EAGLE MATERIALS INC

Eagle Materials Inc. is a leading U.S. manufacturer of heavy construction products and light building materials, with primary products Cement and Gypsum Wallboard that are essential for building, expanding, and repairing roads, highways, and residential, commercial, and industrial structures across America. The company operates through a network of more than 70 facilities spanning 21 states, and demand for its products is generally cyclical and seasonal, depending on economic and geographic conditions. The U.S. cement industry comprises numerous regional markets rather than a single national market, and in calendar 2025, cement consumption in the United States, as stated by the American Cement Association (ACA), was 112.3 million short tons ¹, which was approximately 2% lower than calendar 2024 consumption levels. Imported cement consumption represented nearly 23% ² of total U.S. sales in both calendar 2025 and 2024. The ACA forecasts cement consumption will decline approximately 2.5% ³ in calendar 2026. For gypsum wallboard, according to the Gypsum Association, industry shipments decreased approximately 7% ⁴ to 25.4 billion square feet ⁵ in calendar 2025, and residential construction and repair and remodel accounted for more than 80% ⁶ of calendar 2025 industry sales.

The company benefits from several competitive strengths: a strategically located plant network near both raw material reserves and customers in high-growth U.S. markets; a decentralized operating structure with network-wide coordination; substantial owned raw material reserves and resources of at least 25 years (and in many instances more than 50 years) for each cement and wallboard facility; production flexibility; a low-cost producer position; and proven management with average industry experience of more than 20 years. Approximately 65% ⁷ of total revenue, including the proportional share from the joint venture, is generated in 10 states: Colorado, Illinois, Kansas, Kentucky, Missouri, Nevada, North Carolina, Ohio, Oklahoma, and Texas. The population in these ten states is expected to increase approximately 16% ⁸ between the 2020 census and 2050, compared with 12% ⁹ for the United States as a whole. In the gypsum wallboard industry, the four largest producers — Knauf, National Gypsum Company, CertainTeed, and Koch Industries — account for approximately 85% ¹⁰ of gypsum wallboard sales in the U.S. Total wallboard-rated production capacity in the United States is currently estimated at approximately 32.7 billion square feet ¹¹ per year.

The company generates revenue through the manufacture and sale of heavy construction products (Cement and Concrete and Aggregates) and light building materials (Gypsum Wallboard and Recycled Paperboard). The primary end market for the Cement and Concrete and Aggregates segments is infrastructure, while the primary end market for the Gypsum Wallboard and Recycled Paperboard segments is residential construction. The company operates a decentralized but coordinated plant network: day-to-day operations are managed by strong local operating teams, and products are separately branded and marketed by individual companies. No single customer accounted for more than 10% of Cement segment sales during fiscal 2026, and no single customer accounted for more than 10% of Concrete and Aggregates segment revenue in fiscal 2026. Three customers collectively accounted for approximately 64% ¹² of Gypsum Wallboard segment sales during fiscal 2026. Approximately 40% ¹³ of the recycled paperboard sold by the paper mill was consumed by the company's Gypsum Wallboard manufacturing operations during fiscal 2026.

The Heavy Materials sector comprises the Cement and Concrete and Aggregates segments. The Cement segment operates eight modern cement plants and two slag grinding facilities (one cement plant and one slag grinding facility are operated through a joint venture), with clinker capacity of approximately 6.7 million tons ¹⁴, which is approximately 6% ¹⁵ of total U.S. clinker capacity. All cement plants use dry-process technology, and approximately 80% ¹⁶ of clinker capacity is produced from preheater or preheater/pre-calciner kilns. The company also operates over 30 cement storage and distribution terminals. Cement production, including the 50% share of the cement joint venture production, totaled 6.9 million short tons ¹⁷ and 6.0 million short tons ¹⁸ for fiscal 2026 and fiscal 2025, respectively. Total net Cement sales, including the 50% share of cement sales from the joint venture, were 7.5 million short tons ¹⁹ and 6.9 million short tons ²⁰ in fiscal 2026 and fiscal 2025, respectively. The Concrete and Aggregates segment includes aggregates operations with estimated annual production capacity of 9,050 thousand tons ²¹ across six locations, and 30 readymix concrete plants ²² in central Texas, the greater Kansas City area, northern Colorado, and northern Nevada. Total net Aggregates sales (excluding intercompany tons sold) were 6.4 million tons ²³ in fiscal 2026 and 3.8 million tons ²⁴ in fiscal 2025. Total Aggregates production related to third party sales was 6.4 million tons ²⁵ in fiscal 2026 and 4.2 million tons ²⁶ in fiscal 2025.

