Eagle Materials Inc . (NYSE:EXP) announced in their recent earnings call that they achieved record revenue of $609 million for the first quarter of fiscal year 2025, marking a modest 1% increase from the previous period. The company also reported a significant 16% rise in earnings per share (EPS).
Management credited this performance to a combination of factors, including a focus on operational efficiency, safety, and sustainability, as well as strategic organic investments.
Eagle Materials expressed optimism about the demand outlook for their cement and wallboard businesses, anticipating benefits from public infrastructure spending, non-residential construction, and underlying market dynamics.
Key Takeaways
- Record Q1 revenue of $609 million, a 1% year-over-year increase.
- Earnings per share increased by 16%.
- The company highlighted its focus on operational efficiency and sustainability.
- Organic investments are underway, including the Texas Lehigh slag grinding facility and the Mountain Cement facility expansion.
- Management is optimistic about the demand for cement, driven by infrastructure spending and non-residential construction.
- Positive long-term outlook for the wallboard business due to underbuilding and aging US housing stock.
- Lower natural gas prices have improved margins for wallboard and cement.
- Cement prices expected to remain stable with potential increases in Texas later in the year.
- Wallboard pricing remained consistent, with a March price increase not yet fully realized.
- The company is hedged at around 40% for natural gas prices for the remainder of fiscal 2025.
Company Outlook
- Eagle Materials anticipates higher pricing opportunities in both cement and wallboard due to supply constraints and strong demand.
- The company plans to maintain a strong core, a healthy balance sheet, and superior operational performance.
Bearish Highlights
- Weather impacts on cement volumes are difficult to quantify, but a busy second half is expected.
- Overall market volumes for cement were down due to weather issues.
Bullish Highlights
- The company expects stable margins with some upward potential in OCC prices in the September quarter.
- Paperboard volume increased, and capacity expanded in this area.
- Texas saw an increase in cement volumes, bolstering confidence in the demand outlook.
Misses
- No specific misses were discussed during the earnings call.
Q&A Highlights
- The company discussed future average selling prices and planned price increases, mainly in the Texas area.
- Management expects consistent sequential pricing for the rest of the year.
- CapEx is expected to increase due to more construction and site work in the latter part of the summer and fall.
Eagle Materials Inc. reported strong financial results in the first quarter of fiscal 2025, with a focus on maintaining efficiency and capitalizing on market opportunities. The company's strategy includes leveraging lower natural gas prices and organic investment to improve operational performance. With a solid demand outlook and potential for increased pricing, Eagle Materials appears poised for continued growth in the coming quarters.
InvestingPro Insights
Eagle Materials Inc. (EXP) has demonstrated a robust financial performance in the latest quarter, and InvestingPro data provides further insights into the company's market position and potential for future growth. With a market capitalization of $9.16 billion and a P/E ratio of 18.98, reflecting investor confidence in the company's earnings potential, Eagle Materials is trading at multiples that suggest a strong market valuation.
InvestingPro Tips highlight that management has been aggressively buying back shares, which often signals confidence in the company's future prospects and a commitment to delivering shareholder value. Additionally, three analysts have revised their earnings upwards for the upcoming period, suggesting that the positive sentiment around the company's financial health is shared among market experts.
Key InvestingPro Data metrics to consider:
- Market Cap (Adjusted): $9.16 billion USD
- P/E Ratio: 18.98
- Revenue Growth (Last twelve months as of Q1 2025): 3.58 %
The company's revenue growth over the last twelve months, although modest at 3.58%, indicates a steady upward trajectory. Moreover, the strong return over the last week, with a 16.8% price total return, underscores the recent positive market reaction to the company's strategic moves and financial results. InvestingPro offers additional tips for Eagle Materials Inc., which can be found at https://www.investing.com/pro/EXP, providing investors with deeper insights into the company's performance and potential investment opportunities.
