Eagle Materials Inc (EXP) 2023 Q2 法說會逐字稿

Good day, everyone, and welcome to Eagle Materials Second Quarter of Fiscal 2023 Earnings Conference Call. This call is being recorded.

大家好，歡迎來到 Eagle Materials 2023 財年第二季度收益電話會議。此通話正在錄音中。

At this time, I'd like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir.

此時，我想將電話轉給 Eagle 的總裁兼首席執行官 Michael Haack 先生。哈克先生，請繼續，先生。

Thank you, Jason. Good morning. Welcome to Eagle Materials Conference Call for our second quarter for fiscal 2023. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President of Strategy, Corporate Development and Communications. We are glad you could be with us today.

謝謝你，傑森。早上好。歡迎參加我們 2023 財年第二季度的 Eagle Materials 電話會議。我是 Michael Haack。今天加入我的是我們的首席財務官 Craig Kesler；戰略、企業發展和傳播執行副總裁鮑勃·斯圖爾特 (Bob Stewart)。我們很高興你今天能和我們在一起。

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 the 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.

將進行與此次電話會議相關的幻燈片演示。要訪問它，請訪問 eaglematerials.com 並單擊網絡廣播鏈接。當您訪問幻燈片時，請注意第一張幻燈片涵蓋了我們在本次電話會議期間所做的前瞻性陳述的警告性披露。這些陳述受風險和不確定性的影響，可能導致結果與電話會議期間討論的結果不同。有關更多信息，請參閱本披露，該披露也包含在我們的新聞稿末尾。

This morning, I'd like to offer a few perspectives about our quarter, the outlook for our business and our ESG agenda. First, let me talk about the quarter. The demand for our products continues to be strong. I'm pleased to report record revenue is up 19% and record earnings per share up 51%. Our earnings results are driven by robust price improvement across our businesses and across our entire geographic system. Price realizations more than mitigated the cost of inflation pressures. We also returned $110 million to shareholders through dividends and the repurchase of roughly 840,000 shares. This quarter's performance reflects our strategic and operational disciplines. Disciplines would serve us well at all points in the economic cycle.

今天早上，我想就我們的季度、我們的業務前景和我們的 ESG 議程提出一些看法。首先，讓我談談這個季度。對我們產品的需求持續強勁。我很高興地報告創紀錄的收入增長了 19%，每股收益增長了 51%。我們的盈利結果是由我們業務和整個地理系統的強勁價格改善推動的。價格實現不僅減輕了通脹壓力的成本。我們還通過派息和回購大約 840,000 股股票向股東返還了 1.1 億美元。本季度的業績反映了我們的戰略和運營紀律。在經濟周期的各個階段，紀律都能很好地為我們服務。

We have been growing and improving our businesses systematically in keeping with a strong strategic focus and clear strategic boundaries. This quarter's actions included the acquisition of a distribution terminal in Nashville, which extends our profitable operational reach in this high-growth Southeastern region, and the purchase of aggregates quarry in Northern Nevada, increasing our access to aggregate reserves and our ability to serve this rapidly growing market.

我們一直在系統地發展和改進我們的業務，以保持強大的戰略重點和明確的戰略邊界。本季度的行動包括收購納什維爾的一個分銷終端，擴大我們在這個高增長的東南部地區的盈利運營範圍，以及購買內華達州北部的骨料採石場，增加我們獲得骨料儲備的機會和我們快速服務的能力不斷增長的市場。

The decisions we have made over the years are providing significant advantages today and the decisions we are making today will provide significant advantages to us in the future as we make our operations increasingly sustainable and resilient. The successful and well demonstrated pursuit of our low-cost producer strategy positions us well for any eventualities that might be ahead this cycle. We will continue to grow the heavy side of our business as we have been doing in 2 ways. First is through asset acquisitions that meet our strategic and financial returns criteria and the second is through growth investments that expand our system capabilities. We will also continue to invest in improving the profitability and the sustainability of our existing assets.

我們多年來做出的決定在今天提供了顯著的優勢，而我們今天做出的決定將在未來為我們提供顯著的優勢，因為我們使我們的運營越來越具有可持續性和彈性。我們對低成本生產商戰略的成功和充分證明的追求使我們能夠很好地應對本週期可能發生的任何不測事件。正如我們一直在做的那樣，我們將繼續以兩種方式發展我們業務的重型方面。首先是通過滿足我們的戰略和財務回報標準的資產收購，其次是通過擴展我們系統能力的增長投資。我們還將繼續投資於提高現有資產的盈利能力和可持續性。

Now let me turn to the outlook for our businesses, starting with the heavy side. For cement as well as aggregates, we have perhaps the best multiyear visibility into demand and into the opportunities for pricing power than perhaps ever before. We have announced a cement price increase across our network of plants effective January 1, 2023. The die is pretty well cast for public construction and infrastructure over the next 3- to 5-year time frame. It is not a stretch to think we could see public construction spending substantially higher. Some facts supporting demand optimism for Eagle are state DOT budgets are running well above prior decade averages.

現在讓我談談我們業務的前景，從沉重的一面開始。對於水泥和骨料，我們對需求和定價權機會的多年了解可能比以往任何時候都多。我們已宣布自 2023 年 1 月 1 日起在我們的工廠網絡中提高水泥價格。在未來 3 到 5 年的時間框架內，公共建設和基礎設施的模具已經非常好。認為我們可以看到公共建設支出大幅增加並不誇張。支持 Eagle 需求樂觀的一些事實是，州 DOT 預算遠高於前十年的平均水平。

The infrastructure portion of state DOT budgets are receiving high fund allocations and the magnitude of state DOT budget dollars skews favorably for Eagle Cement system footprint. Infrastructure contract award values are trending above national averages in the states in which we operate. At the same time, U.S. cement manufacturing supply response is highly constrained, and we see no material build or expansion in markets that will fundamentally change this picture.