The Light Materials sector comprises the Gypsum Wallboard and Recycled Paperboard segments. The Gypsum Wallboard segment owns and operates five gypsum wallboard plants with total approximate annual production capacity of 3,775 million square feet (MMSF) ²⁷. Gypsum Wallboard production totaled 2,792 MMSF ²⁸ in fiscal 2026 and 3,022 MMSF ²⁹ in fiscal 2025. Total Gypsum Wallboard sales were 2,759 MMSF ³⁰ in fiscal 2026 and 2,968 MMSF ³¹ in fiscal 2025. The Recycled Paperboard segment operates a technologically advanced paper machine in Lawton, Oklahoma, with an estimated annual capacity of approximately 380,000 tons ³². The paper machine is designed primarily for gypsum liner production using 100% recycled paper. The company has contracts with two other gypsum wallboard manufacturers that continue until either party gives two to three years advance notice of termination, and these two contracts represent approximately 50% ³³ of total segment revenue, with most of the remaining 10% ³⁴ of volume shipped to other gypsum wallboard manufacturers.

During fiscal 2026, the company executed several strategic actions. Construction continued on the modernization and expansion of the Mountain Cement facility in Laramie, Wyoming, which will increase manufacturing capacity by nearly 50% ³⁵ to approximately 1.2 million tons ³⁶ of cement and is expected to reduce manufacturing costs by approximately 25% ³⁷, with start-up expected in late calendar 2026. The company began construction and made good progress on a $330.0 million ³⁸ project to modernize and expand the Gypsum Wallboard facility in Duke, Oklahoma, which will increase capacity by 25% ³⁹ to 1.5 billion square feet (bsf) ⁴⁰ of production, with completion expected in the second half of calendar 2027. The company issued $750.0 million ⁴¹ of 10-year senior notes with an interest rate of 5.000% ⁴², extending the debt maturity schedule and increasing liquidity. The company repurchased approximately 1.7 million shares ⁴³ of its Common Stock for $381.8 million ⁴⁴, returning a total of $414.2 million ⁴⁵ to shareholders through share repurchases and dividends. In the past five years, the company has invested $388.4 million ⁴⁶ in acquisitions, $905.0 million ⁴⁷ in organic capital expenditures, and approximately $2.2 billion ⁴⁸ in share repurchases and dividends. Since becoming a public company in 1994, the share count is down approximately 55% ⁴⁹, and the company has returned approximately $4.3 billion ⁵⁰ to shareholders through a combination of share repurchases and dividends.

Fiscal 2026 was a strong year for the company, with increased earnings in the Cement, Concrete and Aggregates, and Recycled Paperboard segments. Record Revenue of $2.3 billion ⁵¹ was achieved, up 2% ⁵² from the prior year. Net Earnings were $423.8 million ⁵³, down 9% ⁵⁴. Diluted Earnings per Share were $13.16 ⁵⁵, down 4% ⁵⁶. The company repurchased approximately 1.7 million shares ⁵⁷ of Common Stock for $381.8 million ⁵⁸, returning a total of $414.2 million ⁵⁹ to shareholders through share repurchases and dividends.

