EXP Q3 2026: Cement Volumes Jump 9% as Heavy Materials Outperform Wallboard Drag
EXP’s Q3 2026 reveals a clear divergence: heavy materials, led by cement and aggregates, drive growth while wallboard volumes and pricing come under pressure from persistent housing weakness. Management’s disciplined capital allocation and cost control underpin resilience, but the business faces a mixed demand outlook as infrastructure tailwinds offset residential softness. With major plant modernizations nearing completion and price increases announced across most cement markets, the next 18 months will test EXP’s ability to extend its low-cost advantage and navigate shifting construction cycles.
Summary
- Heavy Materials Resilience: Cement and aggregates delivered broad-based volume and revenue gains, offsetting light materials headwinds.
- Disciplined Capital Deployment: Major investments in plant modernization are paired with increased shareholder returns and a fortified balance sheet.
- Strategy Hinges on Cost Leadership: Execution on low-cost initiatives and network flexibility will determine EXP’s margin trajectory as market cycles evolve.
Performance Analysis
EXP’s Q3 2026 results highlight a business increasingly reliant on its heavy materials segment, as cement and aggregates delivered double-digit revenue growth and record organic volume gains. Cement sales volume rose 9%, and aggregate volume jumped 81%—with 34% organic growth and the remainder from acquisitions—demonstrating the impact of infrastructure and non-residential demand across EXP’s national footprint. Price increases for cement have been announced for early calendar 2026, reflecting management’s confidence in continued demand and utilization improvement.
In contrast, the light materials segment remains under pressure, with wallboard and recycled paperboard volumes declining and wallboard prices slipping 5%. Operating earnings for light materials fell 25% as residential construction activity stayed muted. Management responded by flexing wallboard production and leveraging variable cost structures, but the segment’s performance underscores the cyclical drag from housing affordability and weak new build activity. Cash flow remains robust, up 5% year-to-date, supporting $150 million in shareholder returns and major ongoing capital projects.
- Cement and Aggregates Drive Growth: Heavy materials revenue rose 11% with broad-based demand, while organic aggregates volume set a new record.
- Wallboard Volumes and Pricing Slide: Light materials revenue dropped 16%, with volume declines consistent across regions and pricing range-bound amid weak residential markets.
- Capital Efficiency Maintained: Operating cash flow and disciplined CapEx support both growth investments and increased buybacks, with leverage stable at 1.8x.
Segment divergence is stark: heavy materials offsetting light materials drag, with management’s capital allocation and operational flexibility positioning EXP to weather near-term volatility and capitalize on future upswings.
Executive Commentary
"In these choppy times, Eagle will continue to operate as it always has. We will control what is in our control and adjust to current market conditions to maximize profitability in both the short and long term. Our strategy is consistent. We will invest in the health and safety of our largest differentiating asset, our people, our plans to control costs and support our customers through increased reliability, efficiency, and capacity, Our short and long-term strategy with return-focused projects or acquisitions."
Michael Hack, President and Chief Executive Officer
"During the first nine months of the fiscal year, operating cash flow increased 5% to $512 million. Capital spending increased to $295 million. Most of this increase was associated with the modernization and expansion of our mountain cement plant in Laramie, Wyoming, and the modernization of our Duke, Oklahoma wallboard plant. Considering these two projects, as well as our sustaining capital spending, we expect total capital spending in fiscal 2026 to be in the range of $430 to $450 million."
Craig Smith, Chief Financial Officer
Strategic Positioning
1. Heavy Materials as Core Growth Engine
EXP’s cement and aggregates businesses are now the primary growth drivers, benefiting from infrastructure spending and resilient non-residential markets. The company’s national footprint allows for broad-based demand capture, and announced price increases for early 2026 signal pricing power in most markets. Management’s ability to flex production and leverage regional pricing dynamics will be critical as utilization rates rise and competitive pressures, especially in Texas, persist.
2. Light Materials Facing Prolonged Residential Weakness
Wallboard and recycled paperboard remain challenged by housing affordability and muted new construction, with volumes down and pricing range-bound. Management is relying on operational flexibility—matching production to sales and leveraging variable costs—to protect margins. The repair and remodel segment, representing about a third of wallboard demand, offers steady low single-digit growth, but cannot fully offset new build declines in the near term.