州 DOT 預算的基礎設施部分正在接受高額資金分配，州 DOT 預算美元的規模有利於 Eagle Cement 系統的足跡。在我們運營所在的州，基礎設施合同授予價值趨於高於全國平均水平。與此同時，美國水泥製造業的供應反應受到高度限制，我們認為市場上沒有任何物質建設或擴張會從根本上改變這一局面。

Bottom line, we have excellent visibility on U.S. cement demand for the next 3 years. We have excellent visibility on cement manufacturing capacity expansion in our markets or the lack thereof for the same time frame. And we know how expensive imports are on a delivered basis to our U.S. Heartland markets. These facts should provide a relatively healthy formula for cement pricing power.

總而言之，我們對未來 3 年的美國水泥需求有很好的預見性。我們對我們市場的水泥生產能力擴張或在同一時間段內缺乏產能有很好的了解。而且我們知道進口到我們美國中心地帶市場的交付價格是多麼昂貴。這些事實應該為水泥定價權提供一個相對健康的公式。

Now turning to the light side. First, as to demand, given the rapid rise in interest rates, it is reasonable to expect some softening in the wallboard demand ahead. I want to emphasize that we have not seen softening yet as our quarterly results attest. The main reasons for this are, there are 1.7 million housing units under construction in the U.S. today. This is an all-time record. Our wallboard business has its production footprint in the U.S. Sun Belt. The South region is the most important in the country, more important than the 3 other regions in the U.S. combined. We are where the action is. Repair and remodeling is another important driver of wallboard demand and the near-term outlook implications for Wallboard appear favorable.

現在轉向光明的一面。首先，在需求方面，鑑於利率的快速上升，預計未來牆板需求會出現一些疲軟是合理的。我想強調的是，正如我們的季度業績所證明的那樣，我們還沒有看到軟化。主要原因是，今天美國有 170 萬套住房在建。這是一個歷史記錄。我們的牆板業務在美國太陽帶有其生產足跡。南部地區是該國最重要的地區，比美國其他 3 個地區的總和還要重要。我們就是行動所在。修復和改造是牆板需求的另一個重要驅動力，牆板的近期前景似乎是有利的。

Now turning to the supply side. In many ways, our wallboard business today has its characteristics resembling our cement business. To name 3, in wallboard, we operate at high-capacity utilization and comparatively, our cement plants are sold out. Our demand outlook would suggest these higher utilization conditions will be persistent through the midterm for both businesses. Both businesses have significant constraints to capacity addition, albeit for different reasons. Both Cement and Wallboard are products with very limited substitutes and each are essential to U.S. construction and the growth in rebuilding of America.

現在轉向供給側。在許多方面，我們今天的牆板業務具有與我們的水泥業務相似的特徵。舉個例子 3，在牆板方面，我們的產能利用率很高，相比之下，我們的水泥廠已經售罄。我們的需求前景表明，這些更高的利用率條件將在中期持續存在於兩家公司。儘管出於不同的原因，這兩家企業在產能增加方面都有很大的限制。水泥和牆板都是替代品非常有限的產品，每一種都對美國建設和美國重建的增長至關重要。

Now let me turn to operations. I am delighted with the results we reported across our network of plants as a whole, but I'd be remiss in not talking about 1 plant that has recently struggled with equipment failure issues. This plant is our Texas Lehigh cement plant joint venture. As you know, one of our hallmarks is keeping our plants in like new condition. This plant has had a few one-off failures that are not commonly seen. With each of these failures, we want to ensure that we fix the root cause of the issue. This usually takes a little additional time in understanding the failure and doing the engineering work to fix it properly but will serve us well over the long term.

現在讓我談談運營。我對我們在整個工廠網絡中報告的結果感到很高興，但如果我不談論最近因設備故障問題而苦苦掙扎的一家工廠，我會失職。該工廠是我們在得克薩斯州 Lehigh 水泥廠的合資企業。如您所知，我們的標誌之一是讓我們的工廠保持新的狀態。該工廠發生過一些不常見的一次性故障。對於這些故障中的每一個，我們都希望確保解決問題的根本原因。這通常需要一些額外的時間來了解故障並進行工程工作以正確修復它，但從長遠來看對我們很有幫助。

Supply chain issues have resulted in some extended downtime with these equipment repairs and replacements, which are reflected in this quarter's numbers. Some of this downtime will extend into the coming quarter, but we feel confident that the plant will be more reliable when these investments to fix the root cause of the issue.

供應鏈問題導致這些設備維修和更換的停機時間延長，這反映在本季度的數字中。其中一些停機時間將延續到下一季度，但我們相信，當這些投資解決問題的根本原因時，該工廠將更加可靠。

Let me close today with some comments on our ESG agenda starting with environmental. I have mentioned before that our biggest opportunity for moving the needle on our path to a net zero future is through the introduction, marketing and acceptance of Portland limestone cement. It is the best and quickest way for us to make our clinker go further. Adoption requires approvals from state DOTs as well as some capital investment in our manufacturing plants.

今天結束時，我將從環境開始對我們的 ESG 議程發表一些評論。我之前提到過，我們在通往淨零未來的道路上前進的最大機會是通過引入、營銷和接受波特蘭石灰石水泥。這是讓我們的熟料走得更遠的最好、最快的方法。採用需要獲得州 DOT 的批准以及對我們的製造工廠進行一些資本投資。

Implementing PLC at all locations will not be completed overnight as we face supply chain issues on the equipment side and approval time lines with state DOTs, but I'm happy to report we continue to make significant progress. Last quarter, I commented that almost 15% of our system-wide cement sales were port and limestone cement. This quarter, that proportion grew to 25% with 2 plants shipping PLC in the 60% to 70% range.

