $2.8 million. The Operating Margin increased to 26% from 23% as a result of higher gross sales prices, partially offset by the increase in operating expenses.

### CONCRETE AND AGGREGATES

*(in thousands, except net sales prices)*

|  | For the Three Months Ended June 30, 2024 | 2023 | Percentage Change |
| --- | ---: | ---: | ---: |
| Revenue, including Intersegment | $64,815 | $70,453 | (8)% |
| Less Intersegment Revenue | $(3,777) | $(3,038) | 24% |
| Revenue | $61,038 | $67,415 | (9)% |
| Sales Volume |  |  |  |
| M Cubic Yards of Concrete | 343 | 385 | (11)% |
| M Tons of Aggregate | 799 | 1,157 | (31)% |
| Average Net Sales Price |  |  |  |
| Concrete - Per Cubic Yard | $148.56 | $141.80 | 5% |
| Aggregates - Per Ton | $12.61 | $11.30 | 12% |
| Operating Earnings | $2,980 | $7,034 | (58)% |

Concrete and Aggregates Revenue declined 8% to $64.8 million for the three months ended June 30, 2024. The decrease was due to lower Sales Volume, which reduced Revenue by $9.3 million, partially offset by higher gross sales prices of $3.6 million.

Operating Earnings were approximately $3.0 million, a 58% decline. Lower Sales Volume of $2.8 million and higher operating costs of $4.9 million contributed to the decrease, and were partially offset by higher gross sales prices of $3.6 million. The increase in operating costs was primarily due to higher materials, maintenance, and delivery expenses of approximately $2.3 million, $1.3 million, and $1.3 million, respectively.

### Light Materials

### GYPSUM WALLBOARD

*(in thousands, except per MSF information)*

|  | For the Three Months Ended June 30, 2024 | 2023 | Percentage Change |
| --- | ---: | ---: | ---: |
| Revenue | $217,826 | $219,097 | (1)% |
| Sales Volume (MMSF) | 757 | 763 | (1)% |
| Freight and Delivery Costs billed to Customers | $(36,485) | $(38,608) | (5)% |
| Average Net Sales Price, per MSF (1) | $239.43 | $236.66 | 1% |
| Freight, per MSF | $48.20 | $50.60 | (5)% |
| Operating Margin, per MSF | $124.14 | $119.08 | 4% |
| Operating Earnings | $93,976 | $90,857 | 3% |

(1) Net of freight per MSF.

Gypsum Wallboard Revenue was $217.8 million, a 1% decrease for the three months ended June 30, 2024. Lower Sales Volume reduced Revenue by approximately $1.7 million, partially offset by higher gross sales prices of $0.4 million. Our market share remained relatively consistent during the three months ended June 30, 2024.

Operating Earnings increased 3% to $94.0 million, primarily because of higher gross sales prices of $0.4 million and lower operating costs of $3.4 million. The higher gross sales prices were partially offset by lower Sales Volume of $0.7 million. The lower operating costs were primarily related to freight and energy, which positively affected Operating Earnings by approximately $1.9 million and $1.1 million, respectively. Operating Margin increased to 43% for the three months ended June 30, 2024, primarily because of higher gross sales prices and lower operating costs. Fixed costs are not a significant portion of the overall cost of wallboard; therefore, changes in utilization have a relatively minor impact on our operating cost per unit.

### RECYCLED PAPERBOARD

*(in thousands, except per ton information)*

|  | For the Three Months Ended June 30, 2024 | 2023 | Percentage Change |
| --- | ---: | ---: | ---: |
| Revenue, including Intersegment | $54,240 | $45,328 | 20% |
| Less Intersegment Revenue | (23,987) | (22,091) | 9% |
| Revenue | $30,253 | $23,237 | 30% |
| Sales Volume (M Tons) | 91 | 83 | 10% |
| Average Net Sales Price, per ton (1) | $597.41 | $536.56 | 11% |
| Operating Margin, per ton | $93.44 | $86.77 | 8% |
| Operating Earnings | $8,503 | $7,202 | 18% |

(1) Net of freight per ton.