A major growth vector is the modernization and expansion of the Mountain Cement facility in Laramie, Wyoming. The modernized plant and the construction of an additional cement distribution facility in northern Colorado will employ state-of-the-art technology to maximize operating efficiencies and further strengthen the low-cost producer position. Upon completion, the plant's manufacturing capacity will increase by nearly 50% ⁶⁰ to approximately 1.2 million tons ⁶¹ of cement, and it is expected that manufacturing costs will be reduced by approximately 25% ⁶². Start-up of the new facility is expected in late calendar 2026.

Another significant growth vector is the $330.0 million ⁶³ project to modernize and expand the Gypsum Wallboard facility in Duke, Oklahoma. This project will increase capacity by 25% ⁶⁴ to 1.5 billion square feet (bsf) ⁶⁵ of production, lower the plant's operating costs, and take advantage of nearby, low-cost natural gypsum reserves. Completion is expected in the second half of calendar 2027. The company also continues to proactively pursue acquisition opportunities and organic growth investments, with free cash flow and balance sheet strength enabling consideration of acquisitions and organic growth opportunities that align with stringent return-on-investment criteria.The company expects the cost of fuel to remain relatively stable in fiscal 2027. Paper costs are expected to be relatively consistent throughout fiscal 2027. For the Concrete and Aggregates segment, the company anticipates cost of materials and delivery expenses will increase in fiscal 2027. The company anticipates spending $7.3 million ⁶⁶ during fiscal 2027 on capital expenditures related to compliance with environmental regulations applicable to Cement operations, and $0.1 million ⁶⁷ during fiscal 2027 for Gypsum Wallboard operations.

The company's capital allocation priorities are: investing in growth opportunities that meet strict financial return standards and are consistent with strategic focus; making operating capital investments to maintain and strengthen the low-cost producer position; and returning excess cash to shareholders through the share repurchase program and dividends. The company is currently investing over $400 million ⁶⁸ to modernize and expand the cement plant in Laramie, Wyoming. The $330.0 million ⁶⁹ project to modernize and expand the Gypsum Wallboard facility in Oklahoma is currently under way. In the past five years, the company has invested $388.4 million ⁷⁰ in acquisitions, $905.0 million ⁷¹ in organic capital expenditures, and approximately $2.2 billion ⁷² in share repurchases and dividends.

The filing does not contain explicit discussion of headwinds and constraints as a separate section beyond the risk factors.

The company faces material risks from the cyclical and seasonal nature of the construction industry, with demand directly related to activity in residential, commercial, and infrastructure construction, and a significant portion of revenue generated from publicly funded projects subject to annual appropriation reviews. The company's products are commodities subject to significant changes in supply and demand and price fluctuations, and there continues to be significant excess nameplate capacity in the gypsum wallboard industry in the United States. The Cement business is capital-intensive with significant fixed and semi-fixed costs, making earnings sensitive to changes in volume. The company is subject to extensive governmental regulation, including environmental laws, and may be required to meet new control requirements under the Good Neighbor Plan and revised PM 2.5 NAAQS, which could require significant capital expenditures. As of March 31, 2026, the company had $1.8 billion ⁷³ of debt outstanding, and its debt agreements contain restrictive covenants and require meeting certain financial ratios and tests, which could limit flexibility and give rise to a default if not maintained.

Management's message emphasizes that fiscal 2026 was a strong year for the Company, with increased earnings in the Cement, Concrete and Aggregates, and Recycled Paperboard segments. The tone is confident, highlighting record Revenue of $2.3 billion ⁷⁴, up 2% ⁷⁵ from the prior year, and strategic actions that extended the integrated plant network, advanced the low-cost position, and expanded the ability to meet increasing demand in high-growth markets. Key strategic priorities emphasized for the period ahead include: completing the modernization and expansion of the Laramie, Wyoming cement plant with start-up expected in late calendar 2026; progressing the $330.0 million ⁷⁶ modernization and expansion of the Duke, Oklahoma Gypsum Wallboard facility with completion expected in the second half of calendar 2027; and continuing to proactively pursue acquisition opportunities and organic growth investments. Management also emphasizes maintaining a conservative balance sheet strategy focusing on prudent levels of leverage and liquidity through business cycles.