在所有地點實施 PLC 不會在一夜之間完成，因為我們面臨設備方面的供應鏈問題和州 DOT 的批准時間表，但我很高興地報告我們繼續取得重大進展。上個季度，我評論說我們全系統水泥銷售額的近 15% 是港口和石灰石水泥。本季度，這一比例增長到 25%，其中 2 家工廠出貨 PLC 在 60% 到 70% 的範圍內。

We have set an internal goal to move all of our operations, construction-grade cement to 100% limestone cement production by 2025. Meeting this goal will enable us to produce more cementitious product, which is of critical importance given we are in the sold-out conditions. But also very importantly, it will improve our carbon footprint at the cementitious level. Shortly after the first of the year, we will be more formally updating our progress, and we intend to make these goals and their implications more explicit. As part of a broader disclosure on the E as well as the S of ESG.

我們設定了一個內部目標，即到 2025 年將我們所有的建築級水泥業務轉變為 100% 的石灰石水泥生產。實現這一目標將使我們能夠生產更多的水泥產品，鑑於我們在銷售中，這一點至關重要出條件。但同樣非常重要的是，它將改善我們在膠凝水平上的碳足跡。今年第一天過後不久，我們將更正式地更新我們的進展，我們打算使這些目標及其影響更加明確。作為更廣泛披露 ESG 的 E 和 S 的一部分。

With that, let me turn it over to Craig for the financial review of our quarter.

有了這個，讓我把它轉交給克雷格對我們季度的財務審查。

Thank you, Michael. Second quarter revenue was a record $605 million, an increase of 19% from the prior year. Excluding the recently acquired business in Northern Colorado, revenue increased 16%. The increase reflects higher cements and wallboard sales prices as well as increased wallboard sales volume. Second quarter diluted earnings per share were $3.72, a 51% increase. Excluding the impact of our refinancing actions in the prior year, the EPS increase was 36%. The increase was driven by improved earnings and reduced share count due to our buyback program. Fully diluted shares are down 10% from the prior year.

謝謝你，邁克爾。第二季度收入達到創紀錄的 6.05 億美元，比上年增長 19%。不包括最近在北科羅拉多收購的業務，收入增長了 16%。這一增長反映了水泥和牆板銷售價格的上漲以及牆板銷量的增加。第二季度每股攤薄收益為 3.72 美元，增長 51%。剔除上一年再融資行動的影響，每股收益增長 36%。由於我們的回購計劃，收益增加和股票數量減少推動了這一增長。完全攤薄後的股份比上一年下降了 10%。

Turning now to our segment performance. This next slide shows the results in our Heavy Materials sector, which includes our Cement and Concrete and the Aggregates segments. Revenue in the sector was up 14%, driven by higher cement sales prices. Operating earnings increased 10%, reflecting higher cement prices, which were partially offset by increased energy and maintenance costs. Given the strong demand backdrop, we implemented a second round of cement price increases in early July, across the majority of our markets.

現在轉向我們的細分市場表現。下一張幻燈片顯示了我們重材料部門的結果，其中包括我們的水泥和混凝土以及骨料部門。在水泥銷售價格上漲的推動下，該行業的收入增長了 14%。營業收入增長 10%，反映出水泥價格上漲，但部分被能源和維護成本增加所抵消。鑑於強勁的需求背景，我們在 7 月初對大部分市場實施了第二輪水泥價格上漲。

Moving to the Light Materials on the next slide. Revenue in our Light Materials sector increased 26%, reflecting higher wallboard prices and sales volume. Operating earnings in the sector increased 42% to $95 million, reflecting higher net sales prices, which helped to offset higher input costs, namely freight, energy and paper. However, recycled fiber costs have come down significantly in September and again in October. Looking now at our cash flow, which remains strong. During the first 6 months of our fiscal year, operating cash flow improved 15% to $300 million, and capital spending increased to $43 million. As Michael mentioned, during the quarter, we completed the acquisition of the cement distribution terminal in Nashville, Tennessee, with a purchase price of approximately $39 million.

轉到下一張幻燈片上的輕質材料。我們的輕質材料部門的收入增長了 26%，反映了牆板價格和銷量的增加。該部門的營業收入增長了 42%，達到 9500 萬美元，反映出更高的淨銷售價格，這有助於抵消更高的投入成本，即運費、能源和紙張。然而，再生纖維成本在 9 月和 10 月再次大幅下降。現在看看我們的現金流，它仍然很強勁。在本財年的前 6 個月，運營現金流增加了 15%，達到 3 億美元，資本支出增加到 4300 萬美元。正如邁克爾所提到的，在本季度，我們完成了對田納西州納什維爾水泥配送站的收購，收購價格約為 3900 萬美元。

We also repurchased 840,000 shares of our common stock for $101 million and paid our quarterly dividend. Year-to-date, we have repurchased approximately 1.7 million shares or 4.5% of our outstanding shares. We also have 9.1 million shares remaining under our current repurchase authorization.

我們還以 1.01 億美元的價格回購了 840,000 股普通股，並支付了季度股息。年初至今，我們已經回購了大約 170 萬股股票，占我們已發行股票的 4.5%。根據我們目前的回購授權，我們還有 910 萬股股票。

Finally, a look at our capital structure. At September 30, 2022, our net debt-to-cap ratio was 48% and our net debt-to-EBITDA leverage ratio was 1.5x. We ended the quarter with $84 million of cash on hand. Total committed liquidity at the end of the quarter was approximately $628 million, and we have no meaningful near-term debt maturities, giving us substantial financial flexibility. Thank you for attending today's call.

最後，看看我們的資本結構。截至 2022 年 9 月 30 日，我們的淨債務與市值比率為 48%，我們的淨債務與 EBITDA 槓桿比率為 1.5 倍。我們在本季度結束時手頭現金為 8400 萬美元。本季度末承諾的流動資金總額約為 6.28 億美元，我們沒有有意義的短期債務到期，這為我們提供了巨大的財務靈活性。感謝您參加今天的電話會議。

Jason, we'll now move to the question-and-answer session.

傑森，我們現在進入問答環節。

(Operator Instructions) Our first question comes from Trey Grooms from Stephens.