Recycled Paperboard Revenue increased 20% to $54.2 million during the three months ended June 30, 2024. Higher gross sales prices and Sales Volume increased Revenue by $4.9 million and $4.0 million, respectively. Higher gross sales prices were related to the pricing provisions in our long-term sales agreements.

Operating Earnings increased 18% to $8.5 million, primarily because of higher gross sales prices and Sales Volume, which increased Operating Earnings by $4.9 million and $0.6 million, respectively. This was partially offset by higher operating costs, which reduced Operating Earnings by approximately $4.2 million. The increase in operating costs was primarily related to higher input costs, namely fiber,of approximately $6.6 million which were partially offset by lower energy, chemical, and freight costs of $1.0 million, $0.7 million, and $0.5 million, respectively. The Operating Margin remained consistent at 16%, with the increase in operating costs offsetting the higher gross sales prices. Although the Company has certain pricing provisions in its long-term sales agreements, prices are only adjusted at certain times throughout the year, so price adjustments are not always reflected in the same period as the change in costs.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts disclosed in the financial statements. In many cases, alternative policies or estimation techniques could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare our financial statements. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information.

Information regarding our Critical Accounting Policies can be found in our Annual Report. The three Critical Accounting Policies that we believe are material to our financial statements, and either require the most judgment, or the selection or application of alternative accounting policies, are those related to long-lived assets, goodwill, and business combinations. Management has discussed the development and selection of these Critical Accounting Policies and estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm. In addition, Note (A) to the financial statements in our Annual Report contains a summary of our significant accounting policies.

### Recent Accounting Pronouncements

Refer to Footnote (A) in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q for information regarding recently issued accounting pronouncements that may affect our financial statements.

### LIQUIDITY AND CAPITAL RESOURCES

We believe at this time we have access to sufficient financial resources from our liquidity sources to fund our business and operations, including contractual obligations, capital expenditures, and debt service obligations for at least the next twelve months. We regularly monitor any potential disruptions to the economy, and to our operations, particularly changing fiscal policy or economic conditions affecting our industries. Please see the Debt Financing Activities section below for a discussion of our revolving credit facility and the amount of borrowings available to us in the next twelve-month period.

### Cash Flow

The following table provides a summary of our Cash Flows:

*(dollars in thousands)*

|  | For the Three Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| **Net Cash Provided by Operating Activities** | **$132,636** | **$140,487** |
| **Investing Activities** |  |  |
| Additions to Property, Plant, and Equipment | (33,128) | (35,999) |
| Acquisition Spending | — | (55,053) |
| **Net Cash Used in Investing Activities** | **(33,128)** | **(91,052)** |
| **Financing Activities** |  |  |
| Increase in Credit Facility | 10,000 | 65,000 |
| Repayment of Term Loan | (2,500) | (2,500) |
| Dividends Paid to Stockholders | (8,538) | (8,995) |
| Purchase and Retirement of Common Stock | (85,490) | (74,058) |
| Proceeds from Stock Option Exercises | 56 | 10,385 |
| Shares Redeemed to Settle Employee Taxes on Stock Compensation | (1,421) | (1,360) |
| **Net Cash Used in Financing Activities** | **(87,893)** | **(11,528)** |
| **Net Increase in Cash and Cash Equivalents** | **$11,615** | **$37,907** |

Net Cash Provided by Operating Activities decreased by $7.9 million to $132.6 million during the three months ended June 30, 2024. This decrease was primarily attributable to lower cash flows from changes in Working

Capital and dividends from our Unconsolidated Joint Venture of $8.9 million and $2.5 million, respectively. This was partially offset by higher Net Earnings, adjusted for approximately $3.7 million of non-cash expenses.

Working Capital increased by $34.1 million to $422.4 million at June 30, 2024, compared with March 31, 2024. The increase was primarily due to higher Cash, Accounts and Notes Receivable, net, and Prepaid and Other Assets of $11.6 million, $75.4 million, and $7.9 million, respectively. This was partially offset by $7.3 million of lower Income Tax Receivable, $21.0 million of higher Accounts Payable, and $35.7 million of higher Income Tax Payable.

