EAGLE MATERIALS INC
For the period ended Sep 30, 2024. Filed Oct 29, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 29, 2024
EXP$186.04-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0000950170-24-087945
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0000950170-24-118307
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 126 current paragraphs.
51 unchanged; 34 reworded; 35 added; 9 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
On August 9, 2024, we finalized the Acquisition of an aggregates operation in Battletown, Kentucky. The purchase price of the Acquisition was approximately $24.9 million. The Acquisition is included in our Heavy Materials sector, and its results of operations are reported in the Concrete and Aggregates business segment. See Footnote (B) in the Unaudited Consolidated Financial Statements for more information regarding the Acquisition.
Current report
Our end markets remained resilient despite the Federal Reserve's continued restrictive monetary policy throughout most of the first half of our fiscal year, and they may benefit from more accommodative monetary policy moving forward. Although Cement Sales Volume declined in the second quarter of fiscal 2025, Gypsum Wallboard Sales Volume increased.
Current report
We expect demand for cement to remain steady in the near term given growth in heavy industrial construction and the continued health of state and local budgets to support infrastructure projects. To date, only approximately 25% of federal funding from the trillion-dollar Infrastructure Investment and Jobs Act(IIJA) has been spent. We anticipate a pick-up in demand as the remaining approximately 75% of IIJA funds gets spent on public construction and repair projects.
Current report
In residential construction, activity has remained steady. While the higher interest rate environment has been a headwind for housing demand and affordability, several factors, including the chronic housing shortage caused by more than a decade of underproduction and exacerbated by the "rate lock-in", has supported solid levels of housing construction activity. Moving forward, lower interest rates and continued healthy consumer balance sheets should support residential construction. We believe our geographic footprint across the U.S. heartland and fast-growing Sun Belt region positions us to capitalize on these favorable market dynamics.
Current report
Revenue increased by $1.4 million to $623.6 million for the three months ended September 30, 2024. The Acquisition contributed $1.7 million of Revenue during the three months ended September 30, 2024. Excluding the Acquisition, Revenue decreased by $0.4 million. This decrease was due to lower Sales Volume, which adversely affected Revenue by approximately $17.0 million, and was partially offset by higher gross sales prices, which increased Revenue by $16.6 million.
Current report
Gross Profit decreased 2% to $203.8 million during the three months ended September 30, 2024. The decrease was primarily related to higher operating costs and lower Sales Volume, partially offset by higher gross sales prices. The gross margin declined to 33%, with higher operating costs being partially offset by a rise in gross sales prices.
Current report
Equity in Earnings of our Unconsolidated Joint Venture decreased $1.0 million, or 10%, for the three months ended September 30, 2024. The decrease was primarily due to lower gross sales prices and higher operating costs, which reduced earnings by approximately $1.1 million and $0.3 million, respectively. This was partially offset by higher Sales Volume, which positively affected earnings by $0.4 million.
Current report
Corporate General and Administrative expenses increased by approximately $1.3 million, or 8%, for the three months ended September 30, 2024. The increase was primarily due to $1.0 million of costs associated with business development and transaction due diligence.
Current report
Interest Expense, net increased by approximately $0.5 million, or 5%, during the three months ended September 30, 2024. This was primarily due to higher interest on our Revolving Credit Facility, which was mostly related to higher average balances outstanding during the period.
Current report
Earnings Before Income Taxes decreased to $185.3 million during the three months ended September 30, 2024, primarily because of lower Gross Profit and Equity in Earnings of Unconsolidated Joint Venture and higher Corporate General and Administrative Expense and Interest Expense.
Current report
Income Tax Expense was $41.7 million for the three months ended September 30, 2024, compared with $43.6 million for the three months ended September 30, 2023. The effective tax rate was consistent at 23%.
Current report
RESULTS OF OPERATIONS
Current report
Six MONTHS ENDED September 30, 2024, Compared WITH Six MONTHS ENDED September 30, 2023
Current report
REVENUE
Current report
COST OF GOODS SOLD
Current report
Cost of Goods Sold increased by $2.9 million to $841.6 million for the six months ended September 30, 2024. The Acquisition contributed $2.1 million of Cost of Goods Sold during the six months ended September 30, 2024. Excluding the Acquisition, Cost of Goods Sold increased by $0.8 million. The increase was due to higher operating costs of $28.4 million, partially offset by lower Sales Volume of $27.6 million. Higher operating costs were primarily related to our Cement and Concrete and Aggregates businesses and are discussed further in the segment analysis.