（操作員說明）我們的第一個問題來自 Stephens 的 Trey Grooms。

Congrats on the quarter. First question is on the cement business. You mentioned that you remain virtually sold out. And as you look at your footprint geographically and kind of the relative health of those markets. Can you talk about your expectations for the different end markets you're in there? Clearly, we've seen what's going on with res, but maybe how your markets are holding up there and maybe on -- also just generally private construction as well as any outlook for the infrastructure demand in those markets as we look kind of into next year? And the question really is around if we see softening, do you think also that we should remain in this kind of sold-out condition as we progress into '20 -- I guess, calendar '23?

祝賀這個季度。第一個問題是關於水泥業務。你提到你實際上仍然賣光了。當你從地理上看你的足跡以及這些市場的相對健康程度時。您能談談您對所處的不同終端市場的期望嗎？很明顯，我們已經看到了 res 的情況，但也許你的市場在那里以及也許繼續保持 - 也只是一般的私人建築以及我們對下一個市場的基礎設施需求的任何前景年？問題真的在於，如果我們看到軟化，你是否還認為我們應該在進入 20 年代時保持這種售罄狀態——我想，日曆 23 年？

Yes. Trey, I'll take that question with it. So when we look across, we run our system a little bit differently than we did years ago in that we have a network of cement plants now. And that's why you see some of the acquisitions we did with extending that network and making sure that network is reliable and resilient during good times and bad times with it. So this Nashville purchase was a hallmark of that too, that we extend our profitable distribution footprint down into the Southeast region for some of our plants, and we could hit that through multiple areas.

是的。特雷，我會回答這個問題。因此，當我們放眼望去，我們運行系統的方式與多年前略有不同，因為我們現在擁有一個水泥廠網絡。這就是為什麼您會看到我們在擴展該網絡並確保該網絡在順境和逆境中可靠和有彈性方面所做的一些收購。所以這次納什維爾的收購也是一個標誌，我們將我們的一些工廠的盈利分銷足跡擴展到東南地區，我們可以通過多個地區實現這一目標。

We feel very comfortable as my earnings comments said on where the infrastructure side of the businesses, the state DOT budgets look very favorable. Where we participate in our markets, they're pretty shielded from imports getting into those markets. And overall, there's nothing in my mind, that doesn't think that, that public construction spending will be higher over the near and midterm of this with this infrastructure spending.

正如我的收益評論所說，在企業的基礎設施方面，州 DOT 預算看起來非常有利，我們感到非常自在。在我們參與市場的地方，他們完全不受進口進入這些市場的影響。總的來說，在我看來，沒有什麼不認為，隨著基礎設施支出的增加，公共建設支出將在近期和中期增加。

Your question on individual markets itself and that we really look at it as a network. We think that Cement overall is in a great position. It's in a sold-out position today. With some softening in one submarket or another market, it's going to be more than consumed in another submarket with it. We just think that Cement is sitting in a very good position right now.

您關於個別市場本身的問題以及我們真正將其視為網絡的問題。我們認為 Cement 總體上處於有利地位。它今天處於售罄狀態。隨著一個子市場或另一個市場的疲軟，它將超過另一個子市場的消費。我們只是認為 Cement 現在處於非常有利的位置。

Perfect. Great. And on kind of sticking with Cement on the cost front. I know you guys are locked in on energy largely for the Cement business for the year, for the -- I guess, the rest of the fiscal year. And I guess when those reset, I guess it would be in March, from where we stand today and any color on maybe early conversations you're having with folks there on the energy front? And any color on maybe what you're expecting there for next year with that next 12-month lock in?

完美的。偉大的。在成本方面堅持使用 Cement。我知道你們今年鎖定了主要用於水泥業務的能源，我想是本財政年度的剩餘時間。而且我想當這些重置時，我想那將是在三月，從我們今天所處的位置以及您可能與能源方面的人們進行的早期對話中的任何顏色？在下一個 12 個月的鎖定期內，您對明年的預期有何看法？

Yes. Thanks, Trey. The -- on the cost side, you've got it right. Energy has been upward inflation in fiscal '23. And I would tell you, sequentially, we didn't see a lot of change there. You locked in those energy prices largely at the beginning of the year. But as we're getting into the negotiations for next year, we are continuing to see a similar type of inflation there as we go into FY '24.

是的。謝謝，特雷。 - 在成本方面，你做對了。能源在 23 財年一直在向上通貨膨脹。我會依次告訴你，我們在那裡沒有看到太多變化。您在年初主要鎖定了這些能源價格。但隨著我們進入明年的談判，我們將在進入 24 財年時繼續看到類似類型的通貨膨脹。

Look, natural gas is down a little bit here recently, so that's been favorable. And you can change your fuel mix a little bit. But for more of the solid fuels, we will continue to see upward pressure.

看，最近這裡的天然氣價格有所下降，所以這是有利的。你可以稍微改變一下你的燃料組合。但對於更多的固體燃料，我們將繼續看到上行壓力。

And just as a follow-on to that, the price increase you have announced for January across your footprint there, is the thought there that that's going to be enough to kind of cover that step-up that you're expecting? Or any color around that side of things with the margin outlook given the cost increase in the pricing?

作為後續行動，你宣布 1 月份在你的足跡上的價格上漲，是否認為這足以彌補你預期的漲價？或者考慮到定價成本的增加，利潤率前景周圍的任何顏色？

Yes. We've been -- that's definitely the intent on that side Trey, with it. We haven't finalized on the numbers with any. We've announced the price increase, and we're going to be working with our customers on what that materializes on. But yes, we're going to recover any cost increases.

是的。我們一直 - 這絕對是 Trey 那邊的意圖。我們還沒有最終確定任何數字。我們已經宣布提價，我們將與我們的客戶合作實現這一目標。但是，是的，我們將收回任何成本增加。

Okay. Well, I'll pass it on and good luck for the rest of the year.

好的。好吧，我會把它傳遞下去，祝你在今年剩下的時間裡好運。

The next question comes from Brent Thielman from D.A. Davidson.