Full transcript - Eagle Materials Inc (EXP) Q1 2025:
Operator: Good day, everyone, and welcome to Eagle Materials First Quarter Fiscal 2025 Earnings Conference Call. Today’s event is being recorded. At this time, I'd like to turn the floor over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead.
Michael Haack: Thank you, Jamie. Good morning. Welcome to Eagle Materials conference call for our first quarter of fiscal year 2024. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer, and Alex Haddock, Senior Vice President of Investor Relations, Strategy and Corporate Development. There will be a slide presentation made in connection with this call. To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release. Today I'm pleased to discuss a good start to our 2025 fiscal year. The first quarter results include record revenue of $609 increase and a 16% increase in earnings per share. Our performance this quarter reflects our consistent disciplined approach to managing and operating our businesses through shifting conditions. We achieved our positive results during the quarter characterized by challenging weather conditions and our solid performance was largely led by operational efforts of our employees. At Eagle, we maintain our consistent approach to running our businesses regardless of the challenges presented. Our approach revolves around several aspects that we hold the standards. The first focus area is on safety. It is our belief that a safe operation leads to superior operational and financial results. As I travel to our facilities across the country, it is always impressive to see our employees across all of our businesses stay committed to maintaining the safest possible working environment. Their efforts are demonstrated through our safety statistics, which are consistently below industry averages, but also most importantly through their interactions with one another ensuring each job can be done safely. Second we are relentlessly focused on operating as efficiently as possible. We're always proactive with our maintenance programs to keep our facilities unlike new conditions enabling us to perform with high efficiency and support our customers. This proactive approach regarding maintenance last quarter benefited us this quarter. We were able to navigate the weather challenges well and manage our costs accordingly. Third, we continuously maintain our focus on sustainability. This quarter, like others, has several highlights I want to mention. We continue to make progress on several organic investments including, our joint venture Texas Lehigh slag grinding facility, which is nearing completion and we'll have meaningful economic and environmental benefits by providing slag to our customers in Texas. We also recently announced the expansion and upgrade of our Mountain Cement facility. This upgrade will make this plant more efficient, aligning not only with our focus on sustainability by doing more with less but also expanding our low cost producer position. Dirt work on this project has begun and we will continue to provide updates on this project as we reach other milestones. Another area we are focused on with regards to sustainability is around the products we produce. A few highlights regarding our work in this area are; we continue our transition to Portland Limestone Cement or PLC and other blended products to reduce our CO2 intensity. Currently, 90% of our production is PLC or blended cement. We are also in process in installing two alternative fuel systems to expand the usage of these fuels. Our capital project at our paper mill to cut our water usage in half continues and is scheduled to be completed mid next year Now let me turn to some financial observations for the quarter. Regarding our demand outlook for our businesses, we see the cadence and timing of our business demand drivers vary, but we also see the outlook for each business continuing to skew to the upside. In cement, the demand visibility picture remains strong. CBO data shows years of public infrastructure spend ahead largely driven by the IIJA bill. Non-residential construction, especially as it relates to heavy manufacturing projects should continue to remain at elevated levels. Both infrastructure and non-residential projects are typically multi-year projects that provide confidence around our visibility over the coming years. We also benefit from our geographic footprint and our markets generally outperform the national average. While weather impacted all our regions, it did so at different magnitudes and pushed out the construction fees into varying degrees. If the demand fundamentals we see do stay in place, we think the cement business will continue to see strong performance, especially given the US manufacturing supply response is more limited than in any other cycle. Regarding the wallboard side of our business, in the near term, frankly the demand cycle is harder to predict right now and much will depend on how the economy fairs as well as how our policy makers react and response to the economic data. As we've said many times, we continue to believe in the structural characteristics of our wallboard business especially as the supply has continued