Current report
GROSS PROFIT
Current report
CORPORATE GENERAL AND ADMINISTRATIVE
Current report
Corporate General and Administrative expenses increased by approximately $5.2 million, or 19%, for the six months ended September 30, 2024. The increase was primarily due to higher salaries, information technology upgrades, and costs associated with business development and transaction due diligence of $1.6 million, $1.2 million, and $1.5 million, respectively.
Current report
OTHER NON-OPERATING INCOME
Current report
INTEREST EXPENSE, NET
Current report
EARNINGS BEFORE INCOME TAXES
Current report
INCOME TAX EXPENSE
Current report
NET EARNINGS
Current report
Net Earnings increased 2% to $277.4 million for the six months ended September 30, 2024, as discussed above.
Current report
Cement Revenue was $352.8 million, a 2% decrease, for the three months ended September 30, 2024. The decrease was primarily due to lower Sales Volume, which reduced Cement Revenue by approximately $16.2 million, partially offset by higher gross sales prices of $8.2 million.
Current report
Cement Operating Earnings decreased by $5.5 million to $115.9 million for the three months ended September 30, 2024. The decrease was due to lower Sales Volume and higher operating costs of $5.9 million and $7.8 million, respectively, partially offset by higher average sales prices of $8.2 million. Higher operating costs were primarily due to increased maintenance and litigation loss of approximately $6.9 million and $0.7 million, respectively. The Operating Margin decreased to 33% from 34%, as a result of higher operating costs, partially offset by the higher gross sales prices.
Current report
Cement Revenue was $691.9 million, for the six months ended September 30, 2024. Cement Revenue was relatively flat, with increases of $28.4 million from gross sales prices being offset by lower Sales Volume of $26.3 million.
Current report
Cement Operating Earnings increased by $9.6 million to $205.1 million for the six months ended September 30, 2024. The increase was due to higher gross sales prices of $28.4 million, which was partially offset by lower Sales Volume and higher operating costs of $8.3 million and $10.5 million, respectively. Higher operating costs consisted of $5.1 million of increased maintenance, $3.5 million of higher freight costs, $1.2 million increase in purchased raw materials, $2.1 million of higher labor costs, and a litigation loss of approximately $0.7 million. These higher costs were partially offset by the impact of recording in the prior year $2.8 million of acquired inventories at fair value. Cement Operating Margin increased to 30% from 28%, as a result of higher gross sales prices, partially offset by higher operating expenses.
Current report
Concrete and Aggregates Revenue remained relatively flat at $69.9 million for the three months ended September 30, 2024. Excluding the Acquisition, Revenue declined $1.6 million. The decline was due to lower Sales Volume, which reduced Revenue by $5.4 million, partially offset by higher gross sales prices of $3.8 million.
Current report
Operating Loss was approximately $1.0 million, for the three months ended September 30, 2024. Excluding the Aggregates Acquisition, Operating Loss was $0.7 million. The Operating Loss was due to lower Sales Volume and higher operating costs of $1.5 million and $7.6 million, respectively, partially offset by higher gross selling prices of $3.8 million. The increase in operating costs was primarily due to higher cost of materials, maintenance, delivery, and energy costs of approximately $3.2 million, $2.7 million, $0.4 million, and $0.3 million, respectively.
Current report
Operating Earnings were approximately $2.0 million, an 83% decrease. Excluding the Aggregates Acquisition, Operating Earnings decreased to $2.3 million. The decline in Operating Earnings was due to lower Sales Volume and higher operating costs of $3.4 million and $13.5 million, respectively. This was partially offset by higher gross selling prices of $7.5 million. The increase in operating costs was primarily due to higher cost of materials, maintenance, energy, and delivery expenses of approximately $4.3 million, $5.6 million, $1.8 million, and $1.7 million, respectively.
Current report
Gypsum Wallboard Revenue was $432.8 million, a 1% increase for the six months ended September 30, 2024. The increase was primarily due to increased gross sales prices and Sales Volume, which positively affected Revenue by $0.7 million and $3.8 million, respectively. Our market share remained relatively consistent during the three months ended September 30, 2024.
Current report
Net Cash Provided by Operating Activities increased by $53.1 million to $365.9 million during the six months ended September 30, 2024. This increase was primarily attributable to higher cash flows related to $59.6 million of changes in working capital which was partially offset by lower Net Earnings, adjusted for approximately $1.5 million of non-cash charges and $2.5 million of lower dividends from our Unconsolidated Joint Venture. The increase in cash flows from the changes in working capital was due primarily to the $65.7 million increase in Income Taxes Payable, which resulted from our deferring tax payments for the three and six months ended September 30, 2024. The Internal Revenue Service granted this deferral to individuals and businesses in Texas that were affected by severe storms, straight-line winds, tornadoes, and flooding that began on April 26, 2024, and triggered a Federal Emergency Management Agency disaster declaration. We anticipate making all estimated tax payments, including the deferred amounts, for the nine months ending December 31, 2024, in the fourth quarter of calendar 2024.