下一個問題來自 D.A. 的 Brent Thielman。戴維森。

My first question was just the -- more of a near-term question. The issues on the Mississippi River and whether that's having any direct or indirect sort of impacts in your business, thinking specifically cement.

我的第一個問題只是 - 更多的是近期問題。密西西比河上的問題以及它是否對您的業務有任何直接或間接的影響，特別是水泥。

Yes. Brent, no, we're not on the Mississippi River, so that wouldn't impact us.

是的。布倫特，不，我們不在密西西比河上，所以這不會影響我們。

Okay. Yes, I just didn't know if there's any indirect effects. Okay. And then the dive in, in the OCC prices recently, just wondering should that have an effect on wallboard prices eventually? Is there just that much more behind the strength in pricing here to consider.

好的。是的，我只是不知道是否有任何間接影響。好的。然後潛入，最近 OCC 價格，只是想知道這最終會對牆板價格產生影響嗎？這裡要考慮的定價優勢背後還有更多嗎？

No. Look, I think the pricing strength we've seen in wallboard has been largely around demand and supply dynamics that have been going in our favor and some of the raw material issues that we've talked about for others in the eastern part of the country. But OCC prices being down, as I talked about in my comments in September and then again in October, that will be a nice tailwind for the paper mill as well as the wallboard business. It takes a little bit of time for that to flow through to the wallboard business, a couple of quarters, but we will see some lower costs there as we get into the winter.

不，我認為我們在牆板中看到的定價優勢主要是圍繞對我們有利的需求和供應動態以及我們為東部其他地區的其他人討論的一些原材料問題國家。但 OCC 價格下降，正如我在 9 月份和 10 月份的評論中所說，這對造紙廠和牆板業務來說將是一個很好的順風。這需要一些時間才能流向牆板業務，幾個季度，但隨著我們進入冬季，我們會看到那裡的成本有所降低。

Okay. And then your comments on all of your facilities effectively being able to sell PLC by 2025. Is the governor on that whether or not all the DOTs you serve, effectively, will take in PLC? I'm just wondering if you're seeing that already, where they're already accepting PLC for all the DOTs you already serve or other factors kind of play into that?

好的。然後你對你的所有設施到 2025 年能夠有效地銷售 PLC 的評論。州長是否認為你所服務的所有 DOT 都有效地接受 PLC？我只是想知道你是否已經看到了，他們已經在哪裡接受了你已經服務的所有 DOT 的 PLC 或其他因素？

Yes. It really is a mixture of 2 things. With the DOTs, we're pretty far along with approval status with -- that's why you see some of the plants in the 60% to 70% range. And my comments of 100% to it, we expect to keep expanding significantly on that side. We do have some supply chain issues on some equipment material that we need to order in order to convert some plants to 100% PLC. So some plants will be able to get partially there, but then we got to wait for the equipment delivery and installation to get to the final, be it 30%, 40% at some of these plants with additional, either grinding capacity or different parts that we need for the plant to be 100% compliant.

是的。它真的是兩種東西的混合體。對於 DOT，我們與批准狀態相差甚遠——這就是為什麼你會看到一些工廠在 60% 到 70% 的範圍內。我對它的評論是 100%，我們希望在這方面繼續顯著擴大。我們確實在一些設備材料上存在供應鏈問題，我們需要訂購這些材料才能將一些工廠轉換為 100% PLC。所以一些工廠將能夠部分到達那裡，但是我們必須等待設備交付和安裝才能到達最終，無論是 30%，還是 40% 在這些工廠中有額外的，研磨能力或不同的部分我們需要工廠 100% 合規。

The next question comes from Anthony Pettinari from Citigroup.

下一個問題來自花旗集團的 Anthony Pettinari。

This is (inaudible) on for Anthony. Just on the January hike, that you communicated to customers, understanding that those conversations are ongoing, can you size that roughly? Are we thinking about another double-digit increase maybe?

這是安東尼的（聽不清）。就在一月份的加息中，你與客戶進行了溝通，了解這些對話正在進行中，你能粗略估計一下嗎？我們是否正在考慮另一個兩位數的增長？

And then as you communicate a January hike to customers rather than historical April, is the sort of implied message that customers should expect another midyear hike? Or is January just sort of a new normal now?

然後，當您向客戶傳達 1 月份加息而不是歷史性的 4 月份時，是否暗示客戶應該期待年中再次加息？或者現在一月只是一種新常態？

So we'll continue to have those discussions with our customers, and we'll report out where we ended up the next quarter with it. We expect a similar cadence to what we've had in the past is all I'll leave with on the dollar amount with it. As for future price increases, I don't want to speculate on those. We will monitor the market and we'll see where the market stands. And then we'll determine our pricing strategy going forward with that. We did -- we've opened in our note saying that we will continue to evaluate the market, and we will see what happens in the second half of the year.

因此，我們將繼續與我們的客戶進行這些討論，我們將報告下個季度的最終結果。我們希望與過去類似的節奏是我將留下的所有美元金額。至於未來的漲價，我不想去揣測那些。我們將監控市場，我們將了解市場狀況。然後我們將確定我們的定價策略。我們做到了——我們已經在我們的說明中打開說我們將繼續評估市場，我們將看到下半年會發生什麼。

Great. And then switching to Wallboard. You talked about pricing remaining strong in the medium term. But some of the homebuilders we cover, talk about working with material producers to reduce their costs as their home prices come down. So I'm just wondering if you started to see any sort of that pressure from builders on the wallboard side or having any sort of conversations to that effect.

偉大的。然後切換到牆板。您談到定價在中期保持強勁。但我們報導的一些房屋建築商談論與材料生產商合作，以在房價下降時降低成本。所以我只是想知道你是否開始看到來自牆板一側的建築商的任何壓力，或者是否開始進行任何類型的對話。

Yes. We had a mid-quarter price increase in Wallboard. It was in August. As you can see, our prices were up sequentially. I understand that there are questions about the 12, 18 months from now. But in the meantime, we were largely able to achieve a price increase across our footprint.