to come offline over the last several years. Some key facts that that led us to believe - lead us to believe this are; we have been underbuilding housing against underlying demand in the US for a long time. This underbuilding has led to a shortage of homes while household formations expand. In addition, the US existing housing stock continues to age and is older than ever giving us further confidence in the medium and long-term demand profile for our wallboard business. But as this cycle has already proved now, we believe both demand and supply fundamentals of the wallboard industry creating an appealing performance backdrop for our business. As we look forward, even with some of the uncertainties I mentioned, we are confident we can continue our track record of superior margin performance, setting the industry benchmark for our low-cost producer position. To that end, I'll conclude with some remarks that largely mirror my opening comments on the consistency of our approach to running our businesses exceptionally well in shifting economic conditions. As we look forward to the quarters, years, and even cycles ahead, we are committed to looking for opportunities to strengthen our core businesses across both the heavy and light materials segments through investments, both organically and through M&A. Our consistent strategy has led to superior shareholder returns over the history of our company and we believe these unique investments coupled with our strict strategic and financial investment criteria will generate similar outstanding returns in the future. Another key tenet to maintaining a strong core is keeping our balance sheet healthy. We have generally kept our leverage at or below 1.5 times through the last several years. This allows us to execute on investment opportunities, but it also gives us the flexibility to return our excess free cash flow to shareholders, mostly through share buybacks. Finally, but equally important, we'll make our core business stronger by executing operationally. As our long track record of performance shows, we will achieve this while keeping our people safe and being excellent environmental stewards in the communities we operate in. With that, I'll turn it over to Craig more details on our financials.
Craig Kesler: Thank you, Michael. As mentioned, first quarter revenue was a record $609 million, an increase of 1%. The increase primarily reflects higher cement and wallboard sales prices and record paperboard sales volume, partially offset by lower cement sales volume, which I'll comment on during the segment discussion. First quarter earnings per share was a record $3.94, that's a 16% increase from the prior year. The increase was driven by higher earnings and a 4% reduction in fully diluted shares due to our share buyback program. Turning now o segment performance on the next slide. In our Heavy Materials sector which includes our Cement and Concrete and Aggregate segments, revenue was up 1%, driven primarily by cement sales price increases implemented earlier this year. Higher cement prices were partially offset by lower cement sales volume, as wet weather delayed construction projects hampering Cement, Concrete and Aggregates volume during the quarter. In addition, June of 2024 had two fewer shipping days than last June. Operating earnings were up 14%, primarily because of increased cement prices, lower fuel cost within the cement business, and lower maintenance cost during our planned annual maintenance outages. In addition, last year’s quarterly results included approximately $2.8 million of cost associated with the step-up in inventory values related to the Terminal Stockton acquisition. Moving to the Light Materials sector on the next slide, revenue in the sector increased 2%, reflecting higher wallboard sales prices and record recycled paper board sales volume. Operating earnings in the sector increased 5% to $102 million, reflecting higher net sales prices and lower input cost primarily for freight and energy. Looking now at our cash flow, we continue to generate substantial cash flow and allocate capital in a disciplined way in line with our strategic priorities. In the first quarter, operating cash flow decreased by 6% to $133 million, reflecting improved earnings, offset by increased working capital. Capital spending decreased to $33 million and we repurchased 348,000 shares of our common stock for $85.5 million and paid our quarterly dividend returning $94 million to shareholders. We have 5.5 million shares remaining under our current repurchase authorization. Finally, a look at our capital structure, which continues to give us significant financial flexibility. At June 30th 2024, our net debt-to-cap ratio was 44% and our net debt-to-EBITDA leverage ratio remained at 1.3 times. We ended the quarter with $47 million of cash on hand, total committed liquidity at the end of the quarter was approximately $607 million and we have no meaningful near-term debt maturities. Thank you for attending today's call. We'll now move to the Question & Answer session, Jamie?
Operator: [Operator Instructions] Our first question today comes from Trey Grooms from Stephens Inc. Please go ahead with your question.
