Eagle Materials (EXP) is like a:

• Dow Chemical for foundational building materials.
• ExxonMobil for construction's core ingredients.
• U.S. Steel for cement and gypsum.

• Cement: A fundamental binder used to produce concrete for infrastructure, commercial, and residential construction projects.
• Concrete and Aggregates: Ready-mix concrete is a core construction material, while aggregates like sand, gravel, and crushed stone are its primary components.
• Gypsum Wallboard: A widely used building material for interior walls and ceilings in residential and commercial construction.
• Recycled Paperboard: Used primarily as the facing material for gypsum wallboard and in various packaging applications.

Eagle Materials (symbol: EXP) primarily sells its heavy construction materials (cement, concrete, aggregates) and light building materials (gypsum wallboard, recycled paperboard) to other businesses, making it a B2B company.

Due to the commodity nature of its products and a highly fragmented construction industry, Eagle Materials typically serves a broad and diverse customer base. The company does not publicly disclose specific "major customers" that account for a significant portion of its revenue. Instead, its sales are distributed among various types of businesses within the construction supply chain. These primary customer categories include:

• Building Material Distributors and Dealers: These companies purchase large volumes of gypsum wallboard, cement, and other materials from manufacturers like Eagle Materials. They then resell these products to a wide range of end-users, including residential and commercial contractors, homebuilders, and remodelers.
  • Examples of public companies that operate in this space and could be customers or represent their customer base include: Builders FirstSource (BLDR) and GMS Inc. (GMS).
• Ready-Mix Concrete Producers: For its cement and aggregates segments, Eagle Materials supplies businesses that produce and deliver ready-mix concrete for various construction projects, from buildings to infrastructure. Many of these producers are regional or privately held.
  • While many are private, this category includes various sizes of ready-mix concrete companies that rely on suppliers like Eagle Materials for core components.
• Construction Contractors (Commercial, Residential, and Infrastructure): General contractors, specialized subcontractors, and homebuilders procure materials, often through distributors, for their construction projects. These can range from large-scale commercial developments and public infrastructure projects (roads, bridges) to residential housing.
  • Large public homebuilders such as D.R. Horton, Inc. (DHI) and Lennar Corporation (LEN) represent the type of activity that drives demand for Eagle Materials' products, even if purchases are often made indirectly through distributors or subcontractors rather than directly from EXP.

Key Risks to Eagle Materials (EXP)

1. Cyclicality of the Construction Industry and Housing Market Demand
   Eagle Materials' financial performance is heavily dependent on the demand within the construction industry, particularly residential construction, and public infrastructure projects. As a manufacturer of heavy construction materials like cement and light building materials such as gypsum wallboard, the company is highly susceptible to economic and geographic conditions that influence construction activity. Weakness in the housing market, driven by factors like high interest rates and housing affordability concerns, directly impacts demand and pricing for its products, especially wallboard, potentially leading to reduced volumes and pressured margins.
2. Fluctuations in Input Costs
   The company's operations are capital-intensive, with significant reliance on fuel, energy, and raw materials. Eagle Materials is vulnerable to considerable changes in the cost and availability of these key components, as well as transportation costs. Substantial increases in these expenses or disruptions in their availability can materially and adversely affect the company's operating profits and overall financial performance.
3. Customer Consolidation and Pricing Pressure
   Eagle Materials faces an emerging risk from the consolidation occurring within its customer base. This trend may lead to increased reliance on a smaller number of larger customers. These consolidated entities could leverage their enhanced purchasing power to negotiate more favorable terms and pricing, which could exert pressure on Eagle Materials' operating margins, disrupt its results of operations, and constrain its cash flow.

The clear emerging threat to Eagle Materials (EXP) is the increasing adoption of **Mass Timber construction** (e.g., Cross-Laminated Timber - CLT) in mid-rise and even high-rise buildings. This construction method uses engineered wood products as a structural alternative to concrete and steel. As mass timber gains wider acceptance due to its perceived environmental benefits (carbon sequestration, lower embodied energy), faster construction times, and aesthetic appeal, it directly reduces demand for cement, concrete, and aggregates in the structural components of buildings, which are core products for Eagle Materials.