是的。我們在 Wallboard 的季度中期價格上漲。那是在八月。如您所見，我們的價格連續上漲。我知道有人對從現在開始的 12、18 個月有疑問。但與此同時，我們基本上能夠在我們的業務範圍內實現價格上漲。

The next question comes from Jerry Revich from Goldman Sachs.

下一個問題來自高盛的 Jerry Revich。

Craig, I'm wondering if you could just talk about in the cement business, the cadence of inflation over the course of the quarter. Any meaningful changes and obviously, a lot of the commodities we see, but what about things like contracted labor or anything that -- any services that come up, et cetera? Can you just talk about whether inflation is at least stabilizing for some of those miscellaneous repair and similar items?

克雷格，我想知道你是否可以談談水泥行業本季度通貨膨脹的節奏。任何有意義的變化，顯然，我們看到的很多商品，但是諸如合同工之類的東西 - 出現的任何服務等等呢？您能否談談通貨膨脹是否至少穩定了其中一些雜項維修和類似項目？

Yes. The 2 things that I pointed out were energy and maintenance, energy being the larger component of the year-over-year cost increase. As I mentioned earlier, the sequential change in energy prices wasn't significant. As we said, we locked in those costs generally for the year. We will see some inflation into FY '24. But sequentially, not a lot of major changes. Again, the labor component within these businesses is generally not significant. We do see inflation on some of the parts that we consume, things like that, but that's kind of been ongoing as a part of that maintenance bucket as well.

是的。我指出的兩件事是能源和維護，能源是同比成本增長的較大組成部分。正如我之前提到的，能源價格的連續變化並不顯著。正如我們所說，我們通常鎖定了當年的這些成本。我們將在 24 財年看到一些通貨膨脹。但順序上，沒有太多重大變化。同樣，這些企業中的勞動力成分通常並不重要。我們確實看到了我們消耗的某些零件的通貨膨脹，諸如此類的事情，但這也作為維護桶的一部分一直在進行。

What do you -- sorry, please go ahead.

你有什麼事——抱歉，請繼續。

I would say the freight seems to have also flatlined here, plateaued from where we were in the prior year. That's more of a cost within the Wallboard business, but some of them have kind of flatlined here. And OCC prices, as we mentioned earlier, have come down significantly in September and then again in October just post the quarter.

我想說的是，這裡的運費似乎也趨於平穩，與去年相比趨於平穩。這在 Wallboard 業務中的成本更高，但其中一些成本已趨於平穩。正如我們之前提到的，OCC 價格在 9 月份大幅下降，然後在 10 月份再次下降，只是在本季度之後。

And with the big robust price increases in Cement, they have essentially been necessary to maintain strong profitability and 7% margins are very similar today versus a year ago. Do you see an opportunity with the January price increase that you spoke about? Could pricing actually outpace inflation, so we see year-over-year margin expansion potentially? Or how are you thinking about the price cost balance into January?

隨著水泥價格大幅上漲，它們基本上是保持強勁盈利能力所必需的，今天 7% 的利潤率與一年前非常相似。您是否看到了您所說的 1 月份價格上漲的機會？定價真的可以超過通貨膨脹率，所以我們可能會看到同比利潤率增長嗎？或者您如何看待 1 月份的價格成本平衡？

Yes. Look, Jerry, we were able to expand our wholly owned margins over 100 basis points this past quarter. So the pricing that we achieved in January of this year and again in July has been margin accretive. And given where the supply-demand dynamics are and where our production facilities are operating at a high utilization rate, and as Michael mentioned, those price increases should more than offset some of these inflationary pressures that we're seeing.

是的。聽著，傑里，我們在上個季度能夠將我們的全資利潤率擴大超過 100 個基點。因此，我們在今年 1 月和 7 月再次實現的定價增加了利潤率。考慮到供需動態以及我們的生產設施以高利用率運行的位置，正如邁克爾提到的那樣，這些價格上漲應該足以抵消我們所看到的一些通脹壓力。

I didn't mean to shortchange you on the improvement with the last question, but can I ask, you folks are very deliberate in your capital deployment program, big stock buybacks year-to-date? And you spoke about all the signs that we're all looking for, for residential construction to slow 12 months out. So can you just talk about the confidence you have in the wallboard margin profile in your business given the cost increases for the industry?

我並不是想用最後一個問題來欺騙你，但我能問一下，你們在你的資本配置計劃中非常慎重，今年迄今為止進行了大量股票回購嗎？你談到了我們都在尋找的所有跡象，住宅建設將在 12 個月後放緩。那麼，鑑於行業成本的增加，您能否談談您對牆板利潤率的信心？

It feels like behind your stock buyback actions is confidence on better than historical trough margins in wallboard, but maybe I can get you to expand on that.

感覺你的股票回購行動背後是對牆板利潤率高於歷史低谷的信心，但也許我可以讓你擴大這一點。

Yes, Jerry, it's a great point. I'll tell you my confidence is more around the cash flow generation capabilities of these assets throughout the cycle. To me, that is what these assets are all about. And we've positioned the capital structure in a place where leverage is manageable, whether that is for opportunities to continue to grow the company, whether that is to manage cycles, that's always been a hallmark of how we position our capital structure.

是的，傑里，這是一個很好的觀點。我會告訴你，我對這些資產在整個週期內的現金流生成能力更有信心。對我來說，這就是這些資產的意義所在。我們將資本結構定位在槓桿可控的地方，無論是為了公司繼續發展的機會，還是為了管理週期，這一直是我們如何定位資本結構的標誌。

And so the free cash flow can then be used to either continue to expand our geographic footprint if the strategic criteria were met or and the financial criteria were met. And to the extent we have additional free cash flow, we returned that to shareholders, and we know how to do that pretty well through our share repurchase program. So I think it's just the confidence in the cash flow management and generation of these assets more than anything. And as you point out, the position of our company relative to where we were in prior cycles is dramatically more resilient given the geographic footprint that we have and given the position of our wallboard business relative to where we were 15 years ago.