Trey Grooms: Hey, good morning, and thanks for taking my question. First off, nice improvement on the margins in both cement and wallboard. But I guess maybe first on wallboard OCC costs have been rising, paperboard margin saw a little bit of compression in the quarter. So, given the timing differences between paperboard and then the wallboard business, how should we be thinking about the kind of directional impact maybe to wallboard here in the near term? And then, also with nat gas pulling back again still pretty low. Could that help offset? And then Craig if you could maybe give us an update on where do you stand with your hedging efforts there with nat gas?
Michael Haack: Yes. Thanks, Trey From a OCC recycled fiber costs which are the primary raw material for the paper business, we saw those cost up significantly in the second half of calendar ‘23 and into early calendar ‘24. But we’ll tell you the April May and June OCC prices have been flat. So that we will pass kind of the earlier part of the year through to the wallboard business here in the September quarter, but given where prices have gone over the last couple of months, it would seem to stay right around that level. But you'll see a little bit of inflation there in wallboard whereas the paper mills will pass that through and little higher pricing. And you're right, natural gas again down lower the last few days. We did see a nice benefit year-over-year from lower gas prices. We are right around the 40% hedged for the rest of the remainder of fiscal 2025 just right around here at these market prices. Keep in mind the forward curve isn't as low as the prompt month, but as you look at that forward curve, we're 40% hedged right in that area.
Trey Grooms: Got it. All right. That's helpful. And then, it maybe kind of a little bit the same for cement, could you give us a little bit more detail again great margin improvement there. I think you mentioned the lower fuel cost, if you could maybe talk about kind of the sustainability of that? And then, you also touched on maintenance. But if you could just kind of give us a rundown on kind of the cost outlook there with cement given the nice margin improvement you've seen here in the quarter.
Michael Haack: Yeah, the fuel cost, we talked about it now for several quarters. We had good visibility into lower fuel cost around some of the solid fuels that we use and that's largely purchased or committed for the remainder of the year. And then, as we pointed out and you mentioned, maintenance costs, our teams did a really good job this quarter of looking at projects what needed to be done and found ways to get projects done that were needed. And given the weather that we experienced and I think we'll chronicled we did a good job of managing those costs during the quarter.
Trey Grooms: Yep. Good work with all that. And then last one for me is, you mentioned that the pricing in wallboard that you guys put up and a nice sequential improvement as you guys have talked about on the prior call. Is there – could you give us kind of the ending number for the quarter maybe relative to the reported ASP?
Michael Haack: Yeah, the average for the quarter was pretty consistent throughout the quarter. We had implemented a March price increase which we haven't seen the full benefit of during the March quarter. But the average was pretty consistent throughout the quarter.
Trey Grooms: Right Thanks, I'll pass it on. That's it for me. Good luck.
Operator: Our next question comes from Stanley Elliott from Stifel. Please go ahead with your question
Stanley Elliott: Hey, good morning, everyone and nice work in a very tough operating environment. I guess, starting off, either you mentioned kind of the resi side being a little less certain in terms of how that's going to end up playing up. I am curious did you guys see you to what extent residential projects were getting pushed out because of financing costs? And then, I guess secondly, were you seeing any of your builder customers concerned about rising inventory levels in any of the markets that you operate?
Michael Haack: I've always said, as it relates to wallboard inventory in particular, it's a perishable product. So, you don't see a tremendous amount of inventory either at the manufacturer level or at the distribution level. You can't store it outside in a meaningful way. So, it comes and goes. And look, I think we’ve said weather more once this morning, especially you get into the South Texas market, that amount of rain. We don’t we think of wallboard as an indoor sport, but there is no doubt we’ve seen in South Texas a delay because of the rain and the extreme wet weather that market has faced. So, again, maybe a little bit of inventory build here and there. But it’s not significant and in terms of the residential outlook, there's obviously a lot of factors that influence that. Interest rates are one of them. They've come down nicely here over the last four to six weeks. We’ll see again tomorrow what tomorrow bring, but the overall, given the low supply of homes in the country that has continued to support a pretty resilient level of construction activity.