Current report
Net Cash Used in Investing Activities during the six months ended September 30, 2024, was approximately $124.5 million, compared with $120.5 million during the same period in fiscal 2024. The $4.0 million increase was primarily related to the higher capital expenditures, most of which were related to the expansion of our Mountain Cement facility. This was partially offset by the lower purchase price for the fiscal 2025 Acquisition, compared with the acquisition completed in fiscal 2024.
Removed paragraphs (9)
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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
Previous report
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.
Previous report
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.
Reworded paragraphs (34)
Previous wording
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.
Current wording
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 and six months ended September 30, 2024 and 2023, are presented on a consolidated basis and by these business segments – Cement, Concrete and Aggregates, Gypsum Wallboard, and Recycled Paperboard.
Previous wording
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.
Current wording
We believe we are well-positioned to manage our cost structure and meet our customers’ needs during the second half of 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.
Previous wording
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.
Current wording
Energy costs decreased in all our businesses during the second 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.
Previous wording
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.
Current wording
The primary raw material used to produce paperboard is OCC. Prices for OCC increased during the six months ended September 30, 2024 compared with 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.
Previous wording
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.
Current wording
Cost of Goods Sold increased by $6.6 million, or 2%, to $419.8 million for the three months ended September 30, 2024. The Acquisition contributed $2.1 million of Cost of Goods Sold during the three months ended September 30, 2024. Excluding the Acquisition, Cost of Goods Sold increased by $4.5 million, or 1%. The increase was due to higher operating costs of $16.4 million, partially offset by lower Sales Volume of $11.9 million. Higher operating costs were primarily related to our Cement and Concrete and Aggregates businesses and are discussed further in the segment analysis.
Previous wording
Net Earnings increased 11% to $133.8 million for the three months ended June 30, 2024, as discussed above.
Current wording
Net Earnings decreased 5% to $143.5 million for the three months ended September 30, 2024, as discussed above.
Previous wording
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.
Current wording
Revenue increased by $8.5 million, or 1%, to $1,232.3 million for the six months ended September 30, 2024. The Acquisition contributed $1.7 million of Revenue during the six months ended September 30, 2024. Excluding the Acquisition, Revenue increased by $6.8 million, or 1%. The Revenue increase was due to higher gross sales prices, which positively affected Revenue by $43.5 million, partially offset by lower Sales Volume, which adversely affected Revenue by approximately $36.7 million.
Previous wording
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.
Current wording
Gross Profit increased 1% to $390.7 million during the six months ended September 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 32%, with higher gross sales prices being partially offset by a rise in operating costs.
Previous wording
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.
Current wording
Equity in Earnings of our Unconsolidated Joint Venture increased $3.5 million, or 26%, for the six months ended September 30, 2024. The increase was primarily due to lower operating costs and higher Sales Volume, which positively affected earnings by $4.0 million and $0.8 million, respectively. This was partially offset by lower gross sales prices, which adversely affected earnings by approximately $1.3 million. The decrease in operating costs was primarily related to maintenance, energy and freight, and distribution costs of approximately $2.1 million, $1.0 million, and $0.9 million, respectively. Lower maintenance costs for the six months were partly due to maintenance costs in the prior year being $2.8 million higher than normal given an extended outage that required additional maintenance spending and reduced production levels.
Previous wording
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.
Current wording
Interest Expense, net decreased by approximately $1.0 million, or 5%, during the six months ended September 30, 2024. This decrease was primarily due to approximately $0.5 million of lower interest on our Revolving Credit Facility, which was related to lower average outstanding borrowings, as well as increased interest income of $0.5 million on cash deposits.
Previous wording
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.
Current wording
Earnings Before Income Taxes increased to $356.2 million during the six months ended September 30, 2024, primarily because of higher Gross Profit and Equity in Earnings of Unconsolidated Joint Venture, which were partially offset by higher Corporate General and Administrative Expense.
Previous wording
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.
Current wording
Income Tax Expense was $78.8 million for the six months ended September 30, 2024, compared with $78.2 million for the six months ended September 30, 2023. The effective tax rate of 22% remained consistent with the prior-year period.
Previous wording
Three MONTHS ENDED June 30, 2024 vs. three MONTHS ENDED June 30, 2023 BY SEGMENT
Current wording
Three AND SIX MONTHS ENDED September 30, 2024, COMPARED WITH three AND SIX MONTHS ENDED sEPTEMBER 30, 2023, BY SEGMENT
Previous wording
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.