The increase in Accounts Receivable at June 30, 2024, was primarily related to higher Revenue during the three months ended June 30, 2024, particularly in the month of June, compared with the three months ended March 31, 2024. As a percentage of quarterly sales generated for the respective quarter, Accounts Receivable was approximately 46% and 33% at June 30, 2024 and March 31, 2024, respectively. Management measures the change in Accounts Receivable by monitoring the days sales outstanding on a monthly basis to determine if any deterioration has occurred in the collectability of the Accounts Receivable. No significant deterioration in the collectability of our Accounts Receivable was identified at June 30, 2024.

Our Inventory balance at June 30, 2024, decreased by approximately $2.3 million from our balance at March 31, 2024. Within Inventory, Recycled Paperboard and Repair Parts inventory declined $4.3 million and $5.3 million, respectively. This was partially offset by increased Raw Materials and Materials-in-Progress, Aggregates and Gypsum Wallboard inventory of approximately $3.6 million, $1.9 million, and $1.7 million, respectively. The relatively flat balance in Raw Materials and Materials-in-Progress is consistent with our business cycle; we generally build up clinker inventory over the winter months to meet the demand for cement in the spring and summer. The decrease in Repair Parts inventory was primarily due to the completion of most of our scheduled outages during the quarter. The largest individual balance in our Inventory is our Repair Parts. These parts are necessary given the size and complexity of our manufacturing plants, as well as the age of certain of our plants, which creates the need to stock a high level of Repair Parts inventory. We believe all of these repair parts are necessary, and we perform semi-annual analyses to identify obsolete parts. We have less than one year’s sales of all product inventories, and our inventories have a low risk of obsolescence because our products are basic construction materials.

Net Cash Used in Investing Activities during the three months ended June 30, 2024, was approximately $33.1 million, compared with $91.1 million during the same period in 2023. The $58.0 million decrease was primarily related to the $55.1 million purchase of the Stockton Terminal in May 2023.

Net Cash Used in Financing Activities was $87.9 million during the three months ended June 30, 2024 compared with $11.5 million during the same period in 2023. The $76.4 million increase was primarily related to lower borrowings and Proceeds from Stock Option Exercises of $55.0 million and $10.3 million, respectively, as well as higher Purchase and Retirement of Common Stock of $11.4 million.

Our debt-to-capitalization ratio and net-debt-to-capitalization ratio were 45.1% and 44.0%, respectively, at June 30, 2024, compared with 45.7% and 44.9%, respectively, at March 31, 2024.

### Debt Financing Activities

Below is a summary of the Company’s outstanding debt facilities at June 30, 2024:

|  | Maturity |
| --- | --- |
| Revolving Credit Facility | May 2027 |
| Term Loan | May 2027 |
| 2.500% Senior Unsecured Notes | July 2031 |

See Footnote (M) to the Unaudited Consolidated Financial Statements for further details on the Company’s debt facilities, including interest rate, and financial and other covenants and restrictions.

The revolving borrowing capacity of our Revolving Credit Facility is $750.0 million (any revolving loans borrowed under the Revolving Credit Facility, as applicable, the Revolving Loans). The Revolving Credit Facility also includes a swingline loan sublimit of $25.0 million, and a $40.0 million letter of credit facility. At June 30, 2024 we had $180.0 million outstanding of Revolving Loans under the Revolving Credit Facility and $10.0 million of outstanding letters of credit, leaving us with $560.0 million of available borrowings under the Revolving Credit Facility, net of the outstanding letters of credit. We are contingently liable for performance under $30.1 million in performance bonds relating primarily to our mining operations. We do not have any off-balance sheet debt, or any outstanding debt guarantees.

Other than the Revolving Credit Facility, we have no additional source of committed external financing in place. Should the Revolving Credit Facility be terminated, no assurance can be given as to our ability to secure a new source of financing. Consequently, if any balance were outstanding on the Revolving Credit Facility at the time of termination, and an alternative source of financing could not be secured, it would have a material adverse impact on our business.