Stanley Elliott: And I guess, one more on weather. To what extent do you see the weather impacting in the quarter? I mean, obviously, pricing was very nice. Do you think it has any impact on pricing pressures later in the year or maybe even into I guess it’s too early to think about ’25. But just any sort of disruption and some of the pricing momentum that we've seen because of the weather?
Michael Haack: Yeah, I mean no doubt the construction season got off to a very slow start in several markets with the extended rainfall et cetera. So, yeah, that does maybe change timing and cadence a little bit, but the grand scheme of things, the cement business continues to be in a fairly tight position. And exactly when and how prices go through will be determined over a cycle.
Stanley Elliott: And then lastly, I mean, balance sheet very manageable. You do have the larger Wyoming project coming up in ’26. We started - you started on it. The plan to kind continue to build cash ahead of that to support that or still remain opportunistic on the M&A front or even the share repurchases?
Michael Haack: No, absolutely, we've put the position – the balance sheet in a position, I think Michael said it well, so that we can continue to make good investments whether that's organic as we've talked about with the Mountain Cement monetization and expansion. But that doesn't preclude us even though it is sizeable, it doesn't preclude us from continuing to return capital to shareholders and being active in the M&A market. There’s a good pipeline of activity there and we have the balance sheet and the free cash flow to continue to make good investments.
Stanley Elliott: Perfect guys. Thanks so much. Congrats and best of luck.
Operator: Our next question comes from Brent Thielman from D.A. Davidson. Please go ahead with your question.
Brent Thielman: Hey, thanks. Good morning. Just I had a question again on cement, just maybe a clarifier. I mean, any plans for cement price increases in the calendar second half? And then, Craig, you had some markets with price increases for April with the realizations of those price increases been impacted at all by sort of weather-related issues, I just curious your thoughts there.
Michael Haack: So, I think they moved forward as we had expected and we do have – again, Texas faced extremely wet weather, April and May even into July here with the hurricane that came through. But the pricing in that market is - has extended out. There is some here in the second part of the year. But that's about it for a second round of cement price increases as we sit here today.
Brent Thielman: Okay. And then, just as a follow-up, I mean, Michael with some of your comments just about the momentum you're seeing and some of the infrastructure projects and presumably going over the next few years, do you anticipate for your mix of sort of in sector, in market sector exposure to skew more heavily towards infrastructure in the coming years? I mean I know it's sort of been 40%, 50% do you see a higher than that as we sort of move forward?
Michael Haack: It depends really regionally where you look at this - these items with it. As we - as I said in the comments to, we see these as multi-year projects with us and the extending out give us great visibility. We're also kind of opportunistic when we take some of those projects with it. We have a customer base that we support and those projects we see has great projects to pick up certain aspects of them and keep our demand profile looking strong. So across our network, we see this is a just a good visibility for the cement side of the business for multi-years to come.
Brent Thielman: Okay. Very good. Thank you.
Operator: Our next question comes from Anthony Pettinari from Citi. Please go ahead with your question.
Anthony Pettinari: Good morning. On cement, is there a way to quantify the magnitude of volumes that were impacted by the weather in the quarter? And then just given kind of very poor weather in the first half of the calendar year do your customers talk about an opportunity to maybe make some of that up in the second half of the year? Is that's something that could be maybe a tailwind to volumes either for you or the industry or is that not really something you expect?
Michael Haack: Yeah, hey, Anthony, to the first part of your question, it's really hard to quantify the exact impact that weather had, no doubt it was significant, but really tough to quantify that. In terms of the last –that is a little bit market-to-market because you’ve got certainly the northern markets that weather - winter weather will start, you don't know if that's November, December or into January. But I think you're overall – we have been in the south where we don't. have near the winter, you can get maybe a little bit more, but your point is still but given that these projects were delayed they're cancelled, they're just pushed out. It just means you're going to be real busy this fall and into the winter as long as you can. And so that is what you'll see can you make look, all that up, that remains to be seen. But it should be a busy second half of the year.