3. Capital Allocation and Balance Sheet Strength
EXP continues to prioritize disciplined capital deployment, with major investments in the Laramie cement and Duke wallboard plant modernizations. The recent $750 million senior note issuance extends debt maturities and supports ongoing projects, while increased share repurchases and dividends reflect confidence in cash generation and valuation. The balance sheet remains robust, with $1.2 billion in committed liquidity and no near-term maturities.
4. Operational Initiatives and Cost Leadership
Management advances low- and no-capex initiatives to convert waste streams into revenue and reduce costs, such as reclaiming raw materials from legacy waste and recycling wallboard scrap back into production. These efforts reinforce EXP’s low-cost producer status and provide operational flexibility to navigate cyclical swings.
5. End-Market Diversification and Regional Dynamics
While heavy materials benefit from infrastructure and non-residential demand, regional disparities persist, with Texas facing unique competitive and import pressures. The company’s exposure to both public and private construction cycles offers some insulation, but the outperformance of heavy materials is not yet enough to fully counterbalance light materials drag.
Key Considerations
EXP’s strategic context this quarter is defined by a sharp split in end-market performance, with management doubling down on cost control, capital efficiency, and network flexibility.
Key Considerations:
- Infrastructure and Non-Residential Tailwinds: Federal, state, and local spending are supporting cement and aggregates, with volume momentum expected to continue into 2026.
- Residential Construction Drag: Housing affordability and weak new build activity are pressuring wallboard, with little near-term visibility on recovery.
- Capital Projects Nearing Inflection: Laramie and Duke plant modernizations will lower cost structures and are set for commissioning in late 2026 and 2027, respectively.
- Shareholder Returns Accelerate: Nearly $150 million returned in Q3 via dividends and buybacks, reflecting strong cash flow and valuation discipline.
- Commodity and Regional Risks: Texas cement market faces structural and import-driven competition; natural gas volatility hedged but remains a watchpoint for wallboard costs.
Risks
EXP faces cyclical risks from sustained residential construction weakness, regional price competition—especially in Texas—and potential delays in infrastructure spending. Commodity cost volatility, particularly in natural gas for wallboard production, and execution risk on large capital projects could pressure margins and free cash flow. Management’s range-bound guidance for wallboard pricing underscores the risk of further near-term declines if housing fails to stabilize.
Forward Outlook
For Q4, EXP management signaled:
- Continued optimism for heavy materials demand, with infrastructure and non-residential markets supporting volumes.
- Wallboard volumes and pricing to remain pressured, with production flexed to match sales and costs tightly managed.
For full-year 2026, management maintained capital spending guidance at $430 to $450 million, with major projects on track and no change to shareholder return strategy. Key factors highlighted include:
- Timing and realization of cement price increases across regions.
- Monitoring of housing policy shifts and their potential to spur residential recovery.
Takeaways
EXP’s Q3 2026 underscores a business at an inflection, leveraging heavy materials strength and disciplined capital allocation to offset light materials headwinds.
- Cement and Aggregates Underpin Stability: Heavy materials’ broad-based growth and announced price increases provide a buffer against cyclical drag from housing.
- Capital Discipline and Flexibility: Robust cash flow, prudent leverage, and project execution position EXP to weather volatility and capitalize on a future upturn.
- Watch for Plant Modernization Impact: Commissioning of Laramie and Duke facilities over the next 18 months will be pivotal for cost structure and competitive positioning.
Conclusion
EXP’s Q3 2026 results reflect a company executing well on its core strengths, with heavy materials offsetting light materials softness and capital discipline supporting resilience. The next phase will test EXP’s ability to translate operational investments and cost leadership into sustained margin gains as construction cycles evolve.
Industry Read-Through
EXP’s results offer a clear read-through for building materials peers: infrastructure and non-residential demand are providing a much-needed offset to residential construction weakness, but regional price competition and commodity volatility remain persistent risks. The divergence between heavy and light materials performance is likely to persist across the sector, with cost leadership and capital allocation discipline separating winners from laggards. Peers with exposure to public spending and flexibility in plant operations are best positioned to navigate the ongoing cycle, while those reliant on residential new build face continued headwinds.