We believe that our cash flow from operations and available borrowings under our Revolving Credit Facility, as well as cash on hand, should be sufficient to meet our currently anticipated operating needs, capital expenditures, and dividend and debt service requirements for at least the next 12 months. However, our future liquidity and capital requirements may vary depending on a number of factors, including market conditions in the construction industry, our ability to maintain compliance with covenants in our Revolving Credit Facility, the level of competition, and general and economic factors beyond our control, such as supply chain constraints and inflation. These and other developments could reduce our cash flow or require that we seek additional sources of funding. We cannot predict what effect these factors will have on our future liquidity. See Market Conditions and Outlook section above for further discussion of the possible effects on our business.

As market conditions warrant, the Company may from time to time seek to purchase or repay its outstanding debt securities or loans, including the 2.500% Senior Unsecured Notes, Term Loan, and borrowings under the Revolving Credit Facility, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our balance sheet or the incurrence of new debt. The amounts involved in any such purchase transactions, individually or in aggregate, may be material.

We have approximately $24.9 million of lease liabilities at June 30, 2024, that have an average remaining life of approximately 9.9 years.

### Dividends

Dividends paid were $8.5 million and $9.0 million for the three months ended June 30, 2024, and 2023, respectively. Each quarterly dividend payment is subject to review and approval by our Board of Directors, who will continue to evaluate our dividend payment amount on a quarterly basis.

### Share Repurchases

During the three months ended June 30, 2024, our share repurchases were as follows:

| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |
| --- | ---: | ---: | ---: | ---: |
| April 1 through April 30, 2024 | 129,067 | $256.53 | 129,067 |  |
| May 1 through May 31, 2024 | 118,618 | 253.81 | 118,618 |  |
| June 1 through June 30, 2024 | 100,048 | 222.63 | 100,048 |  |
| **Quarter 1 Totals** | **347,733** | **$245.85** | **347,733** |  |
| **Year-to-Date Totals** | **347,733** | **$245.85** | **347,733** | **5,535,937** |

28

On May 17, 2022, the Board of Directors authorized us to repurchase an additional 7.5 million shares. This authorization brought the cumulative total of Common Stock our Board has approved for repurchase in the open market to 55.9 million shares since we became publicly held in April 1994. Through June 30, 2024, we have repurchased approximately 50.4 million shares.

Share repurchases may be made from time to time in the open market or in privately negotiated transactions. The timing and amount of any share repurchases are determined by management, based on its evaluation of market and economic conditions and other factors. In some cases, repurchases may be made pursuant to plans, programs, or directions established from time to time by the Company’s management, including plans intended to comply with the safe-harbor provided by Rule 10b5-1.

During the three months ended June 30, 2024, the Company withheld from employees 5,493 shares of stock upon the vesting of Restricted Shares that were granted under the Plan. We withheld these shares to satisfy the employees’ statutory tax withholding requirements, which is necessary once the Restricted Shares or Restricted Share Units are vested.

### Capital Expenditures

The following table details capital expenditures by category:

*(dollars in thousands)*

|  | For the Three Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Land and Quarries | $2,344 | $548 |
| Plants | 13,591 | 16,272 |
| Buildings, Machinery, and Equipment | 17,193 | 19,179 |
| **Total Capital Expenditures** | **$33,128** | **$35,999** |

Capital expenditures for fiscal 2025 are expected to range from $310.0 million to $340.0 million and will be allocated across both Heavy Materials and Light Materials sectors. These estimated capital expenditures will include maintenance capital expenditures and improvements, as well as other safety and regulatory projects.