Anthony Pettinari: Got it. Got it. And then, just, I guess, one follow up, was your exit rate on cement prices in the quarter, was that sort of similar to the quarter average? Or maybe a touch ahead or…?
Michael Haack: Pretty much in line with the average.
Anthony Pettinari: Got it. Got it. Okay. I'll turn it over.
Operator: Our next question comes from Jerry Revich from Goldman Sachs (NYSE:GS). Please go ahead with your question.
Jerry Revich: Yes, hi, good morning, everyone and congratulations on the strong performance. I want to ask, so, normal seasonality for your cement business is margins are up about 8 points in the September quarter from the June quarter. And so, as we think about that normal seasonality, anything that we need to keep in mind. this year, Craig, relative to the really strong June quarter results?
Craig Kesler: Sitting here today, I don't expect to see anything unique. That that margin improvement as you know is mostly driven by our annual maintenance programs are completed during the June quarter. Those are quite heavy spends and then that doesn't happen in the September and December quarters.
Jerry Revich: Got it. So the full benefit from the improved energy costs and all the other moving pieces there fully baked in the strong June quarter results?
Craig Kesler: Right
Jerry Revich: Yeah, okay. And then, in terms of the sequential price cadence so, over the past two years your cement average selling prices were up 3% to 4% September quarter versus June quarter. I know part of that is mix where the volumes are coming from and contract rollovers. But can you just give us an update on how you're thinking about the sequential move in average selling prices from here given timing of contract rollovers and mix of business? How should that look this year, September versus June versus the three to four points we’ve seen over the past couple of years?
Craig Kesler: Yeah, Jerry, as we talked a little bit earlier, we've got a few markets where we've got a price increase slated for later this year, mostly in the Texas area just given the push out of that timing. But other than tht, we don’t have any incremental announcements at this point. And so, absent something like that, you'd expect to see more of a consistent sequential price from what we saw here in the June quarter.
Jerry Revich: Okay. And then, in terms of the indications to customers of potential future price increases in both cement and wallboard, can you just talk about what the range of price increase discussions that you folks have had to the extent you can comment. I know in some markets you're going to roll those out as time come. But I wonder if you just give us any additional color on how those conversations are headed particularly in cement the ahead of ’25?
Michael Haack: Yeah, Jerry, it's always hard to predict the exact timing and magnitude of price increases. That’s certainly a discussion we’ll be having with customers as we go over the next few weeks and months ahead of calendar ’25. So I don't want to speculate too much on how much or when those price increases will be announced? But look, I think as Michael has mentioned and we talked about now for several quarters if not years, given the dynamics and the backdrop of - in both businesses both in cement and wallboard with supply being constrained for a variety reasons and pretty good outlooks around demand. We do expect to see utilization rates will remain high through the cycle, which should lead to higher pricing this cycle than we've seen in price cycles both in different economic climates, just given the changes that have occurred I our industries. And so, that’s without getting into specifics for timing, we just do continue to see pricing opportunity in front of us.
Jerry Revich: Right. Thank you.
Operator: Our next question comes from Adam Thalhimer from Thompson Davis. Please go ahead with your question.
Adam Thalhimer: Hey, good morning guys. Congrats on the strong quarter. I wanted to start on wallboard margins, I think that was the best quarterly wallboard margin in something like 18 years. Just curious what drove that? And what your thoughts are on sustainability?
Michael Haack: Yeah, Adam, the environment that we've been in certainly with lower natural gas prices contributed to that really managing the cost structure around maintenance projects and the need to spend they did again our teams did a fantastic job this quarter, just like the cement group did as well. And you know look our assets are well positioned. We've talked about that many times from a surety of raw materials those the primary raw. Mater being gypsum and our long years either of raw material reserves or supply contract for synthetic gypsum and so we really positioned this business very, very well and yes, it's a good margin and performance, but that's been a hallmark of that business for many years now.