因此，如果滿足戰略標准或滿足財務標準，自由現金流可用於繼續擴大我們的地理足跡。就我們有額外的自由現金流而言，我們將其返還給股東，我們知道如何通過我們的股票回購計劃很好地做到這一點。所以我認為這只是對現金流管理和這些資產生成的信心比什麼都重要。正如您指出的那樣，考慮到我們擁有的地理足跡以及我們的牆板業務相對於 15 年前的位置，我們公司的位置相對於我們在之前週期中的位置更具彈性。

The next question comes from Stanley Elliott from Stifel.

下一個問題來自 Stifel 的 Stanley Elliott。

Quick question. I know it's probably very hard to do. Is there a way to size kind of what the industry typically sees from these major hurricanes both for cement and then, well I guess, more for wallboard for you just from a regional standpoint?

快速提問。我知道這可能很難做到。有沒有一種方法可以衡量行業通常從這些主要颶風中看到的水泥，然後，我想，從區域的角度來看，更多的是牆板？

Stanley, it's a good question. Here's what I would tell you. It is our experience with hurricanes is that there is an initial surge for the cleanup of an event like that and a very unfortunate event. The rebuild effort happens over such a broad time period that it's hard to parse out what's hurricane rebuild versus what's new construction. We just know that the fighting with the insurance companies and everything else that happens just happens over such a broad time period.

斯坦利，這是個好問題。這就是我要告訴你的。根據我們對颶風的經驗，對於這樣的事件和非常不幸的事件，清理工作最初會激增。重建工作發生在如此廣泛的時間段內，以至於很難區分什麼是颶風重建與什麼是新建設。我們只知道與保險公司的鬥爭以及發生的所有其他事情都發生在如此廣泛的時間段內。

And then as it relates to the JV and some of the equipment issues, I mean -- do we think that this -- or is this basically pulling ahead capital spend or maintenance CapEx, however you want to think about it for next year into this year so that vis-a-vis you're actually looking at lower capital maintenance spend across the system? Or just kind of trying to parse out a little bit more what exactly is going on with the JV.

然後，由於它與合資企業和一些設備問題有關，我的意思是——我們是否認為這——或者這基本上是在拉動資本支出或維護資本支出，但是你想在明年考慮這個問題年，因此相對於您實際上正在尋找整個系統的較低資本維護支出？或者只是試圖更多地解析合資企業到底發生了什麼。

Yes. No, you could just assume that the capital spend is going to be the same. We're going to do the same type of outage work with it. Where we had some issues were really one-off failures, and they were items that don't typically fail with us. And so we didn't have necessarily all the spare parts on-site with it. So the supply chain of ordering these specialty parts took a little longer. But I would assume the same cadence and spend on an outage. We take our plants down. We usually -- we go through all the plants, and we make sure they're in like new condition. And we will -- we spend to make sure they operate. This was just one-off occurrences, so.

是的。不，您可以假設資本支出將保持不變。我們將用它做同樣類型的中斷工作。我們遇到的一些問題實際上是一次性的失敗，而且它們通常不會與我們一起失敗。因此，我們不一定在現場擁有所有備件。因此，訂購這些特殊零件的供應鏈花費了更長的時間。但我會假設相同的節奏並花在中斷上。我們把我們的植物拿下來。我們通常——我們檢查所有的植物，我們確保它們像新的一樣。我們將——我們花錢確保它們運作。這只是一次性事件，所以。

The next question comes from Adam Thalhimer from Thompson Davis.

下一個問題來自 Thompson Davis 的 Adam Thalhimer。

Nice quarter. I wanted to ask first about cement and wallboard margins, both of which are really good in Q2. What are your thoughts on the sustainability of that in the back half, kind of year-over-year margin improvement?

不錯的季度。我想先問一下水泥和牆板的利潤率，這兩者在第二季度都非常好。您對後半部分的可持續性有何看法，即利潤率同比提高？

Yes. Look, the wallboard, we have seen, as I mentioned, freight has kind of plateaued. So if you think about the different pieces, we had good price realization in the quarter. OCC prices are coming down. Gas prices have come down here over the last couple of weeks. So that's all been positive for the Wallboard business. On the cement side, again, the July price increase was realized across the majority of our markets and in good shape.

是的。看，牆板，正如我所提到的，我們已經看到運費已經趨於穩定。因此，如果您考慮不同的部分，我們在本季度實現了良好的價格實現。 OCC 價格正在下降。過去幾週這裡的汽油價格有所下降。所以這對牆板業務來說都是積極的。在水泥方面，我們的大多數市場再次實現了 7 月份的價格上漲，而且情況良好。

And look, I will tell you on the cement side, it's all about when does winter show up in the December quarter, especially for some of those more northern climates. But the businesses are in a good spot. The maintenance programs are largely done. And we have a good margin profile.

看，我會在水泥方面告訴你，這完全是關於冬天什麼時候出現在 12 月這個季度，特別是對於一些更北方的氣候。但企業處於有利地位。維護計劃已基本完成。而且我們的利潤率很高。

And then similar question, but as it relates to the OCC price declines. To what extent have you been eating the higher OCC prices at the Paperboard segment?

然後是類似的問題，但因為它與 OCC 價格下跌有關。您在多大程度上接受了紙板部門較高的 OCC 價格？

Yes. So we don't have a lot of inventory on hand of recycled fiber. So you see that benefit within the paper business pretty quickly, especially when prices fall like they have here in the last 2 months or so.

是的。所以我們手頭沒有大量的再生纖維庫存。所以你很快就會看到造紙業的好處，尤其是當價格像過去 2 個月左右的價格那樣下跌時。

The paperboard margins used to be in a gross -- operating margins in the 30% range. Could they snap back to that range that quickly with OCC down? Or does it take more than that to.