Eagle Materials Inc. (symbol: EXP) operates primarily in the United States, manufacturing and distributing a range of essential building materials. The addressable markets for their main products and services in the U.S. are as follows:

• Cement: The U.S. cement market size was valued at approximately USD 18.7 billion in 2024, with projections to reach USD 24.0 billion by 2032. In terms of volume, the market attained a value of approximately 110.37 million metric tons in 2024 and is projected to reach around 134.54 million metric tons by 2034.
• Gypsum Wallboard: The U.S. gypsum product market, which includes gypsum wallboard, was valued at USD 15.1 billion in 2024 and is expected to increase to USD 30.9 billion by 2032. Separately, the U.S. gypsum board market size was estimated at USD 15.6 billion in 2023.
• Concrete: The concrete market in the United States generated a revenue of USD 351,383.5 million (approximately USD 351.38 billion) in 2024 and is expected to reach USD 442,145.0 million (approximately USD 442.15 billion) by 2030.
• Aggregates: The U.S. construction aggregates industry was valued at USD 39 billion based on 2024 revenues. The USA construction aggregates market was valued at USD 35.4 billion in 2023. Another estimate for the U.S. construction aggregates market in 2024 is USD 79.2 billion, within the broader North American market.
• Recycled Paperboard: Eagle Materials produces recycled paperboard primarily for use as facing paper in gypsum wallboard. Therefore, its market size is largely integrated into the gypsum wallboard market.
• Frac Sand: null

Expected Drivers of Future Revenue Growth for Eagle Materials (EXP) over the Next 2-3 Years:

1. Increased Infrastructure Spending: A significant tailwind for Eagle Materials is anticipated from the Infrastructure Investment and Jobs Act (IIJA) funding, with approximately 75% of the funds yet to be disbursed. This ongoing federal and state infrastructure spending is expected to drive robust demand for the company's heavy materials, particularly cement and aggregates, over the next 2-3 years.

2. Strategic Price Increases: Eagle Materials has a stated strategy of prioritizing price over volume, and the company has announced planned price increases across most of its markets. Specifically, cement price increases are set to take effect by early 2025 and again on January 1, 2026. Price increases for the wallboard business were also announced for early 2025. These increases reflect strong demand and the company's favorable market positioning, contributing to future revenue growth.

3. Recovery and Growth in the Wallboard Business: While near-term demand for wallboard has been impacted by high interest rates, the long-term outlook for the wallboard business is positive due to underbuilt housing and expectations of a more favorable housing market environment, potentially driven by lower mortgage rates. This anticipated recovery in residential construction is poised to boost wallboard volumes and, coupled with announced price increases, drive revenue.

4. Bolt-on Acquisitions: Eagle Materials continues to pursue a strategy of making small, complementary bolt-on acquisitions, particularly in its aggregates business. Recent examples include the acquisition of a small aggregates business in Kentucky and Bullskin Stone & Lime LLC in Western Pennsylvania, which enhance customer reach and contribute to overall revenue growth through expanded market presence.

5. Modernization and Expansion Projects: Ongoing investments in modernization and expansion projects across its facilities are expected to enhance operational efficiency, boost plant reliability, and expand capacity. Projects such as upgrades at the Texas Lehigh and Tulsa Cement facilities, the Laramie, Wyoming cement plant, and the Duke, Oklahoma wallboard facility are designed to optimize production and support future volume growth and margin expansion, including through enhanced low-carbon product offerings.

Share Repurchases

• Over the past five fiscal years (ending March 31, 2025), Eagle Materials invested $1.8 billion in share repurchases and dividends.
• In fiscal year 2024, the company repurchased approximately 1.9 million shares of common stock for $343 million.
• As of September 30, 2025, approximately 3.9 million shares remained available under the current repurchase authorization.

Share Issuance

• Eagle Materials' basic shares outstanding have generally declined over the last few years, from $0.041 billion in 2022 to $0.037 billion in 2023, and $0.035 billion in 2024, indicating a net reduction rather than significant issuance.

Outbound Investments

• Over the past five fiscal years (ending March 31, 2025), Eagle Materials invested $388 million in acquisitions.
• In fiscal year 2023, the company acquired a readymix concrete and aggregates business in northern Colorado for approximately $120.2 million.
• The company has made strategic investments, including a new slag-cement facility in Houston through its joint venture, Texas Lehigh Cement Company, which was set to start commissioning in October 2024.

Capital Expenditures

• Over the past five fiscal years (ending March 31, 2025), Eagle Materials invested $546 million in organic capital expenditures.
• Expected capital spending for fiscal 2026 is projected to be between $475 million and $500 million, with fiscal 2027 anticipated to be $400 million to $425 million.
• A significant capital project involves a $430 million investment to modernize and expand the Mountain Cement facility in Wyoming, intended to increase capacity by 50%, lower manufacturing costs by 25%, and reduce carbon intensity, with completion expected in late calendar 2026 (fiscal 2027).