Adam Thalhimer: And Craig it's a smaller business, but the paperboard volume jumped a little bit and I know you did a capacity expansion there. What do you think your annual capacity is normalized now?
Michael Haack: Yeah, that the 90 – 91,000 tonnes is a record quarter for the paper mill we mentioned that we've gone through the expansion project a couple of years ago really starting to see the benefit of that volume improvement again the mills running very well that team is doing a fantastic job. We - if you just annualize that you could get a pretty decent runrate and we are always looking to debottleneck all of these facilities and we’ve taken that mills when we acquired it many, many years ago and we just incrementally been able to get more output and the team's going to continue to do that.
Adam Thalhimer: Great.
Michael Haack: Thank you.
Operator: Our next question comes from Phil Ng from Jefferies. Please go ahead with your question.
Phil Ng: Hey guys. I had a question, how did cement volumes track into your quarter especially when weather cleared out in perhaps June, July? I know June's got two less shipping days if you can't look at a per day basis was it up? And then qualitatively, I think. Michael, your outlook was stable, volumes were certainly upbeat on infrastructure. Are you set up to kind of put up volume growth in the back half? Just want to get a little more colored how are you thinking about some wet volumes and how it's progressed since a very wet spring.
Michael Haack: Yeah, Phil, good question the first part of your question and you look at our business, Texas we're actually up this quarter versus last year I would say that had more to do with the comparison of prior year. We had some issues last year around that. So hard to look at those volumes necessarily as a good parameter for the overall market which is down just given some of the weather issues that we've dealt with. And as you said that we saw much better weather in the month of June across most of the country, but we did had two less shipping days. So hard to get a real gauge when you're coming out of an April and May that we dealt with but to feel good about the forward view of cement demand and look, we have the inventory and the network and the opportunity presents itself. We are going to meet our customers’ needs.
Phil Ng: And Craig, I think wonder I have questions, there are questions about catch-up demand. Had you seen orders kind of step back and so your kind of customers look to get a recap to some of that deferred demand kind of pushed out thus far like in July and as we kind of look out to August?
Michael Haack: Yeah, to the extent that can I know they are going to push as hard as they can when you have that much weather, you do see a just delay in the overall earth work that happens and so they are doing up for a busy second half of the year.
Phil Ng: And then from a margin standpoint, really impressive quarter both from wallboard and cement. You called out some good guys on energy and freight. Those feel pretty sticky unless things change materially here. Where there any other one-off costs that were that will roll off just because based on what you're putting up and where pricing is trending as well. I would imagine you could build off of this. It's accounting for seasonality but how should we think about the margin cadence through the rest of the year and that are wallboard is or cement?
Michael Haack: Yeah, as you look sequentially while natural gas is down, it's been down level as these levels between $2, $2.5 a million for quite some time. So sequentially I don’t see a significant change there either the lights sometimes eventually, I don't see as I mentioned in the beginning of the call OCC price is we will see some upward tick here in the September quarter. So sequentially that that will be up a little bit higher. So there is going to be some puts and takes where margins are concerned and the cement business we are again we are largely through the large maintenance programs and with fuel cost being low being we’d expect to continue to see that business perform very well.
Phil Ng: And just one last one for me. It – and wallboard turns outlook as a little more contingent on the macro and always housing starts spend a little choppier and rates have got about drought but correct me if I am wrong Craig, I mean your business tends to tied more to completions. So with completions lag and starts the next quarter do you still see decent demand is that I should think about wallboard because your volumes lagged in history [Indiscernible] at all that was ready related but any more perspective would be helpful?
Michael Haack: If you feel, I think we're trying to get away from guessing on the next quarter given as you said some of the volatility around rates and other things that impact the volume trends, but I think generally we feel good about the demand environment given a lot of the factors that we have talked about and now with rates seemingly coming down a little bit that should help the exact timing of how that flows through is harder for us to gauge than and it's always hard to forecast but certainly the last three to six months have been that even tougher.