紙板的毛利率過去是在 30% 的範圍內。他們能否在 OCC 下降的情況下迅速回到該範圍？還是需要更多的時間。

Yes. Look, certainly, we saw a nice margin improvement both year-over-year and sequentially in the paper business this quarter. I would tell you, relative to, call it, 4 or 5 years ago, energy prices are still higher for that business. Freight costs are still higher for that business. So that will impact the ability for margins to get back to those levels, but we have seen nice improvement here.

是的。看，當然，我們在本季度的造紙業務中看到了同比和環比的良好利潤率改善。我會告訴你，相對於 4 或 5 年前，該行業的能源價格仍然更高。該業務的運費仍然較高。因此，這將影響利潤率回到這些水平的能力，但我們在這裡看到了很好的改善。

Okay. Last one, Texas cement, the price spiked a lot sequentially. Is that sustainable? Or was that kind of a one-off related to the production issues?

好的。最後一個，德州水泥，價格連續飆升。這是可持續的嗎？還是那種與生產問題有關的一次性事件？

Sustainable. That's our pricing in that market. That market is very consolidated and the demand -- the supply demand profile in that market is very, very extreme right now.

可持續的。這是我們在那個市場上的定價。那個市場非常鞏固，需求——那個市場的供需狀況現在非常非常極端。

The next question comes from Phil Ng from Jefferies.

下一個問題來自 Jefferies 的 Phil Ng。

This is actually Colin on for Phil. I just wanted to touch on your prepared remarks, you talked about EXP being well positioned in its principal markets for the second half of the fiscal year here despite the increase in interest rates. Can you just elaborate on what you're seeing in your markets and what this implies for wallboard volumes in the back half of the year?

這實際上是 Colin 代替 Phil。我只想談談你準備好的言論，你談到 EXP 在本財年下半年的主要市場中處於有利地位，儘管利率有所上升。您能否詳細說明您在市場上看到的情況以及這對今年下半年的牆板銷量意味著什麼？

And then just as you start to look out into calendar year '23, any preliminary thoughts on what wallboard volumes might look like for you guys?

然後，就在您開始展望 23 年的日曆年時，您對你們的牆板體積可能是什麼樣子有什麼初步想法嗎？

Yes, Colin, good question. As we said, things -- our orders, our shipments in wallboard have remained steady throughout the quarter. And a lot of that is because of the construction cycle for building a home elongated. There is a "backlog" of construction activity as those homes need to be completed. I think it's a little too early to speculate on 2023 volumes quite yet.

是的，科林，問得好。正如我們所說，事情 - 我們的訂單，我們的牆板出貨量在整個季度保持穩定。這在很大程度上是因為建造房屋的建造週期延長了。由於這些房屋需要完工，因此存在“積壓”的建築活動。我認為現在推測 2023 年的銷量還為時過早。

We're all trying to figure out what is the recent rise in interest rates due to the homebuilding industry. Certainly, there's still a significant demand for homes here in the U.S., whether that'd be single-family or multifamily. I'd also say, again, we operate in the southern half of the U.S. generally. Those markets have been much more resilient than the national average. You saw this past quarter. So we think we're well positioned from that perspective as well.

我們都在試圖弄清楚最近由於住宅建築行業而導致的利率上升是什麼。當然，無論是單戶住宅還是多戶住宅，美國的房屋需求仍然很大。我還要再說一次，我們一般在美國南半部開展業務。這些市場比全國平均水平更具彈性。你看到了上個季度。因此，我們認為從這個角度來看我們也處於有利位置。

Okay. That's helpful color. And then in your prepared remarks, you also talked about some constraints from the supply side and capacity additions for wallboard. Can you just dive into those constraints a little bit more? And then just given these dynamics, how are you thinking about the resilience of wallboard pricing going forward -- especially if we start to see volumes decline given that interest rate spike?

好的。這是有用的顏色。然後在您準備好的發言中，您還談到了供應方面的一些限制和牆板的產能增加。你能再深入研究一下這些限制嗎？然後，鑑於這些動態，您如何看待未來牆板定價的彈性——特別是如果我們開始看到利率飆升導致銷量下降？

Yes. Colin, those constraints are for the eastern half of the U.S., generally where synthetic gypsum was the predominant raw material that was expected to be used to produce wallboard. That was a lot of the new capacity that was added 15 years ago and 20 years ago was designed to utilize synthetic gypsum, which is generated from coal-fired power plants. As that has reduced, as we've generated less power via coal, the availability of that gypsum is diminished.

是的。 Colin，這些限制適用於美國東半部，通常合成石膏是預計用於生產牆板的主要原材料。這是 15 年前和 20 年前新增的大量產能，旨在利用燃煤發電廠產生的合成石膏。隨著它的減少，因為我們通過煤炭產生的電力減少了，石膏的可用性也減少了。

And that's a material amount of the capacity in the U.S. was -- we wanted to use that material. So that's going to be a major constraint. The alternative is generally to go overseas, which is expensive and it would be difficult to arrange. So that, in large part, is why the wallboard cycle could be very different this go around versus prior cycles where we were actually adding capacity in advance of a demand pressure this cycle. The -- we're not seeing much new capacity. So that's why we think this cycle could shape up to be very different than prior cycles.

這是美國的大量產能——我們想使用這種材料。所以這將是一個主要的限制。另一種選擇通常是去海外，這很昂貴而且很難安排。因此，在很大程度上，這就是為什麼牆板週期與之前的周期有很大不同的原因，在之前的周期中，我們實際上是在這個週期的需求壓力之前增加產能。 - 我們沒有看到太多新產能。所以這就是為什麼我們認為這個週期可能會與之前的周期有很大不同。

This concludes our question-and-answer session. I'd like to turn the conference back over to Michael Haack for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給 Michael Haack，聽取任何閉幕詞。

Thanks, Josh. Thank you for joining the call today, and we look forward to talking to you at the next call early next year. Thanks.

謝謝，喬希。感謝您參加今天的電話會議，我們期待在明年初的下一次電話會議上與您交談。謝謝。

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。