Current wording
The following presents results within our two business sectors for the three and six months ended September 30, 2024, and 2023. Revenue and operating results are organized by sector and discussed by individual business segments.
Previous wording
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.
Current wording
Concrete and Aggregates Revenue was $134.8 million for the six months ended September 30, 2024. Excluding the Acquisition, Revenue declined $7.2 million. The decrease was due to lower Sales Volume, which reduced Revenue by $14.7 million. This was partially offset by higher gross sales prices of $7.5 million.
Previous wording
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.
Current wording
Gypsum Wallboard Revenue was $215.0 million, a 3% increase for the three months ended September 30, 2024. The increase was primarily due to higher gross sales prices and Sales Volume, which increased Revenue by $0.4 million and $5.4 million, respectively. Our market share remained relatively consistent during the three months ended September 30, 2024.
Previous wording
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.
Current wording
Operating Earnings increased 5% to $90.1 million, due to $0.4 million of higher gross sales prices, a $2.2 million increase in Sales Volume, and a decrease of $1.9 million in operating costs. Lower operating costs were primarily related to freight and energy, which increased Operating Earnings by approximately $0.9 million and $1.4 million, respectively. Operating Margin increased to 42% for the three months ended September 30, 2024, primarily because of lower operating costs and higher gross sales prices. 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.
Previous wording
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.
Current wording
Recycled Paperboard Revenue increased 18% to $50.8 million during the three months ended September 30, 2024. The increase was due to higher gross sales prices and Sales Volume, which increased Revenue by $4.5 million and $3.3 million, respectively. Higher gross sales prices were related to the pricing provisions in our long-term sales agreements.
Previous wording
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.
Current wording
Operating Earnings increased 12% to $16.5 million, primarily because of higher gross sales prices and Sales Volume, which increased Operating Earnings by $9.4 million and $1.2 million, respectively. This was partially offset by higher operating costs, which reduced Operating Earnings by approximately $8.9 million. The increase in operating costs was primarily related to higher input costs, namely fiber, which lowered Operating Earnings by approximately $12.5 million. This was partially offset by lower energy, chemicals, and freight costs of $2.0 million, $0.8 million, and $0.6 million, respectively. The Operating Margin decreased to 16% because of higher operating costs, partially offset by higher gross sales prices. Although the Company has certain pricing provisions in its long-term sales agreements, prices are adjusted only at certain times throughout the year, so price adjustments are not always reflected in the same period as the change in costs.
Previous wording
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.
Current wording
The three Critical Accounting Policies that are material to our financial statements and that we believe require either 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.
Previous wording
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.
Current wording
We believe we currently 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 assess 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.
Previous wording
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.
Current wording
Working capital increased by $29.9 million to $418.2 million at September 30, 2024, compared with March 31, 2024. The increase was due to higher Cash, Accounts and Notes Receivable, net, and Prepaid and Other Assets of $59.0 million, $43.3 million, and $6.2 million, respectively. This was partially offset by lower Income Tax Receivable of $7.4 million and higher Income Tax Payable and Accounts Payable and Accrued Liabilities of $5.2 million and $69.5 million, respectively. The August 2024 Acquisition increased working capital by approximately $0.7 million at September 30, 2024.
Previous wording
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.
Current wording
The increase in Accounts Receivable at September 30, 2024, was primarily related to higher Revenue during the three months ended September 30, 2024, compared with the three months ended March 31, 2024. As a percentage of quarterly sales generated for the respective quarter, Accounts Receivable was approximately 40% at September 30, 2024 and 33% at March 31, 2024. 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 September 30, 2024.
Previous wording
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.
Current wording
Our Inventory balance at September 30, 2024, increased by approximately $1.7 million from our balance at March 31, 2024. Excluding the Acquisition, our Inventory balance increased by $1.0 million. Within Inventory, Raw Materials and Materials-in-Progress, Aggregates, Gypsum Wallboard, and Fuel and Coal increased by approximately $2.7 million, $2.9 million, $0.8 million, and $3.5 million, respectively. This was partially offset by Finished Cement, Recycled Paperboard, and Repair Parts, which declined $5.7 million, $1.9 million, and $1.2 million, respectively. The decline in Finished Cement 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 a result of completing most of our scheduled outages during the first six months of the fiscal year. The largest individual balance in our Inventory is our Repair Parts. The size and complexity of our manufacturing plants, as well as the age of certain of our plants, makes it necessary 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.
Previous wording
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.