Phil Ng: Okay. Thank you appreciate the color.
Operator: Our next question comes from Tyler Brown from Raymond James. Please go ahead with your question.
Tyler Brown: Hey, good morning. Hey Craig, I think you mentioned transportation was a good guy on the cost side on wallboard. I get that it's largely a passthrough but when the market is loosening and the truck market certainly loosening do you tend to make a little bit of money on transportation and what it move the other way in a tightened transportation environment?
Michael Haack: It's this as freight adjusts that can be a headwind or a tailwind for us and it’s certainly been a tailwind over the last couple of quarters and as you said I don’t want to expect that to change significantly in the trucking market.
Tyler Brown: Okay, that's helpful. And then just so I have it. I'm just curious but what is the truck to rail mix? I assume your heavy truck versus rail?
Michael Haack: Yeah, and wallboard is very little rail pretty inefficient commodity to move on the rail.
Tyler Brown: Okay, and then I think you're guiding to call it 3.10 3.40 in CapEx, but you spent under $40 million in the quarter. I'm just curious if you still feel good about spending the full a lot manner me off to a slow start just any color there.
Craig Kesler: Yeah, I wouldn't say it's a slow start. Just timing of when payments are made as Michael mentioned we have started to do some dirt work and so that construction and site work will really start to pick up here the second part of the summer into the fall and so I would. expect to see CapEx starting to tick up. And the exact timing of that to be determined but that’s still a range for now and we’ll see as the year unfolds.
Tyler Brown: Okay. Good deal and then my last one just a couple small other modeling questions, but just any thoughts on how the tax rate pans out for the year on the corporate SG&A was up a bit what was driving that was upon bonus accrual and then the other income was a good guide, just curious if that was a gain just how we should think about that line, appreciate it.
Craig Kesler: Yeah, in terms of the corporate SG&A that number has been in that same range for the last several quarters call it $16 million plus or minus I'd expect to see it continue to be in that range in fact I think 4Q was a little bit higher. So that’s the range I would stick with. Tax rate, it ebbs and flows a little bit but I would it may tick up a little bit here for the second part of the year but again pretty much range bound and other income that it can be other asset sales or little minor things that are hard to predict. But I don't expect it to continue to be at that same level for the second, third and fourth quarte.
Tyler Brown: Okay cool. Thank you.
Operator: And our next question comes from Keith Hughes from Truist. Please go ahead with your question.
Keith Hughes: Thank you. Getting back to cement prices - you got a few increases you had mentioned earlier, but it doesn’t sounds like a lot do you think are your markets getting back to where you're increasing price just sort of once a year or what do you think the cadence is going to look like in the medium term?
Michael Haack: Yeah, Keith like I've always said, it's hard to. predict that exact timing. There's a lot of factors that go into that. For the last couple of years we've seen multiple increases given some of the delayed start to the construction season, I'm frankly not surprised to see us a limited second round of increases normally as construction season starts in March but this year just got extended. That doesn't mean or that doesn't preclude next year from being two increases we just got to see how the year unfolds and how the second half of this year goes through but you know it remains to be seen in terms of the exact timing.
Keith Hughes: Okay. Thank you.
Operator: And ladies and gentlemen with that we'll be concluding today's question and answer session. I'd like to turn the floor back over to Michael Haack for any closing comments.
Michael Haack: Thank you, Jamie. Looking back on our first quarter for Fiscal year 2025, I want to conclude by thanking our employees directly for their resilience through the quarter. Your superior execution and consistent steadfast operational focus once again set the industry standard and help us achieve positive results to start our fiscal year. Thanks also to everyone joining us on the call today. We look forward to discussing our results again with you next quarter.
Operator: Ladies and gentlemen with that we'll conclude today's conference call and presentation. We thank you for attending. You may now disconnect your lines.
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