Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Record first-quarter aggregate revenues, gross profit, gross margin, and gross profit per ton despite challenging winter weather.
• Magnesia Specialties achieved new quarterly record revenues, gross profit, and gross margin, with a significant increase in gross margin.
• Consolidated gross profit increased by 23%, and consolidated adjusted EBITDA increased by 21%, demonstrating the resiliency of the business model.
• Double-digit growth in organic March aggregate shipments and April daily shipment trends provide confidence in reaffirming full-year 2025 adjusted EBITDA guidance.
• Strong infrastructure demand driven by federal and state investments, with expectations for continued growth supported by the Infrastructure and Investments and Jobs Act (IIJA).

Negative Points

• Cement and Concrete revenues decreased by 12% due to divestitures, winter weather, and slower residential demand.
• Ready-mixed concrete gross profit declined due to higher raw material costs.
• Asphalt and paving posted a gross loss due to customary winter shutdowns and higher raw material costs.
• Affordability challenges continue to impact single-family housing starts, with no near-term resolution expected.
• Potential tariff-related uncertainties could impact input costs or product demand, although the company's supply chain is largely domestic.

Q & A Highlights

Q: What gives you confidence in maintaining your volume guidance amidst ongoing tariff debates and market fluctuations? Are you seeing any project cancellations or delays? A: C. Howard Nye, Chairman and CEO, stated that heavy-side materials perform better in current circumstances, and infrastructure remains strong with significant federal and state investments. He noted that only about 30% of IIJA funds have been reimbursed, indicating more funding to come. Additionally, data centers and warehouse construction are showing positive trends, and there are no project cancellations, which supports a steady volume outlook.

Q: How are you thinking about margins in the cement segment, especially with potential tariff impacts on the Texas market? A: C. Howard Nye explained that despite lower production volumes, cement pricing was up 6%, and gross margins improved. He noted that tariffs could provide upside by insulating domestic cement from imports. The company expects mid-single-digit pricing growth in cement for the year.

Q: Can you expand on your comments about Magnesia Specialties earning the right to grow organically and via M&A? A: C. Howard Nye highlighted that Magnesia Specialties has high barriers to entry and pricing power through cycles, making it a strong performer. The company sees opportunities for both organic and inorganic growth in this segment, which has consistently delivered record results.

Q: What is your outlook on infrastructure funding and potential new legislation? A: C. Howard Nye mentioned that infrastructure funding remains robust, with only 34% of IIJA funds disbursed. He anticipates continued growth in infrastructure projects and noted discussions in Congress about new funding mechanisms for the Highway Trust Fund, including contributions from EVs and hybrids.

Q: How do you view the potential for midyear price increases, and what is the outlook for pricing growth? A: C. Howard Nye indicated that the company expects midyear price increases in several markets, although these are not included in the current guidance. He noted that organic pricing was up 7.4%, and the company is likely to be at the higher end of its pricing guidance for the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.