Current wording
Net Cash Used in Financing Activities was approximately $182.4 million during the six months ended September 30, 2024, compared with $160.3 million during the six months ended September 30, 2023. The $22.1 million increase was primarily related to increased borrowings of $20.0 million, and lower Proceeds from Stock Option Exercises of $9.3 million. This was partially offset by lower Purchase and Retirement of Common Stock and Dividends Paid of $5.1 million and $0.9 million.
Previous wording
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.
Current wording
Our debt-to-capitalization ratio and net-debt-to-capitalization ratio were 43.1% and 40.8%, respectively, at September 30, 2024, compared with 45.7% and 44.9%, respectively, at March 31, 2024.
Previous wording
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.
Current wording
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 September 30, 2024 we had $155.0 million outstanding of Revolving Loans under the Revolving Credit Facility and $10.0 million of outstanding letters of credit, resulting in $585.0 million of available borrowings under the Revolving Credit Facility, net of the outstanding letters of credit. We are contingently liable for performance under $30.0 million in performance bonds relating primarily to our mining operations. We do not have any off-balance sheet debt, or any outstanding debt guarantees.
Previous wording
We have approximately $24.9 million of lease liabilities at June 30, 2024, that have an average remaining life of approximately 9.9 years.
Current wording
We have approximately $23.7 million of lease liabilities at September 30, 2024, that have an average remaining life of approximately 10.7 years.
Previous wording
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.
Current wording
Dividends paid were $17.0 million and $17.9 million for the six months ended September 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.
Previous wording
During the three months ended June 30, 2024, our share repurchases were as follows:
Current wording
During the six months ended September 30, 2024, our share repurchases were as follows:
Previous wording
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.
Current wording
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 September 30, 2024, we have repurchased approximately 50.6 million shares.
Previous wording
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.
Current wording
During the six months ended September 30, 2024, the Company withheld from employees 5,636 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.
Previous wording
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.
Current wording
Capital expenditures for fiscal 2025 are expected to range from $280.0 million to $310.0 million and will be allocated across both Heavy Materials and Light Materials sectors. The increase from the prior year reflects our beginning construction of the previously announced modernization and expansion of our Mountain Cement facility. The Mountain Cement construction project will continue through fiscal 2027, with expected completion in late fiscal 2027. These estimated capital expenditures will include maintenance capital expenditures and improvements, as well as other safety and regulatory projects.
Previous wording
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…
Excerpt shortened here; the source contains the full paragraph.
Current wording
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 statements and generally arise when the Company is discussing its beliefs, estimates or expectations as to future events. 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; the effects of adverse weather conditions on infrastructure and other construction projects as well as our facilities and operations; 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 of 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 losses or other adverse outcomes from 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; competition; cyber-attacks or data security breaches, together with the costs of protecting our systems against such incidents and the possible effects thereof on our operations; 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 gov…
Excerpt shortened here; the source contains the full paragraph.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURE
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Operating Earnings increased 4% to $184.1 million, primarily because of $0.7 million higher gross sales prices, a $1.5 million increase in Sales Volume, and a $5.3 million decrease in operating costs. Lower operating costs were primarily related to freight and energy, which increased Operating Earnings by approximately $3.0 million and $2.5 million, respectively. Operating Margin increased to 43% for the six months ended September 30, 2024, primarily because of higher gross sales prices and lower operating expenses. 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.
Current report — wording carried from elsewhere
Operating Earnings increased 6% to $8.0 million, primarily because of higher gross sales prices and Sales Volume, which increased Operating Earnings by $4.5 million and $0.6 million, respectively. This was partially offset by higher operating costs, which reduced Operating Earnings by approximately $4.6 million. The increase in operating costs was primarily related to higher input costs, namely fiber, which reduced Operating Earnings by approximately $5.7 million. This was partially offset by lower energy costs of $1.0 million. The Operating Margin decreased to 16% because of higher operating costs, partially offset by higher gross sales prices. Although the Company has certain pricing provisions in its long-term sales agreements, prices are adjusted only at certain times throughout the year, so price adjustments are not always reflected in the same period as the change in costs.
Current report — wording carried from elsewhere
Recycled Paperboard Revenue increased 19% to $105.0 million during the six months ended September 30, 2024. The increase was due to higher gross sales prices and Sales Volume, which positively affected Revenue by $9.4 million and $7.3 million, respectively. Higher gross sales prices were related to the pricing provisions in our long-term sales agreements.
Current report — wording carried from elsewhere
Information regarding our Critical Accounting Policies and a summary of our significant account policies can be found in our Annual Report, in Note (A) top the consolidated financial statements.