### FORWARD LOOKING STATEMENTS

Certain matters discussed in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not historical facts or guarantees of future performance but instead represent only the Company’s belief at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside the Company’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company’s actual performance include the following: the cyclical and seasonal nature of the Company’s businesses; fluctuations in public infrastructure expenditures; adverse weather conditions and their effects on infrastructure and other construction projects; the fact that our products are commodities and that prices for our products are subject to material fluctuation due to market conditions and other factors beyond our control; the availability and fluctuations in the cost of raw materials; changes in the costs of energy, including, without limitation, natural gas, coal and oil (including diesel), and the nature of our obligations to counterparties under energy supply contracts, such as those related to market conditions (for example, spot market prices), governmental orders and other matters; changes in the cost and availability of transportation; unexpected operational difficulties, including unexpected maintenance costs, equipment downtime and interruption of production; material nonpayment or non-performance by any of our key customers; consolidation of our customers; inability to timely execute announced capacity expansions; difficulties and delays in the development of new business lines; governmental regulation and changes in governmental and public policy (including, without limitation, climate change and other environmental regulation); possible outcomes of pending or future litigation or arbitration proceedings; changes in economic conditions or the nature or level of activity in any one or more of the markets or industries in which the Company or its customers are engaged; severe weather conditions (such as winter storms, tornados and hurricanes) and their effects on our facilities, operations and contractual arrangements with third parties; competition; cyber-attacks or data security breaches; increases in capacity in the gypsum wallboard and cement industries; changes in the demand for residential housing construction or commercial construction or construction projects undertaken by state or local governments; the availability of acquisition or other growth opportunities that meet our financial return standards and fit our strategic focus; risks related to pursuit of acquisitions, joint ventures and other transactions or the execution or implementation of such transactions, including the integration of operations acquired by the Company; general economic conditions including inflation and recessionary conditions; and changes in interest rates and the resulting effects on the Company and demand for our products. For example, increases in interest rates, decreases in demand for construction materials or increases in the cost of energy (including, without limitation, natural gas, coal and oil) and the cost of our raw materials can expected to adversely affect the revenue and operating earnings of our operations. In addition, changes in national or regional economic conditions and levels of infrastructure and construction spending could also adversely affect the Company’s result of operations. Finally, any forward-looking statements made by the Company are subject to the risks and impacts associated with natural disasters, the outbreak, escalation, or resurgence of health emergencies, pandemics or other unforeseen events, including, without limitation, the COVID-19 pandemic and responses thereto designed to contain its spread and mitigate its public health effects, as well as their impact on our operations or on economic conditions, capital and financial markets. These and other factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024. All forward-looking statements made herein are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein will increase with the passage of time. The Company undertakes no duty to update any forward-looking statement to reflect future events or changes in the Company’s expectations.

## Market risk

As filed, 1,035 characters.

We are exposed to market risks related to fluctuations in interest rates on our Revolving Credit Facility. We have occasionally utilized derivative instruments, including interest rate swaps, in conjunction with our overall strategy to manage the debt outstanding that is subject to changes in interest rates. We had a $750.0 million Revolving Credit Facility at June 30, 2024, under which borrowings bear interest at a variable rate. A hypothetical 100 basis point increase in interest rates on the $180.0 million of borrowings under the Revolving Credit Facility and the $180.0 million of borrowings under the Term Loan at June 30, 2024, would increase interest expense by approximately $3.6 million on an annual basis. At present, we do not utilize derivative financial instruments.

We are subject to commodity risk with respect to price changes principally in coal, coke, natural gas, and power. We attempt to limit our exposure to changes in commodity prices by entering into contracts or increasing our use of alternative fuels.

## Controls and procedures

As filed, 1,035 characters.

We have established a system of disclosure controls and procedures that are designed to ensure that information relating to the Company, which is required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 (Exchange Act), is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), in a timely fashion. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) was performed as of the end of the period covered by this quarterly report. This evaluation was performed under the supervision and with the participation of management, including our CEO and CFO. Based upon that evaluation, our CEO and CFO have concluded that these disclosure controls and procedures were effective.

## Risk factors

As filed, 274 characters.

For information regarding factors that could affect our results of operations, financial condition, and liquidity, see Part 1. Item 1A. Risk Factors in our Form 10-K for the fiscal year ended March 31, 2024, filed with the Securities and Exchange Commission on May 22, 2024.

Filed Jul 30, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-087945. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.